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EDI(Electronic Data Interchange) is used to connect businesses and to facilitate electronic B2B communication. It is a computer-to-computer exchange of business documents in a standard electronic format between business partners, which replaces postal mail, fax and e-mail processed by people. What are the features of EDI, and how does it work? And is it the ideal solution for efficiently connecting suppliers and other business partners? Or are there other, better-suited options?
Businesses exchange purchase orders, invoices and advance shipping notices via EDI. But there are many others, such as bill of lading, customs documents, inventory documents, shipping status documents and payment documents.
There are several EDI standards in use today, including ANSI, EDIFACT, TRADACOMS and ebXML. Furthermore, there are many different versions for each standard, such as ANSI 5010 or EDIFACT version D12, Release A.
Unlike humans, computers are not very good at reading between the lines. Therefore, business partners must adopt a standard format to allow the receiving computer to understand the documents. A typical standard format describes each piece of information and in what format (e.g. integer, decimal, mm-dd-yy).
Sending EDI documents involves three steps:
Step 1: Prepare the document
Step 2: Translate the document into EDI format
Step 3: Connect and transmit your EDI document to your business partner
EDI is an expensive solution mainly based on restrictions and narrowing specifications. Documents are processed according to different rules for different business partners, which causes EDI to lack flexibility. This type of solution is typically slow and expensive to connect with business partners, and many suppliers and business partners cannot be connected electronically.
While EDI certainly offers advantages to manual data and document exchange, it also comes with many disadvantages. For example, EDI often means accepting restrictive standards and formats, long project times, and barriers. In addition, many business partners will be excluded from a digital B2B connection because EDI is too complex and expensive.
However, seamless B2B workflows, automated exchange of data and documents and the electronic connection of all significant business partners along the supply chain are the pillars of modern procurement.
The Netfira Platform offers a unique alternative to EDI solutions for automating B2B purchasing processes.