What is EDI?
Electronic Data Interchange, otherwise referred to as "EDI", is the exchange of common business forms and documents between two or more organizations using a machine-based communications and archiving system.
Common documents exchanged using Electronic Data Interchange include purchase orders, invoices and shipping documents. Electronic Data Interchange can be performed in a number of ways, but today is most often performed through desktop computers. Electronic Data Interchange is an often-overlooked information transfer resource. It not only delivers exceptional security, speed, and efficiency to large-scale business interests, it also provides significant cost-savings and productivity optimization to medium-sized and even small organizations.
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Benefits of Electronic Data Interchange
Electronic Data Interchange delivers profound and diverse benefits to a variety of industrial applications. From manufacturing sectors to health care, EDI is a strategic, financial, regulatory and environmental asset, helping organizations not only optimize their productivity, but eliminate costly errors in communications and tracking.
EDI found an early and eager proponent in the automotive industry that wanted to implement means of enabling "just in time" inventory movement. It was not created to replace paper, but rather to decrease the time and error rates associated with the manual data input. Since more than 70% of a computers transactional data output becomes a second computer's transactional data input, it's easy to see how EDI could provide significant time and cost savings.
Electronic Data Interchange is now widely used both in the United States and globally, based on a number of standards that have been enacted that provide basic guidelines for its use. The two standards bodies that are most frequently associated with Electronic Data Interchange are the ANSI X12 standard, used primarily in the US, and the UN EDIFACT standard that is used outside of the United States. Here are some of the many advantages of incorporating Electronic Data Interchange into your current communications infrastructure.
Electronic Data Interchange has many benefits, including but not limited to:
- Strong return on investment. The long-term ROI from EDI is considerable – within only a few months of implementation, most businesses see a marked drop in outgoing costs (paper, printing, and filing supplies) and man-hours dedicated to information processing. Best of all for medium and small businesses, EDI applications are scalable, so when the demands of the organization increase, EDI solutions can be adjusted easily to accommodate the higher data volume.
- Reduced errors. Voice and hand-written messaging can lead to errors in transcription, resulting in oftentimes costly delays. EDI standards interpret data accurately, by eliminating the human element that may mishear a message, or inadvertently type incorrect detail. Automated EDI can reduce costly errors by a significant factor – it has been estimated that EDI integration may lead to a drop in communications errors by approximately 40 percent.
- Increased efficiency. Because EDI processes are fully automated, the time spend on manual order processing is virtually eliminated, allowing team members to dedicate man-hours to critical tasks.
- Improved client relations. With reduced errors and enhanced response times, EDI can help ensure all customer orders are handled precisely and quickly. Fast and accurate order processing and deliveries will help end-users optimize their own workflow, increasing confidence in your level of service and products, and resulting in consistent business. Furthermore, large corporations seek to partner with businesses with full EDI compliance; having the technology already integrated will help attract lucrative contracts.
- Eco-friendly. EDI can help reduce overall CO2 emissions by cutting down on mail deliveries of purchase orders and reduce physical file storage space. Automated, paper-free EDI solutions will help your organization stay in accord with industrial and governmental environmental regulations.