Electronic Data Interchange (EDI) is the electronic interchange of business information using a standardized format; a process which allows one company to send information to another company electronically rather than with paper. Business entities conducting business electronically are called trading partners.

EDI replaces postal mail, fax and email. While email is also an electronic approach, the documents exchanged via email must still be handled by people rather than computers. Having people involved slows down the processing of the documents and also introduces errors. Instead, EDI documents can flow straight through to the appropriate application on the receiver’s computer (e.g., the Order Management System) and processing can begin immediately.

While many companies leverage EDI to comply with trading partner requirements, few take advantage of EDI to drive operational excellence. Limiting EDI use to fundamental transactions, such as purchase orders and invoices, leaves money on the table and misses an opportunity to strengthen customer service and overall competitiveness.

Companies achieve the greatest operational excellence gains by expanding EDI across a broad spectrum of transactions and integrating it with a warehouse management system to create visibility through the supply chain.


  • Enhanced visibility. EDI can enable a sharper understanding of your supply chain to reduce inventory carrying costs. You can stock only what you need.
  • Reduced labor costs. Companies using EDI for advanced shipping notices (ASNs) can save up to 40 percent of labor costs associated with inbound processing.
  • Minimized freight costs. Using EDI in concert with a transportation management system can minimize transport expenses while maintaining high service levels through load consolidation and mode selection.
  • Improved customer service. Customers, suppliers, and regulators benefit from the seamless flow of critical business information among partners.