How Does EDI work?
How does EDI work? What is the process? Why do people use it? What are the advantages/disadvantages?
Recently, someone posted these questions on Quora and thought I would post my response here as well.
EDI (electronic data interchange) is a standard data structure that allows companies with differing hardware and software systems to exchange information in a common format. EDI is used to communicate a variety of information and is typically used in a supply chain. It is widely adopted in retail, healthcare, automotive and even by the U.S. Department of Defense.
In my experience, no one does EDI because they want to, they do EDI because a partner in a business relationship mandates it, however it does help save time and money when it comes to communicating business information documents. Major retailers such as Wal-Mart, Target and Home Depot most commonly use EDI to communicate the following information: Orders to their suppliers (850), Invoices from their suppliers (810), Shipment notices from their suppliers (856). There are also a number of other documents that are used but these three are almost always required in a retail relationship.
There are many different EDI solutions in the marketplace so the process and tools you set up and use can differ but the high level processing steps are the same. Read more…





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