EDI is an acronym for Electronic Data Interchange. EDI provides a standardized method of communicating data between businesses. The other businesses that you exchange data with would be considered EDI trading partners.
The standardization EDI offers makes transferring information (such as purchase orders and invoices) between your business and trading partners more efficient and accurate.
EDI 101: What EDI does
According to B2BGateway’s blog “Top 5 Advantages of EDI”, the main benefits of utilizing EDI services are:
- Accuracy & Efficiency
- Great Supply Chain Network Integration
- Quicker Order & Transaction Processing
- Reduced Reliance on Paper
- Faster Payments
However, one of the most important advantages of EDI is that it makes your business EDI compliant. EDI compliance is required by some big box retailers in order to conduct transactions.
EDI 101: How EDI works
EDI works through the use of EDI transaction files. EDI transaction files will contain the pertinent information in a standardized format. There are many different EDI transaction files, each serving its own unique purpose.
For instance, the EDI 856 transaction file (also known as the Advance Ship Notice or ASN), serves to identify shipping information to a trading partner. B2BGateway outlines the many utilizations of the 856 transaction file in their blog article “Explaining EDI 856 Advance Ship Notice”. Some of its many useful purposes include:
- Who: carrier information
- What: items being shipped/how many
- When: when the package has shipped or will ship
- How: mode of transportation
You can utilize EDI services through an EDI provider, commonly known as a Value Added Network (VAN). The VAN is what will make your transactions EDI compliant. If they are integrated with your inventory management software, the EDI provider will work directly with your management software to process orders between you and your trading partners. The direct integration provides maximum unification in your supply chain processes.
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