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What Is EDI (Electronic Data Interchange)?
EDI, or Electronic Data Interchange, enables the computer system from one company to “talk” to the computer system of another company and digitally exchange data.
Learning about EDI is important for having a productive dialogue with customers that require it. While utilizing EDI may be a result of a mandate by your customer, it can certainly bring significant benefits to your operations. Watch the video to learn more about it's history and how it works to help your business grow as you expand your distribution base.
Key Benefits of EDI:
- Reduces or eliminates manual data entry errors
- Streamlines transaction processing
- Increases productivity without increasing staff
Several immediate advantages can be realized by exchanging documents electronically, no matter how small or large your organization may be, including increased speed, accuracy and cost-savings. There are also advantages to EDI for you customers – those trading partners to whom you provide goods or products – which drives EDI compliance. Companies streamline administration with EDI and achieve improved information flow, more accurate accounting, better inventory management, and ultimately lower costs.
Using the right EDI solution helps you improve your vendor scorecard with retailers. TrueCommerce EDI Solutions liberates businesses by connecting them with their greatest opportunities for growth with new customers, or trading partners. We make EDI painless by delivering easy-to-use, robust and affordable EDI solutions and your choice of EDI software deployments.
Because the digital exchange of data is facilitated using computers, most, if not all of the associated business processes can be automated so they occur with little or no manual data entry. This enables companies to electronically send and receive business documents like purchase orders and invoices using EDI transaction codes.
The two most commonly electronically communicated documents are invoices and purchase orders. The American National Standards Institute (ANSI) has stabled standards for electronic data interchange in North America called ASC X12. There are codes, or document numbers, that refer to the type of standardized electronic set of information for different business transactions, for example: 810 Invoice, 850 Purchase Order, and 855 Purchase Order Acknowledgment.
Four required components for Electronic Data Interchange:
A complete system for exchanging transactions electronically requires the following components, preferably from one vendor that can provide an end-to-end solution.
- EDI software translates information from your accounting system into the EDI format
- EDI mapping allows your accounting system to sync with your customer’s system
- EDI VAN - Transaction Network needed to send and receive transactions (supports AS1, AS2 and other connections)
- Ongoing EDI support and maintenance services
There may be many new terms brought up as you learn about the basics of Electronic Data Interchange, such as ANSI ASC X12, connectivity, and trading partner. Please refer to the Glossary of EDI Terms to help clarify what those and other terms mean.
To help further your understanding, there are many helpful resources collected under EDI Case Studies, Videos and White Papers, as well as the articles regularly published in the HighJump EDI Solutions blog about topics related to EDI and increasing the distribution and sales of your products.
To learn more about electronic data interchange, Contact an EDI specialist today.