What is EDI(Electronic Data Interface): Definition, Advantages, Implementation?

EDI(Electronic Data Interface) will replace the traditional market and is expected to hit the market with the $6 billion by the end of the year 2025. According to the latest research the electronic data exchange interface is proved as the top data transfer set up with the yearly transfer volume of data around 20 billions and save the millions of dollars of cost of business for the data exchange.

electronic data interchange

How Traditional data interchange was?

The following approach traditional data interchange follow:

Customer internal systems→ customer creates order→ customer sends order→ supplier receives order→ supplier enter order→ supplier internal systems→ supplier creates invoice→ supplier sends invoice→ customer receives invoice→ customer enters invoice→ customer internal systems.

What is EDI?

EDI stands for electronic data interchange for the exchange of the information between computer systems between two business partners within an organization. It is a fast and reliable system for transferring the business document with external entities in standard format. Electronic data interchange lowers the risk of error, cost and the overall processing time in an organization.

Customers internal systems→ EDI document→ suppliers internal systems

Statistics of EDI

  • Over 80% of the data of business is transferred through digital format in the form of EDI. The percentage of the number is going from 3 to 5 percent annually.

Document Format which EDI supports:

There are various terms for the EDI glossary need to be discussed here first:

  • XML: It is the file format extended or extensible markup language for allocating the security in the world wide web.
  • FTP: It is the file transfer protocol for the exchange of the data in the format of the electronic with greater security and reliability.

EDI and its software workflow:

Big companies are much dependent on EDI for saving their time, cost, and other resources. It is the best tool for all the necessary solutions. It includes the integration of the backend and transmitting the messages to traders.

  • Prepare the document: The sender prepares the document which can be read with the EDI software. Meeting the EDI standards for the purchase order for the optimized results. The system contains the electronic docs with the data files and purchases the EDI software. In the electronic format there is the loading of the data rather than the printing of it manually and use of EDI software solutions.

Advantages of EDI

Why it is important to implement the EDI solutions for your business. The main benefits are:

  • Speed: The documents are transmitted very fastly in digital format. Transaction of documents must take a few minutes rather than hours for sending the postal mail or writing the letter electronically. The manual work may require a large number of people who can do valuable jobs. The EDI software can track real time and ensures the messages delivery at both the ends on time. This way cash order and the purchase to pay cycle boost a lot and supplies more stability in the business and customers are getting more discounts.

Implementation of the EDI:

As the trading partners will require a prototype to follow for handling the functional requirements of the organization. Proper Implementation is required for improvising the EDI.

  • Installation of the EDI: The overall implementation with the Business Development requires for the proper installation of the hardware, VAN connection and proper software handling.
coordination with business partners
  • Correct certification for the handling purpose: EDI protocols give an organization the full access to maintain the authorized certificate to provide best EDI solutions and regular tracking of the updates.

Conclusion: EDI is the electronic secure way to transfer the data securely with reduction of the recurring cost of the organization. Either it is smaller or large organizations the budget maintenance is affected by various factors and tedious, unsecured, non-function of the data deducts the efficiency. The future of EDI is very prominent and use of API will overtake it rigorously in the coming years.



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Akanksha Samar

Content Strategist | Word Writer | ☔Vivid-Depth-Contrast Speller🌌 | Love for Data 📊 | Artist 🎨 | Nature Lover 🌾| Clinical Thinker 🤓