What is EDI?

What is EDI?

EDI stands for Electronic Data Interchange, a method of transporting all types of information, such as purchase orders, invoices, payments and even graphics, to another party electronically. EDI technology was introduced by Value Added Networks (VANs) in the 1970's as an alternative to modem banks, and essentially replaces paper-based communications with electronic equivalents. Since EDI is based on a standard developed by the American National Standards Institute (ANSI), everyone can use it enabling all businesses to share a common language.

If you are like many companies that never moved to VAN-based EDI, and still exchange paper (fax, mail, telephone) documents with your trading partners, your savings could be enormous. AMR Research estimates that it costs $175 to process a paper transaction and only $15 to process the same transaction electronically.