What Is Electronic Data Interchange (EDI)?


EDI Can Save Your Company Time and Money and Make You a Better Business Partner

Using EDI doesn’t just save your business time and money. It also makes it easier and more cost-effective for your partners to do business with you. This gives you an edge over your competitors. When you’re easier to do business with, you can do business in every direction.

What is EDI?

Electronic Data Interchange (EDI) is a system or method for exchanging business documents with trading partners. These can be your suppliers, customers, carriers, 3PLs, or other supply chain connections.

In this method, automation replaces paper documents and manual business processes to streamline incoming and outgoing document types like purchase orders, advance ship notices, and invoices. EDI software uses specific transaction codes to transmit data between computer systems in a standard format. In North America, EDI transaction codes use the American National Standards Institute (ANSI) X-12 standards. European businesses use another EDI protocol, called EDIFACT.

How Does Electronic Data Interchange Work?

EDI optimizes business processes by replacing manual data entry processes such as mail, fax, and e-mail with electronic exchanges of business documents between two companies that may use vastly different internal business systems.

Most Electronic Data Interchange transactions start by creating an electronic document, based on information from your business system(s), spreadsheets, or related transactions. These documents use standardized EDI formats, called transaction codes, for easy ingestion and use by many businesses.

For incoming transactions, an EDI solution translates or “maps” the data sent by supply chain partners like suppliers, retailers, or carriers, into a format that your internal systems and/or users can comprehend and process. Unlike traditional EDI file transfer options like value added networks (VANs), which need to be manually checked, if you have integrated EDI, the data can also be automatically sent to your ERP system—no retyping required. From there, automation makes it easy to create responding documents, and jumpstart order processing workflows from your warehouse, to your accounts payable team, to your logistics partners.

Electronic Data Interchange also lets brands meet compliance requirements for retailers and distributors, to ensure every outgoing document has complete data in the correct format. By “mapping” data to meet these requirements, suppliers can easily meet buyer expectations, and create seamless communications, while saving time.

Different providers use different EDI networks and systems to deliver electronic documents. There are several types of EDI solutions as well, ranging from web EDI portals, to direct EDI, to fully integrated EDI. To learn more about your options, be sure to read our complete EDI Buyer’s Guide below.

How EDI Works

The Need for EDI

Traditional trade relationships rely on slow, manual processes. Often, they require your employees to keep an eye on communications and manually key in business information on purchase orders and invoices type in order by hand. Not only does this strain your team; it also reduces your supply chain visibility and order processing speed. As a result, it can be difficult to expand your business.

The fact is, for businesses of any size, EDI implementation is essential for sustained competitiveness and growth. That’s why in 2019, EDI accounted for more than 78% of B2B electronic sales. By exchanging documents digitally, you can:

  • Enjoy substantial cost savings and improve operational performance across your business
  • Accelerate the flow of data elements to enhance accuracy and streamline order processing
  • Make it easier to manage inventory and reduce associated costs
  • Improve relationships with your suppliers, and increase your vendor scorecard ratings from buyers and enjoy even more benefits of EDI

EDI Benefits

By automating data exchange between business systems, EDI provides the scalability and speed you need to grow your business. Here are a few benefits of electronic data interchange:

  • Reduces or eliminates manual data entry errors by automating document exchanges
  • Streamlines transaction processing for shorter lead times and rapid fulfillment
  • Increases productivity without increasing staff, so you can scale your business
  • Makes it easier and more cost-effective to do business with your trading partners


TrueCommerce EDI Buyer’s Guide

Finding the Right EDI Provider As supply chains become more complex, EDI offers the technology you need to connect your…
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EDI Components

Complete EDI systems consist of four components, which TrueCommerce provides as a single-vendor, unified commerce solution:

  • A web-based EDI translator that formats your transactions to match your unique business needs
  • EDI mapping tables to sync your business system conventions with your customers’
  • A secure, dedicated transaction network that sends and receives EDI transactions
  • Support and maintenance services to keep EDI messages flowing

Making Electronic Data Interchange Easy

You don’t have to be a supply chain expert or tech wizard to get rapid time to value via EDI. TrueCommerce takes the pain out of implementation by delivering easy-to-use, robust and affordable EDI solutions. We also offer the industry’s most responsive and knowledgeable support and maintenance teams through our Fully Managed EDI Service Provider model.

  • Integrations with 25+ leading ERP systems make it easy to transmit EDI documents and automate processes across your business
  • A global network of 160,000 pre-connected trading partners lets you quickly connect with retailers, suppliers, and more
  • SOC compliant security, full redundancy, and a 99.9% uptime provide peace of mind
  • In-house experts and 24/7 customer service availability reduce your IT burdens