EDI

Electronic Data Interchange (EDI) is the computer-to-computer exchange of business documents in standard electronic formats between organizations. It replaces paper-based documents and manual data entry, enabling faster, more accurate transactions across supply chains.

EDI emerged in the 1960s–1970s with standard document formats. In North America the dominant standard is ANSI ASC X12; internationally the UN/EDIFACT standard is common. Other formats include TRADACOMS and ebXML. Industry-specific mappings and formats exist, and transport protocols include AS2, AS4, FTP, HTTP, and SFTP. Most EDI uses EDI translator software to map internal ERP or back-office documents to the standard formats.

Typical EDI documents include purchase orders, invoices, advance ship notices, payment remittance, and functional acknowledgments. Documents are exchanged via value-added networks (VANs) or direct connections, then translated and routed to the receiving organization’s ERP or financial system. Modern implementations often use cloud-based EDI services and API-based integrations to ERP platforms.

Benefits include reduced processing costs and cycle times, improved accuracy, better compliance, and enhanced cash flow. Challenges include the cost of setup and maintenance, complex mapping between internal formats and standards, version control, security concerns, and achieving interoperability across partners.

EDI remains widely used in manufacturing, retail, logistics, and healthcare, including HIPAA-related transactions in the United States. Trends include cloud EDI, API-enabled integration, and the adoption of newer transport standards such as AS4 to improve web-based interoperability.