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What is EDI

Electronic Data Interchange

EDI is the exchange of electronic data (computer files) between businesses. The most common example of this is a retailer placing an order with a supplier.

EDI Network 'mailboxes'

To enable the exchange of files in a secure environment each trading partner sets up an EDI 'mailbox' - which can be thought of as a 'post office box' for sending and receiving files. A network then distributes files; collecting electronic 'mail' from one box and dellivering it to the appropriate receivers mail box. The companies that provide this service are refered to as EDI Network Providers, or EDI Mailbox Providers or Value Added Networks (VANs); the terms are used interchangeably.

EDI Documents or Files

EDI Documents (actually Files) contain information for all sorts of business transactions such as: Sales Orders, Purchase Orders, Despatch documents, Shipping Documents, Invoices, Remittance Advices, and more. To ensure there is no confussion or ambiguity about what is being requested or committed to, there are standards to govern the format of each type of EDI file. The standards for each document type are extremely detailed, these standards are agreed by two main organisations   

There are two major sets of EDI standards used in Australia :

  • The UN-recommended UN/EDIFACT is the only international standard and is predominant outside of North America.
  • The US standard ANSI ASC X12 (X12) is predominant in North America, and used by some retaillers in Australia .

EDI Software

EDI Software has numerous roles in facillitating EDI.

  1. Retreive EDI documents from the "EDI Mailbox"
  2. Read EDI documents and pass details to Sales Order Databases or Systems
  3. Enable the gathering of data for EDI requirements (eg: Scan Packing to create carton content information and unique barcode numbering)
  4. Create EDI-compliant files
  5. Send EDI documents to the "EDI Mailbox" 


EDI Statistics

Advantages of using EDI.

EDI saves a company money by streamlining information flows, reducing errors, eliminating the need to rekey documents and speeding up information flow thus greatly reducing cycle times. For this reason, EDI can be an important component of just-in-time production systems, and reducing stock-outs at retaillers.

According to the 2008 Aberdeen report "A Comparison of Supplier Enablement around the World":  34% of purchase orders are transmitted electronically in North America. In EMEA, 36% and in APAC, 41%. The average paper requisition to order costs a company $37.45 in North America, $42.90 in EMEA and $23.90 in APAC. With an EDI requisition to order costs are reduced to $23.83 in North America, $34.05 in EMEA and $14.78 in APAC.