EDI Basics
Need to know more about EDI and what it's all about? You're in the right place! Take a look at the info below and feel free to contact us with any questions.
What is EDI?
Electronic Data Interchange (EDI) is the electronic exchange of business information (purchase orders, invoices, bills of lading, inventory data and various types of confirmations) between organizations or trading partners in standardized formats.EDI also is used within individual organizations to transfer data between different divisions or departments, including finance, purchasing and shipping.
Who Uses EDI?
Many, many types of organizations use EDI. In fact, tens of thousands of businesses in the U.S. are currently using EDI. Often, a business becomes aware of a need for EDI when a customer or supplier requests the business to start using it for business transactions.EDI is used widely in many industries including manufacturing, finance, transportation, healthcare, and retail. Some large retailers require suppliers to use EDI in order to engage in business transactions with them.
Why is EDI Used?
Companies use EDI for a variety of reasons, mainly increased efficiency and cost savings.- Examples:
- EDI allows business transactions to occur in less time and with fewer errors than traditional, paper-based exchange
- It reduces the amount of inventory companies must invest in by closely tying manufacturing to actual demand, allowing for just-in-time delivery
- By doing away with paper forms, EDI also reduces postage costs and the expenses and space involved in paper-based record storage.
EDI can also be used to form alliances between companies that provide advantages over competitors in several ways, including the ability to offer the lowest market prices and the best customer service. Such alliances also can lead to newer or more innovative services.
