What is EDI and How Does it Impact the Visibility of Your Business?


In past years, auto and retail companies commonly used EDI.

Now, however, all companies are almost at a disadvantage if they don’t use EDI. Industries like manufacturing, construction, and healthcare have all incorporated some form of the system.

But just what is EDI?

Have you been hearing about EDI, but aren’t sure what it is or if it’s right for your business? Be sure to read on to learn more.

What Is EDI?

EDI stands for electronic data interchange. Put very simply; it’s the electronic exchange of data between computers and businesses.

EDI helps businesses move away from paper-based systems to a digital process that’s more efficient with less room for error. Often, the documents exchanged via EDI are things like purchase orders, invoices, inventories, or shipping status documents.

Isn’t That Just Email?

When people first hear the definition of EDI, it’s easy to get it confused with emails. After all, that’s also an electronic exchange of data, right?

The most significant difference with EDI, however, is that it completely removes people from the equation. When using email, there has to be an employee who originally sends a purchase order, another employee who receives the purchase order and sends an invoice, and yet one more who pays the invoice.

Businesses that use an EDI system, on the other hand, don’t have to worry about any of that. It’s a computer-to-computer process, so once the initial request is created, the computers handle the rest.

EDI documents automatically go right to the corresponding application on each computer, making processing easy. For companies who need to manage large orders on a daily basis, this is incredibly valuable.

How Does It Work?

Each EDI document has to be written in a specific, standardized format. This helps to make sure that no matter what programs each business is using, each computer can still interpret the information that is being sent.

Without using a standardized format, you’d get a lot of unintelligible code instead of an invoice you can actually read.

Unfortunately, there is more than one standard in use today, so each business should agree on the standardized format to use before beginning to use EDI. Two of the biggest formats are ANSI and EDIFACT.

The person initiating the EDI will write the business document according to the rules of the standardized format and then let the computers do the rest. Both formats will do the job for you, though ANSI is further concise.

Businesses can do this all in-house, or they can use an outside provider.

How Does It Help With Visibility?

Instead of having to wait for someone to confirm that they’ve received an order, or making calls to discover the status of an invoice, incorporating EDI means you can track the status of orders in your supply chain.

You can get status updates with minimal hassle (from carriers who have enabled/integrated EDI), enabling you to make better and faster decisions.

Find More Ways To Track Your Shipments

Now that you know the answer to the “What is EDI?” question, you can decide if it’s right for you. EDI isn’t always a good fit for every business. Luckily, you can get the same (if not better) level of visibility without EDI integration.

With ODYN monitors, you can get a clear picture of all of your shipments, from the big picture to an individual pallet. They’re easy to install and even easier to use. Find out how it works or contact us to talk to one of our team members.

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