Tuesday, July 3, 2018

EDI - What It Is and How It Works

Jeff Lanford recently served as a developer of EDI applications for Kids II, Inc. in Atlanta, Georgia. In this role, Jeff Lanford led the migration of the company's EDI platform.

EDI stands for Electronic Data Interchange. It enables the electronic transfer of business documents from one business partner to another, thanks to the presence of a standard electronic format. It is a computer-to-computer system, meaning that it eliminates the need for user-operated email, postal mail, and fax systems. With EDI, one computer creates and sends a document directly to another, and that other computer processes the document as necessary.

EDI streamlines the communication process and greatly reduces or eliminates the possibility of user errors. Even in a more traditional paperless system, employees must still generate documents and email them to a partner organization, where a representative must receive the document and take the appropriate action. For example, if a buyer sends a purchase order to a supplier, that organization would then enter the order, print the invoice, and send it back to the buyer for processing.

In an EDI process, however, the buyer's system sends a purchase order directly to the relevant application in the supplier's system. That application can then begin to process the order with no need for user participation. This requires both parties to have the same EDI standard and version, just as two human beings communicating need to speak the same language.

In most cases, EDI documents travel from one company to another. The process is extremely streamlined and can remove days to weeks from applied processes.

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