Electronic data interchange (EDI) is the software or system used by companies to exchange information, files and documents. EDI has replaced the fax machine and mailing list when it comes to information sharing. Using EDI, sharing of data is much quicker and cost effective.

How EDI Works

The basic process is like this: a user places an order (i.e., a document) into the computer. The order goes through an interface program. The application edits the order and relays it to the intermediate EDI files.

The purchase order is changed to the EDI standard format the application can decipher. The translation program can function with several programs, allowing the receiver’s system to interpret the order. The modem relays the order through a value added network.

The network proceeds to take the order. From the EDI format it is changed back into the sender’s original format. This allows the receiver to read the document.

Benefits of Using EDI

The system eliminates the need to use paper. This saves money and helps preserve the environment. This also reduces the odds of errors appearing in the documents.

Information sharing becomes quicker and more effectual. The end result is increased productivity. Response times get quicker and management of information is simplified.

Ways to Implement Electronic Data Interchange

Make it clear to everyone what EDI can do for the company. Explain how it can reduce costs associated with postage and invoices. Stress the fact that it will reduce the clerical staff expenses and accelerate processing.

Choosing an EDI System

Look for the appropriate EDI software. These applications have different features and the cost will vary as well. Look for an application that meets your needs and budget. The system must be designed so it can be activated by a single trading partner. However it must be able to support other partners.

Automation is a necessary feature. This will help you put all the steps into sequence. Of course the program must be user friendly. No doubt an advanced system can make tasks a lot simpler. But it is useless if users cannot understand how it works.


Consider hiring a consultant if you are having a hard time choosing. You should also set up a training seminar to help your employees get used to the new system.

When shopping for software, look for vendors that let you try the program before buying it. This is one of the best ways to determine if the system will work for you. Another good idea is to get recommendations from colleagues.

Of course you want a product that is affordable. However, very cheap products should be avoided. Make sure that the software has the features you need. Using cheap but poor designed software will slow down productivity and cost you more money.

Electronic data interchange uses computers to exchange data. With the efficient way it transmits data, information is processed more quickly and successfully. By using the EDI efficiently, you will be able to cut down on costs and boost productivity.