In What Ways May Businesses Benefit from EDI?

Company practices are constantly evolving and modernising. The fax machine was once seen as a revolutionary piece of technology, however its lack of security features has seen it be labelled as a ‘dinosaur’ in today’s digital age.

As technology continues to advance, businesses are presented with more opportunities to run their operations in a more efficient and effective manner. One such example is Electronic Data Interchange (EDI), a concept which may initially appear simple, but upon closer inspection contains complexities that require further explanation.

First, however, let’s talk about what EDI really is.

EDI: What Is It?

Electronic Data Interchange (EDI), commonly referred to as “Electronic Dance Music” (EDM), is the process of electronically exchanging standard business documents between two computers using a variety of computer-to-computer protocols across a secure, encrypted connection.

At first glance, Electronic Data Interchange (EDI) may appear to be similar to email, cloud sharing, Samba, NFS, or SMS; however, there is more to it than meets the eye.

Actually, it’s not quite that easy.

The purpose of Electronic Data Interchange (EDI) is to modernise the processes of transferring files between computers. This includes all forms of written communication, from traditional mail to faxes and emails.

It would be appreciated if you could remain with us for a moment. Has email become outdated? On the contrary, it has not. The issue with email is that it is not inherently secure. If confidential documents are sent through email without encryption, it could be possible for an unauthorised third party to gain access to the recipient’s inbox.

In the 21st century, it is no longer feasible for businesses to use outdated methods of communication to exchange data such as purchase orders, invoices, shipment updates, customs papers, inventory lists and payment information. This is due to the potential for confidential personal information, such as names, addresses, phone numbers and account numbers, to be included in these documents, and the risk of such information being made public.

It is essential that your business relies upon secure and dependable methods of both internal and external communication. Electronic Data Interchange (EDI) is a reliable solution, as it utilises documents that are structured to meet standardised rules for each data item. All computers will be able to process the data successfully, provided the necessary steps are followed. Every industry generally has its own particular set of standards that all parties must comprehend and comply with.

When analysing EDI, it is vital to keep in mind a number of crucial aspects:

  • Security procedures should be employed in plenty.
  • Businesses either need to conform to a common set of criteria or engage a third party to act as a mediator.
  • In order to facilitate its implementation, EDI software is obtainable.
  • Older protocols, like as FTP, are still used by certain EDI products.

It is evident that all organisations within the same sector must comply with the same EDI systems and standards, however they are free to develop their own versions if they wish. If an alternative, third-party solution is selected, it is imperative to ensure that a standard industry tool is utilised.

By utilising Electronic Data Interchange (EDI), your business can benefit from increased efficiency, accurate stock tracking, real-time notifications and alerts, automated shipment notifications, and faster and more precise invoicing. Furthermore, utilising processes and technologies tailored to your industry provides an extra level of protection.

That Being Said, What Are the Most Typical EDI Formats?

EDI must be utilised within specific industries, such as supply chain (for retail, manufacturing and automotive), healthcare (for exchanging patient data), logistics (for tracking goods and scheduling shipments), accountancy (for invoicing and audits) and aviation (for flight information and passenger names).

Different EDI formats (or standards) are utilised in different parts of the world.

  • UN/EDIFACT (international trading outside of the U.S.) (international trade outside of the U.S.)
  • Healthcare Interoperability Resources (HL7), Future Health IT Interoperability Resources (FHIR), Clinical Documentation Improvement (CCD) and Electronic Exchange of Healthcare Data (EHR) are all important resources for the advancement of healthcare technology.
  • EANCOM (a subset of UN/EDIFACT that covers solely the messages needed in business applications)
  • EDIG@S (developed exclusively for the gas sector) (designed specifically for the gas industry)
  • IATA Cargo-IMP (air transportation industry) (air transportation industry)
  • IATA Cargo-XML (electronic communication between airlines and cargo stakeholders) (electronic communication between airlines and cargo stakeholders)
  • NCPD Protocol (for prescription information)
  • RosettaNet (used by consumer electronics and semiconductor sectors) (used by consumer electronics and semiconductor industries)
  • A SAP IDoc (used within SAP tools)
  • SEF (an open standard that can be read by any EDI software) (an open standard that can be read by all EDI applications)
  • TRADACOMS (used by the U.K. real estate business) (used by the U.K. real estate industry)
  • X12 (the de facto standard in the U.S.) (the de facto standard in the U.S.)
  • PARIS IATA (used for passenger travel and airport-related passenger service activities)

The fact that many different sectors have their own standards makes EDI far more involved than, say, an email or text message.


Electronic Data Interchange (EDI) has become an essential resource for businesses across the globe. It would be unwise to disregard EDI, given that your organisation regularly exchanges documents with other firms, regardless of the sector. The IT department should be informed of this.

The correct use of EDI is now required, since security and privacy have evolved into important components of how we do business.

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