EDI 101
What is EDI?
(Electronic Data Interchange) is a way for companies to send business documents like purchase orders, invoices, and shipping updates electronically in a standard format. It helps automate these exchanges, making business move faster and reducing the need for manual entry.
What does EDI stand for?
EDI stands for Electronic Data Interchange. It refers to the exchange of important business documents—like orders and invoices—digitally and in a structured way.
What is EDI software?
EDI software automates the exchange of business documents in EDI format. It handles translating your data into a format your trading partners can understand, and it helps ensure transactions are accurate and secure.
Who uses EDI?
Businesses in many industries, like retail, manufacturing, healthcare, and logistics, use EDI. Basically, if a company needs to exchange documents with suppliers, customers, or partners, EDI can make things easier.
What is EDI mapping?
EDI mapping is the process of converting data from your internal system into a format that can be understood by your trading partner’s system and vice versa. It ensures that everyone’s systems are speaking the same language.
What is an EDI payment?
An EDI payment is when payment information is shared electronically between a buyer and a seller using EDI. It helps businesses process payments faster by sending invoices and payment details in a digital format.
What are the 4 major components of EDI?
The four major components of EDI are:
Standard Document Format - EDI relies on standardized formats, such as X12 or EDIFACT, which allow businesses to communicate in a common language.
Standard Document Format - EDI relies on standardized formats, such as X12 or EDIFACT, which allow businesses to communicate in a common language.
Communication Network - This is the medium through which EDI documents are exchanged, such as a Value-Added Network (VAN) or direct internet-based connections.
- Trading Partners - The businesses or entities involved in the exchange of EDI documents, including suppliers, customers, and logistics providers.
What is the most common EDI standard?
The most widely used EDI standard is ANSI X12, especially in North America. This standard is commonly used in sectors like retail, healthcare, and transportation. In other regions, EDIFACT (Electronic Data Interchange for Administration, Commerce, and Transport) is widely adopted, especially in Europe and Asia. Both standards provide the structure for exchanging critical business documents, such as purchase orders, invoices, and shipping notices, electronically.
What are the most common EDI communication channels?
The main ways companies exchange EDI data are:
VAN (Value-Added Network): A private network for sending EDI files.
AS2: A secure way to send data over the internet.
FTP/SFTP: File transfer methods to send documents between systems.
APIs: A newer, faster way to share EDI data in real time.
EDI Implementation and Solutions
Is EDI difficult to implement?
It depends on the size of your business and the systems you already use. While EDI might seem complicated at first, many modern solutions make it much simpler. With the right tools and support, you can get set up smoothly. If you're interested in an easy to use EDI platform consider Orderful.
What types of EDI solutions are there?
The main types of EDI solutions are:
- Managed Service Providers (MSPs) – Full-service, handles integration and management.
- Mapping Tools – Translates data formats, requiring constant maintenance.
- In-House Solutions – Built internally, offering control but needing significant resources.
- Self-Service APIs – Flexible, developer-focused for custom integrations.
- Web Forms – Simple, user-friendly for quick EDI adoption.item
Each solution varies in complexity, control, and resource needs. You can read more on EDI Solutions here.
How to find EDI solution partners?
To find the right EDI partner, look for a provider that fits your needs, whether it's easy integration with your current systems, strong customer support, or cost-effective solutions. You can start by researching EDI service providers or asking for recommendations in your industry - if you need more help, consider Orderful for your EDI needs.
How long does EDI take to integrate?
With tools like Orderful’s API, you can integrate EDI in as little as a few days to two weeks per document type. It mostly depends on the complexity of your setup and how quickly you can get things going.
Do I need to be an expert in EDI?
Nope! Your EDI company, like Orderful, are the experts. Your EDI software company should enable you to trade EDI without having to learn it!
What is the best EDI software for me?
The best EDI software depends on your business needs. If you’re a small business, a simple, cost-effective, cloud-based EDI solution might be the way to go. Larger companies might need a more robust system that integrates with their existing ERP software. Look for a solution that’s easy to use, reliable, and scalable as your business grows.
Industry Terms and Definitions
What is a backorder?
A backorder happens when a customer orders an item that’s temporarily out of stock but will be shipped as soon as it becomes available. With EDI, backorders are automatically updated between buyers and suppliers.
What is a freight broker?
A freight broker connects companies that need to ship goods with carriers who can transport them. They don’t own trucks but help arrange the logistics for moving the goods.
What does ANSI stand for?
ANSI is the American National Standards Institute. It’s an organization that helps develop standards for many industries, including the standards used in EDI transactions.
What is MIS?
MIS (Management Information System) is a system used to collect, process, and manage business data. When combined with EDI, MIS helps companies analyze transaction data to make better decisions.
What is RDS?
RDS can stand for different things, but in tech, it usually means Remote Desktop Services, which lets users access and control computers remotely. It’s not directly related to EDI but is a common term in IT.
What is a 3PL?
3PL, or third-party logistics, refers to companies that handle logistics services like warehousing, fulfillment, and shipping for other businesses. Many 3PLs use EDI to manage orders, inventory, and shipping data.