EDI

What Is EDI?

What is EDI?

Electronic Data Interchange Helps You:

  • check_circle_outline Standardize document transfer
  • check_circle_outline Connect with business partners
  • check_circle_outline Receive and send information securely
  • check_circle_outline Increase the speed of data exchange

Standardize document transfer

EDI can help your business send important documents to partner organizations in a standardized format. This helps ensure that information is relayed correctly and efficiently while also reducing the transmission of errors.

Some of the commonly used EDI standards include:

  • ANSI ASC X12
  • EDIFACT
  • ODETTE
  • SWIFT
  • EANCOM
  • RosettaNet
  • VDA
  • VICS
  • Tradacoms

Connect with business partners

EDI transfer is obsolete if it doesn’t effectively send a message from one company to another. The key to this process is making sure that information is communicated accurately, securely and to the appropriate location. Often, sending documents such as purchase orders to a business partner can get dicey because emails bounce back and files are sent in incorrect formats. The goal of EDI is to reduce these hindrances by creating an information highway that connects organizations.

Receive and send information securely

EDI ensures secure transmissions. EDI tools enable organizations to connect with business partners directly either through a point-to-point or outsourced implementation. This ensures that important documents such as invoices are sent to the correct locations and don’t get into the wrong hands. This also alleviates the need to email sensitive information to business partners or to give collaborators access to an internal repository, therefore reducing the potential for security breaches or for others to access information that isn’t relevant to them.

Increase the speed of data exchange

EDI programs can make the process of getting information from one company to another faster. It can help reduce transmission errors and bounce-back emails that notify you when a message can’t be delivered. Some reports estimate that EDI can increase the speed of business processes by 61%, largely because transfers can be done in minutes instead of the hours, days, or weeks associated with other delivery methods such as email and traditional mailing services.

FAQs

What Is EDI?

EDI (also known as electronic data interchange) is a method of sending and receiving information among different organizations. The internal transfer of information is typically a lot easier than sending documents externally, which is why EDI was created to alleviate issues with document formats and inefficient transmissions. The sharing of data among business partners can be essential in developing effective and mutually beneficial partnerships.

How Do I Implement EDI?

There are two main methods of implementing EDI — through point-to-point or outsourced integration. Let’s investigate the differences between these two methods.

Point-to-Point
Point-to-point implementation requires organizations to install the EDI solution within their internal environments. The main benefit of this implementation method is that it gives companies control of their program and more flexibility. However, it does require more of an investment to get started than an outsourced implementation method would entail.

Outsourced
Outsourced implementation leverages third-party businesses known as interconnects to set up connections among partner organizations. The main benefit of using this implementation method is that the third-party establishes and manages your EDI connections, meaning that your business doesn’t have to deal with a high infrastructure investment. However, you will have less visibility of current connections and a slower onboarding time when configuring new communication channels if you go this route.

What Types of Information Can Be Exchanged Through EDI?

EDI connections enable the exchange of a variety of documents. Here are some of the commonly shared forms communicated through EDI programs:

  • Purchase orders
  • Purchase order acknowledgments
  • Invoices
  • Inventory inquiries
  • Shipping notices
  • Warehouse shipping orders
  • Product activity reports

How Does EDI Work?

Electronic data interchange works through the development of secure pathways for the flow of data and information from location to another. This is especially helpful when companies are doing business with other organizations and need to send sensitive information to an external area. The way the actual pathway is constructed depends on whether a business opts for point-to-point implementation or an outsourced implementation model. The core of EDI is that documents can be sent digitally and in an appropriate format to another location.

Which Industries Use EDI?

Companies in a variety of industries use EDI to more securely and efficiently share sensitive documents and information with business partners. Here is just a sampling of some of the industries that leverage this technological solution:

  • Financial services
  • Software
  • Manufacturing
  • Distribution
  • Retail
  • Automotives
  • Pharmaceuticals
  • Electronics

What Is EDI Compliance?

