What is EDI?

What is EDI?

Electronic Data Interchange (EDI) is an essential computer-to-computer business document exchange process that standardizes electronic formats between two (or more business partners). EDI helps to improve efficiency, capitalizing on the trend to move away from paper-based exchanges to electronic ones. Meade Willis edi services help to cut costs, improve document processing speeds, reduce errors and redundancies, and, perhaps most importantly, to improve the relationship between business partners.


Using EDI means you can pretty much say goodbye to traditional postal mail, the now obsolete fax, and even the still useful e-mail. Or, rather, you could say that you will no longer need to rely on several different forms of passive communication. Also, a live person, similar to with postal mail, must handle every email. When you switch to EDI, though, documents no longer require touch from an actual person. Instead, they can flow straight through the communication chain to whichever department or people need them. This speeds along all processing and makes your system more efficient overall.


This term refers to the collection of paperwork that gets traded back and forth between businesses. The most common type of business document traded using EDI is purchase orders. Invoices and advance ship notices are also common. Still, while these are all very common, there are several other types of documents that your company could need exchanged and keeping track of all those different pieces of paper can be confusing and tedious. EDI helps keep this organized and, again, efficient.


As you might assume, EDI documents are processed by computers and not humans. Obviously, that is a good thing, but what makes the process so effective is something called standard format. Standard format is the term that refers to a way of presenting information in a consistent way so that all computers understand it (and, thus, process it more quickly). This does not necessarily mean there is only one kind of standard format; it is kind of like a language. A computer system might use one format (or language) to process one document and then a different format (or language) to process another.


In a typical business transaction the companies involved will communicate with each other directly but that does not mean that they have to; or, rather, they might find it more efficient to use EDI in some or all cases because it is, simply more efficient.