What is Electronic Data Interchange (EDI)?

EDI (Electronic Data Interchange) is a system that allows suppliers and customers to exchange electronic standardized messages and data to communicate business information. 

EDI-technologies help to automate order fulfillment and eliminate the influence of human factors. The buyer will not make a mistake in the order, and the supplier will bring the right product on time. 

Standards of data transfer in EDI

EDI data exchange is based on the GS1 global system of standards. It is an international non-profit organization that develops and maintains standards and creates keys to identify goods, services, assets and their locations. 

EDI exchange is based on basic standards that are set by GS1, such as the message format standard. Transmission of standardized data eliminates manual input errors. Which means there will be no typos in the order and the store will get the right product on time. 

To share commodity information with trading partners in an EDI system, you must use GS1 identification numbers (keys). Such keys are unique all over the world – the set of digits in the key is not repeated. 

To create an identification key, a company must join the national GS1 organization. Upon joining, it receives a registration number, based on which all identification keys are generated. 

Types of EDI messages

Buyers and suppliers exchange EDI data at each stage of delivery: order, shipment, acceptance, invoice for payment. Messages record the steps of the workflow and contain information about each of them. 

The main types of EDI messages:

ORDER – purchase order. Contains a list of items, quantities, prices, and delivery times and address. Buyers, such as retailers, generate an order and send it to suppliers. 

ORDRSP – response to order. The supplier may confirm the order, refuse the customer, make additional information or adjustments. For example, through ORDRSP you can offer an analog if the desired product is out of stock. 

DESADV – shipment notification. This is analogous to a bill of lading. The supplier sends a message that provides information about the quantity shipped, price, shipper and recipient of the goods. 

RECADV – message about acceptance of goods. The buyer notifies the seller when he accepts the goods. In RECADV indicate information about the actually accepted goods and discrepancies, if part of the goods is not accepted. 

INVOICE – counting. Contains final delivery details, prices and amounts payable. Electronic documents are formed on the basis of INVOICE. 

Advantages of switching to EDI

EDI-exchange allows to automate interaction with partners, save resources and increase efficiency of order processing. 

Participants in the EDI system benefit from the ability to:

  • expedite order processing, payment for delivery and signing of closing documents;
  • reduce the number of errors and the cost of finding and correcting them;
  • automatically generate legally relevant documents;
  • reduce the cost of shipping, storing and printing paper documents;
  • analyze supply data to establish processes. 

Users of the system can at any time refer to the transmitted messages and documents to avoid disagreements with counter-parties, or use them to analyze business processes. 

In addition, EDI technologies guarantee the validity, confidentiality and security of data. Messages are encrypted and transmitted over secure channels so that their contents are accessible only to the sender and the recipient. Messages cannot be corrected after they have been sent – the recipient receives the data as it was sent.