EDI compliance is a method of ensuring that your system will work effectively. This includes factors such as developing your EDI infrastructure, assuring that it aligns with the needs of your business partners and putting in place the standards that you will use in your system. For example, you will need to determine the document standards that your partners support in their platforms, the types of information that will be sent and received through the program, how you will implement the solution, and the hardware and security protocols that are necessary for efficient use.

How Do I Select EDI Software?

When it’s time to select the right EDI software for your business, there are a few factors that you’ll want to consider. For example, elements such as implementation method, business partner standards, industry and company size will all be important components to keep at top of mind when selecting between different vendors.

The process of choosing the right EDI system for your business and its partners can be tedious, which is why at SelectHub we’ve created an easy-to-navigate requirements list that will help you narrow down the vendors that best fit your needs. Check out our EDI Requirements Checklist to make the vendor selection process easier or our EDI Software Trends article to learn more about electronic data interchange options.

Recent Articles

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EDI software selection is complex and beset with problems for both IT buyers and solution providers. We do three things to make it fast and simple:

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Your Guides

Our industry journalists proudly distill the helpful information you read on SelectHub, always on the mission to share what matters so you can make your best decisions independently.

EDI articles are written and edited by:

Mariah Hansen

Lead Editor

As the lead editor at SelectHub, Mariah edits and manages content for more than 40 different software categories, as well as writing for a couple of them herself.

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Thought Leaders

SelectHub has sought out and invited thought leaders to contribute to our EDI industry articles and resources. These thought leaders ensure we deliver quality content with the most accurate information, focusing on what matters most. No thought leader is compensated for their contributions, but shares our belief that information should be democratized so everyone can make the best decision.

Erik Kiser

Erik Kiser

CEO, Orderful

At 25 Erik started a consulting firm focused on writing EDI and B2B integrations for manufacturers. Through scaling the company he realized that there is a great opportunity to improve business for the manufacturers by providing a software hub approach.

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EDI Requirements Checklist and Template

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Electronic data interchange (EDI) technology goes back as far as the 1960s, yet it’s still a common tool used by many businesses today. What has prolonged its life is its security, reliability and ubiquitous presence. And while many have spoken of API’s ability to replace EDI software, it doesn’t look like it’s going anywhere soon.

The EDI market is projected to be worth nearly six billion dollars by the year 2025 with 85 percent of the industry utilizing the technology today. As a result, it’s still a smart move to invest in these tools. To help you out on your software selection journey, we’ve compiled a checklist of popular EDI requirements. Use it to compare vendors to get a system that perfectly fits your needs.

Kim O'ShaughnessyEDI Requirements Checklist and Template
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EDI Software Trends: The Future of EDI for 2020

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If there’s anything certain about the future of EDI software, it’s that its future isn’t certain at all. Electronic data interchange technology has been around for decades, and in that time, numerous authorities have declared it’s imminent end. But EDI has remained a staple in the B2B communications realm all these years. However, throughout 2020 and as new technologies develop, it’s important to reassess EDI’s place in the supply chain. To better understand what’s on the horizon for this long-standing software, we asked several experts their thoughts on the future of EDI software trends for 2020 and the years to come.

Kim O'ShaughnessyEDI Software Trends: The Future of EDI for 2020
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The Best iPaaS Vendors & Their Features and Benefits

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Cloud computing has completely changed the landscape of the IT industry. Cloud technology’s accessibility and ease of use have turned it into a booming industry. But the rise of the cloud, coupled with competing technologies like APIs and EDI software, has brought on new challenges to companies as well. Combining on-premise applications, cloud software solutions and social platforms makes the integration process much more complicated. This has many companies turning to iPaaS vendors (or integration platform as a service).

But before we discuss the top iPaaS companies, let’s go over the definition of integration platform as a service, its key features and benefits.

Kim O'ShaughnessyThe Best iPaaS Vendors & Their Features and Benefits
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3 EDI Alternatives Changing the Way B2B Business is Done

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Exchanging data is an essential part of running a business.

No matter your industry, technology that allows you to securely transfer data such as purchase orders, invoices and shipping information is crucial to success. For the past 40+ years, EDI software has been at the forefront of system-to-system data exchange for organizations across the world.

SelectHub3 EDI Alternatives Changing the Way B2B Business is Done
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