Electronic data interchange (EDI) is the structured transmission of data between organizations (equivalents of commercial or administrative documents, such as: invoice, order, notice of delivery, production schedule, etc.), created according to the commonly adopted standard between the applications in different computer systems, by means of teletransmission. EDI system has embedded work flow elements, modules for the circulation and exchange of documents and information between different applications owned by cooperating trade partners. There is no obligation to print these documents; after generating the corresponding data structures, the documents can be electronically sent to the addressee's system and then automatically processed, without human intervention, by the program interpreting the received data structures. The key aspect of EDI is the standardisation of transmitted information and safety of communication.
EDI is a technology based on the circulation and exchange of documents in such sectors as: production, trade, transport, education, banking and administration.
The electronic data transfer eliminates the necessity of copying data from one paper document to another, or manual data introduction in the system. In a typical purchase order, a person must physically copy the information from the paper at least once. Precision and effectiveness can be attained by means of EDI in several ways:
- electronic documents are sent in an accurate form, regardless of their size. If the transmission of a large document turns out to be unsuccessful, the user may activate the retransmission procedure
- electronic data are withdrawn from the database where they have already been subject to an approval procedure
- where an electronic document is processed by many users, each of them adds some data to the existing documents and none can change the previously introduced information.
- fast document exchange and zero chance of making a mistake allow for much faster implementation of orders. The system will not allow the situation where the company is left with the shortage of warehouse goods. The system alerts the user to intervene at the time of delivering given articles, with an indication of the contractor from whom to order the goods. The system makes use of advanced technologies of data analysis, ensuring the supervision of warehouse inventory to exclude the possibility of any goods deficiency or overstorage.
- expanding the market of recipients and suppliers.
- the increasing number of big enterprises with global reach already uses EDI as their standard at work. For a smaller cooperator, the implementation of EDI is an added value and sometimes even a straight path towards development, as the majority of corporations simply requires the use of EDI.
The application of EDI is closely related to a change of management methods and improvement of logistics procedures. Currently, the implementation of EDI subsystem in a technical plan does not constitute any problem. However, for EDI to be used properly the following conditions must be met:
- integration of EDI subsystem with internal IT system
- change of internal circulation of information
- reorganisation of logistics procedures in agreement with partners
- tailoring marketing policy to new possibilities
The companies with many years’ experience in using EDI emphasise that direct effects quickly offset all the investment expenses connected with the EDI implementation. However, the long-term benefits are considered the most important as they contribute to the improvement of the company’s competitiveness.
