Electronic Data Interchange (EDI) is the computer-to-computer exchange of business documents in a standard electronic format between business partners. EDI replaces postal mail, fax, and email, and allows businesses to electronically communicate information that was traditionally communicated on paper, such as purchase orders, invoices, and advance ship notices. EDI implies a sequence of messages between two parties, either of whom may serve as originator or recipient. The formatted data representing the documents may be transmitted from originator to recipient via telecommunications or physically transported on electronic storage media. EDI provides a technical basis for automated commercial "conversations" between two entities, either internal or external.
Some key features of EDI include:
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Standard electronic format: EDI documents are exchanged in a standardized format between business partners.
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Computer-to-computer exchange: EDI transactions involve information moving directly from a computer application in one organization to a computer application in another.
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Elimination of manual data entry: EDI enables companies to exchange information electronically in a structured format, eliminating the need for manual data entry and reducing the cost and time associated with paper-based transactions.
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Exchange of various business documents: Many business documents can be exchanged using EDI, including purchase orders, invoices, payment documents, bills of lading, inventory documents, customs documents, and shipping status documents.
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EDI standards: There are several EDI standards in use today, including ANSI, EDIFACT, TRADACOMS, and ebXML.
EDI is used in operations management, including logistics, supply chain, procurement, and manufacturing production. It enables companies to exchange information electronically in a structured format, reducing the cost and time associated with paper-based transactions. EDI is also used in healthcare between service providers, payers, and patients, ensuring HIPAA compliance within the EDI process and using ASC X12 for transmission of EDI transaction sets.
