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Electronic Data Interchange (EDI) is the electronic completion of routine business transactions. Such transactions include purchase orders, order status, invoices, inquiries, planning, shipping and receiving acknowledgements, pricing, scheduling, test results, payments, and financial reporting.

EDI permits unrelated companies to communicate and process business transactions electronically.

EDI makes it possible to:
  • enter data only once
  • reduced errors
  • store data on-line
  • expeditiously generate management reports
  • automatically reconcile statements


EDI - Electronic Data Interchange is a standard format for exchanging business data. The standard is ANSI X12 and it was developed by the Data Interchange Standards Association. ANSI X12 is either closely coordinated with or is being merged with an international standard, EDIFACT.
An EDI message contains a string of data elements, each of which represents a singular fact, such as a price, product model number, and so forth, separated by delimiter. The entire string is called a data segment. One or more data segments framed by a header and trailer form a transaction set, which is the EDI unit of transmission (equivalent to a message). A transaction set often consists of what would usually be contained in a typical business document or form. The parties who exchange EDI transmissions are referred to as trading partners.

EDI messages can be encrypted. EDI is one form of e-commerce, which also includes e-mail and fax.

As more and more companies get connected to the Internet, EDI is becoming increasingly important as an easy mechanism for companies to buy, sell, and trade information.

EDI Applied - Example


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