EDI is the industry standard terminology for electronic transactions and it stands for Electronic Data Interchange which facilitates the exchange of electronic business documents between computers. EDI is an electronic alternative to paper, fax, and phone-based transactions used by companies to communicate with one another. EDI transactions between companies flow faster and more reliably than paper documents and it is used as a strategic tool to reduce expenses, streamline business procedures, and create a competitive advantage.
Companies are under pressure to reduce their procurement process costs by automating manual processes to increase efficiency and as a result EDI capability is a requirement for doing business with many companies. Companies are finding they can reduce costs by automating business-to-business processes with EDI because money is saved in improving the speed and accuracy of documents they receive from their suppliers and more and more companies want their suppliers to have the ability to reliably exchange EDI documents.
EDI’s efficiency has made it an important contributor to the efficiency of business communications in many industries, Business documents like invoices, purchase orders, and advanced ship notices can all be exchanged between companies through EDI.
EDI documents generally contain the same information that would normally be found in a paper document used for the same organizational function. There are standards that govern how EDI documents are structured and used. North American companies follow the X.12 standard and European companies follow the EDIFACT standard. These standards say which pieces of information are mandatory for a particular document and which pieces are optional and give the rules for the structure of the document.
Organizations that send or receive documents between each other are referred to as trading partners. Trading partners agree on the specific information to be transmitted and how it should be used. One trading partner is the sender and the other is the receiver. Both partners will alternate as sender or receiver based on the documents being sent or received. In most instances one trading partner is the driver and they will publish a set of guidelines describing its EDI program, procedures, rules and expectations. All trading partners are expected to follow those guidelines in order to be compliant.
Trading partners can have vastly different processing systems and still enjoy seamless document exchanges. EDI translation software converts all documents into an agreed upon standard and when a document is received, EDI translation software automatically changes the standard format into the proprietary format of your document processing software.
There are three main components required to set up EDI:
- EDI Translation software: translates information to and from your business system into the EDI format.
- Data Mapping: allows your business system to sync with your EDI software.
- Data Transport: communication protocol needed to send and receive EDI transactions (Value Added Network, Point to Point and EDI-INT).
In today’s high-tech climate, there’s a wide variety of electronic languages spoken by different businesses. This presents a challenge when businesses with different electronic languages enter a trading relationship and they simply cannot converse electronically. In order for a successful electronic exchange of data between companies to occur, the sender and receiver must agree on the same electronic language or standard document format.
Edisoft has made this exchange quick, safe, reliable and inexpensive. We are committed to providing you everything you need to become EDI compliant. Our innovative software is an end-to-end EDI solution that provides a single access point that will enable you to connect to your communications network (VAN), send, receive and translate EDI documents and also interact seamlessly with your business/order fulfillment system to streamline your electronic process ensuring complete integration between you and your trading partners. With Edisoft it’s that simple.
To find out how EDI can work for your business, contact our Sales team at 1-877-334-0030 or email email@example.com.
Edisoft's tech support is fast, responsive, patient and extremely professional.
- Rory K Gallagher
EDI and Compliance