Electronic Data Interchange (EDI) is a technology used to exchange business data or documents between two businesses or applications. The technology utilizes a standard format called ANSI X12 developed by the Data Interchange Standards Association and is used primarily in North America. There is also an international standard called EDIFACT used outside of North America. Plans are underway to merge the two.
Some of the benefits that are driving businesses to widely adopt EDI are:
- Costs savings – Computer to computer exchange is much less expensive than document exchanges that require human intervention.
- Efficiency and quality – Less human intervention correlate to less human error.
- Speed – Processing a paper invoice, purchase order, or any other paper business document can take 10-14 days to process. With EDI, it is instantly processed.
- Labor costs – Using EDI dramatically lowers administrative costs.
EDI is one form of eCommerce (including email and fax) and can be easily implemented by any company. All that is needed is a computer and access to the internet.