Electronic data interchange (EDI) describes the technology and the accord between business partners who jointly agree to save costs on human labor, and reduce errors, by submitting and processing standard business documents in an automated, electronic exchange. What do I need to know about data mining?
EDI comprises a set of standardized formats for documents and business partners who wish to adopt these standards to create structured data that facilitates computer processing without human intervention.
EDI is most often used for routine documents such as purchase orders and invoices, but most routinely exchanged business documents are fair game for EDI transmission, so long as both parties agree to use EDI for that document or transaction type.
Business partners, also called “trading partners” in EDI, jointly agree to one of several EDI standards. The standard describes the way that various types of data must be formatted so that each partner’s software can process the others’ data without ambiguity. Documents are submitted electronically and then processed by an EDI translator—typically either a custom-built or hosted software service—to process the document and feed the information to downstream software applications such as accounting systems or enterprise resource planning (ERP) systems.