What Is EDI ?

EDI stands for Electronic Data Interchange. It is a documented standard that allows the transfer of data between different companies and their own proprietary networks. EDI defines the language that companies use to talk to each other and conduct business with each other electronically. EDI is very important. It provides a standard method for companies to buy, sell, and trade with one another. EDI is an ANSI documented standard for doing electronic business.

Many larger corporations use EDI extensively and require that those who do business with them to use EDI as well. For many smaller and mid-size companies, following EDI standards is a part of doing business.

EDI standards mirror what you would expect to see on paper documents. For example, an EDI order transmission would include one EDI order header record that would include the purchaser’s identification, the destination of the order, and the delivery date of the order. Each order header record would include one ore more order detail records. Each order detail record may include the item ordered and the quantity needed.

EDI standards for communications have been developed for many industries including banking, warehouses, medicine, transportation, engineering and more. The EDI standard allows free electronic data transmission between businesses. It defines what data comes in what order and how large each piece of data can be. It defines whether the data is characters only, numeric only, or a combination of the two. EDI also defines which data is required and which is not. Thus, if an EDI transmission is sent, it can be tested for accuracy and completeness.

Organizations that choose to send and receive data electronically via EDI standards are known as trading partners. Trading partners will agree together on which EDI transactions to send. Then each trading partner will map the EDI data to their company specific requirements, databases, and processes.

Many larger companies have a team of EDI software experts who are trained and experienced with the EDI requirements and standards. These teams are responsible for onboarding new trading partners, managing the EDI transmissions or current trading partners as well as maintaining the internal EDI systems as the EDI standards grow and evolve.

Many consulting companies will provide EDI experts and training to companies who are not equipped or experienced to handle EDI communications. In addition, user friendly interfaces to the world of EDI are available for smaller companies who need to use EDI for some of their business partners.

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