EDI Electronic Data Interchange

Electronic Data Interchange, or EDI for short, is a business-to-business transactional communication method. Developed in the 20th Century (I know I didn't need to phrase it that way, but it makes it sound like it's been around a very, very long time!), EDI is the standard method of communication for transferring business "documents" between companies electronically.

There's different standards for different industries, and sometimes different standards for the same industry due to the regional area. For example, ANSI ASC X12 and is used the U.S. and abroad. EDIFACT is a large standard in Europe and internationally, and TRADACOMS is prevalent in the U.K., CII operates out of Asia. In addition to this larger standards, there are different standards used by some health and vision industries, just to name a few.

Part of the original rational for instituting EDI was to reduce paper usage (one of the original "green" movements??), speed up the transactional process, and securely transmit the business data. (I know each one of these points can be contested, but let's just move on.)

Nowadays, those original considerations are not often listed among the rationals for implementing electronic data interchange. Most often now, the main reason is that larger businesses require EDI as the preferred transactional business document transfer method. (I remember when mail, fax and email were the "way to go".)

Since 1997, I have consulted as a EDI integration specialist for 70 (rough guess) companies here in the States, Canada, Puerto Rico and Western Europe, and I have seen some really great business ROI despite the sometimes pricey implementation schedules and previously expensive VAN (Value Added Network) charges.

However, automation of documents (for example, quotes, purchase orders, sales orders, ship notices, invoices, delivery notices, payments, etc.) transfer, tracking and timely processing, can go a long way toward improving business efficiencies, sales volume and operational capabilities.

As electronic transactions have become common place, newer technologies have been incorporated in and around the world of EDI like XML (eXtensible Markup Language), AS2 (Applicability Statement 2), and the Internet, in general. These technologies have even further reduced the costs associated with Electronic Data Interchange and improved the security surrounding the transmission of the documents.

I haven't really scratched the surface in discussing EDI, but maybe there will be a part two in the future.

Keep on learning!

VinceH

P5Logic EDI ERP B2B Systems Integration