Definition and Basic Concepts of EDI

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Definition of System
Basically, Electronic Data Interchange (EDI) is a computer system that allows the exchange of business documents between companies electronically and automatically. In this context, business documents include purchase orders, invoices, shipping confirmations, delivery notes, and so on.

EDI can be defined as the process of sending and receiving business information generated by computer systems directly between business partners. This means that business documents that are italy mobile phone numbers database usually printed and sent through manual methods, such as letters or faxes, are replaced by electronic data exchange that is structured and can be processed automatically.

The basic concept behind EDI is the standardization of data formats and communication protocols. Business documents sent via EDI must follow a predetermined format, such as the EDI X12 standard for companies in the United States or the EDIFACT standard used internationally. This standardization allows companies to understand and process data with consistency, regardless of the differences in internal systems they use.

How EDI Systems Work
The working process of the EDI system involves several steps which include:

Document Conversion
Business documents to be exchanged between companies are converted into electronic formats that comply with the EDI standard used. For example, a purchase order that was originally in Word document format is converted into EDI X12 format.

Shipping and Receiving
Once the documents are converted, they are sent over a secure communication channel, such as the Internet or a dedicated network used for EDI exchange. Documents are sent directly from one company's computer system to its business partner's computer system.