What is EDI

Electronic Data Interchange (EDI) is defined as

the inter-process communication (computer
application to computer application) of
business information in a standardized
electronic form. In short, EDI communicates
information pertinent for business transaction
between the computer systems of companies,
government organizations, small businesses,
and banks.
 
 What is EDI

• EDI refers to the exchange of data between

one computer and another on a pre-
defined structure where both have agreed
upon the same message standard. This
electronic communication helps in
business transactions such as order,
confirmation, shipping notices and so on
between organizations.
• The relationship is usually developed
between a vendor and a customer. EDI
implies computer to computer transaction
into vendor databases and ordering
systems. The EDI system co-ordinates
transaction, initiates deliveries and
generates invoices. Data is exchanged
between different companies using a
 What is EDI
 However, due to the different approaches
in the development and implementation of
EDI, there is no consensus on definition of
EDI. Some of the prevailing definitions are
as follows.
•  EDI is the transmission, in a standard
syntax, of unambiguous information of
business or strategic significance between
computers of independent organizations
(The Accredited Standards Committee for
EDI of the American National Standards
Institute)
• EDI is the interchange of standard
formatted data between computer
application systems of trading partners
with minimal manual intervention(UNI /
EDIFACT Training Guide)
 What is EDI

• EDI is the electronic transfer, from computer

to computer, of commercial and
administrative data using an agreed
standard to structure an EDI
message(Article 2.1 of the European
Model EDI agreement)
• EDI is the interchange is the electronic
transfer from one computer to another of
computer processable data using an
agreed standard to structure the
data(International Data Exchange
Association, The EDI handbook: Trading in
the 1990s)
•  
 What is EDI
• WHAT ARE THE ESSENTIAL ELEMENTS
OF EDI?
 

• Some of the essential elements of EDI are

the use of an electronic transmission
medium instead of physical storage such
as magnetic tapes, and disks. The
message is well structured and formatted.
The exchange of documents from the
sender to receiver speeds up. EDI enables
direct communication between
applications. It depends on a
sophisticated information technology
infrastructure that includes data
processing, data management,
networking capabilities that ensure
efficient and reliable data transmission
 What is EDI
• HOW DOES EDI BENEFIT INDUSTRY?
• There are numerous advantages of using EDI. Some of
them are increased business opportunities in
various sectors and reduction of workforce
requirements.
• There is a quick data transfer.
• Reduced paper-based systems
• Improved problem resolution and customer service
• Less time is wasted on exception handling.
• It also saves time in unnecessary re-capture of data.
• Expanded customer / supplier base(Many suppliers are
forced to switch over to EDI by large manufacturers
• It is also beneficial in areas such as inventory
management, transportation and distribution,
administration and cash management due to
automatic existing process leading to cost
reduction, improved speed and better quality of
services.
• EDI is being used by Federal Express, Eastman Kodak,
 What is EDI
• How does EDI work?
• EDI provides the electronic equivalent of
common business documents—request for
quotes, purchase orders and invoices—
which are then transmitted electronically
between computers of trading partners.
Electronic documents are given
standardized electronic format, as it is
easy for everyone to correctly interpret
information sent to them. Translation
software is used by each partner to
translate business data from ASCII
(American Standard Code for Information
Interchange) format or any other format
to ANSI X12 form and vice versa.
 What is EDI
• What’s the difference between e-
commerce and EDI?
• E-commerce and EDI differ. E-
commerce is an aspect of doing
electronic business, person to
person interaction or collaboration,
money transfer, data sharing and
exchange, Web site merchant
systems etc.
• EDI is a subset of e-commerce. In
EDI, users can exchange business
information in a standardized