EDI Full Form

EDI is the generic term for the Electronic Data Interchange standard. It allows a computer, or a mainframe of any level, to automatically and efficiently transmit, receive and store electronic data to and from a host of different electronic data transfer systems. The concept arose in the eighties to allow the exchange of data between different computer systems, which in the past were only compatible with each other by being physically coupled. The idea behind EDI is that once the data has been encoded, it can be transported between any two different systems and thus, can be used by any organisation. Today, EDI is the standard method for electronically transmitting information such as invoices, purchase orders, and credit applications. 

EDI is also deemed as the Electronic Data Interchange standard developed by the International Organisation for Standardisation (ISO). The goal of EDI is to provide a secure and reliable means of electronically exchanging business data. EDI is a set of standards using standard formats and communication protocols, that allow electronic transfers of business data between a wide variety of application programs and computer systems. With the adoption of EDI standards, organisations can use common, widely accepted formats and protocols to exchange data with each other.

Types of EDI

The basic types of EDI include Electronic Data Interchange for Business (EDI-B), Electronic Data Interchange for Government (EDI-G), Electronic Data Interchange for Healthcare (EDI-H) and Electronic Data Interchange for Personal Financial Management (EDI-P). Another type of EDI, Electronic Data Interchange for Other Industries (EDI-O) is defined by the National Standards for Electronic Commerce (NSC) in many places. EDI’s are also differentiated by the extent to which they require the sender and receiver to be able to understand each other\’s language. This is known as the language of the data-exchange. EDI can be broken down into three categories: master data, transaction data and process data. EDI Master Data is used to store all relevant records pertaining to a particular business. For example, information about the location, products, suppliers, or contact details of a business can be stored in EDI Master Data. This type of data is only used in very large organisations or entities that require information about a large number of clients or suppliers. 

The EDI transaction data is used to send messages containing data to be processed by a central processing system. Once all the messages arrive, the central computer processes them and returns the result information in a way that can be used by the original sender of the messages. 

EDI can be used to process data. For example, EDI allows a bank to use the data it has received from the customer to enable that customer to make a transaction, as well as enabling any third-party system to receive data from that transaction for use in the third-party system.

Benefits of Electronic Data Interchange

Electronic Data Interchange (EDI) is widely viewed as a mechanism for exchanging electronic product data between businesses. It is an electronic version of the paper-based business-to-business exchange of the same data. One of its greatest benefits is its ease and speed, because it is not dependent on paper flow. Electronic Data Interchange (EDI) allows companies to exchange data without the need for manual data entry or transcription of data. 

Through EDI, businesses can send data in a format that is easily readable and searchable by software. EDI also enhances the process by reducing the possibility of data errors and omissions. Businesses can also save money by avoiding the costs of manual data entry and transcription. EDI allows different organisations to exchange data, without the need to physically exchange anything.

EDI is also used to send messages and data between partners who don’t work directly with each other. For example, an accounting firm may use EDI to send a report of the previous year’s financial statements to the accounting department of a manufacturing company. This is known as an “intercompany” EDI. Similarly, an accounting firm may use EDI to send a report of its previous year’s earnings to the general accounting office of a large corporation.

The major advantage of EDI over a paper based system is that it allows many more transactions to take place simultaneously, whereas the paper based system can do only transactions at a time.

Conclusion

EDI is an abbreviation for Electronic Data Interchange. It can be used to exchange data between organisations, and provide a common language for the exchange of business information. It often replaced the paper based interchanges. EDI is the foundation for the electronic commerce world. The current approach to EDI is to develop a new application for each company to handle transactions, and this leads to many different versions of the same structure. EDI is also used as a mechanism to deliver messages to the recipient instead of a method to receive and process messages.