Electronic data interchange (EDI) is an electronic communication method that provides standards for exchanging data through any electronic means. By adhering to the same standard, two different companies or organizations, even in two different countries, can electronically exchange documents (such as purchase orders, invoices, shipping notices, and many others). EDI has existed for more than 30 years, and there are many EDI standards (including X12, EDIFACT, ODETTE, XML, etc.), some of which address the needs of specific industries or regions. It also refers specifically to a family of standards. In 1996, the National Institute of Standards and Technology defined electronic data interchange as “the computer-to-computer interchange of strictly formatted messages that represent documents other than monetary instruments. EDI implies a sequence of messages between two parties, either of whom may serve as originator or recipient. The formatted data representing the documents may be transmitted from originator to recipient through communications medium or physically transported on electronic storage media.” It distinguishes mere electronic communication or data exchange, specifying that in EDI, the usual processing of received messages is by computer only. Human intervention in the processing of a received message is typically intended only for error conditions, for quality review, and for special situations. EDI can be formally defined as the transfer of structured data, by agreed message standards, from one computer system to another without human intervention.
Efficiency and cost savings – Processing of documents becomes timely and precise resulting in less errors and reworking of orders. With efficient planning the result is less out of stocks and happier clients. EDI is significantly cheaper than paper based options of the past.
Enhanced inventory management – EDI shortens the processing and delivery times, and can have a positive effect on required inventory levels.
Transparency – Knowing exactly what is needed, in transit or on order means you have a clear picture of your business stock and accurate information at your fingertips when a customer has a stock enquiry.
Enhanced strategic focus – Automating out of date paper based systems with EDI data means your team is available for customer focused activities aimed at growing your business.
Streamlines your ability to enter new territories and markets – EDI provides a common business documentation platform anywhere in the world. This makes it easy to transact business on a global basis.
Promotes social responsibility and sustainability – Replacing paper based systems with electronic data communication will not only save you money and time but also promotes sustainability of our planet.
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