Electronic Data Interchange (EDI)

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What is Electronic Data Interchange (EDI)?

An electronic data interchange (EDI) is a standardized method of exchanging business documents digitally between two business partners. This digital method replaces the manual paper documentation exchange process and thus, helps save time and money. In this method, business information passes from one company to another via a computer application. 

Significance of Electronic Data Interchange (EDI) in E-Commerce

An electronic data interchange (EDI) is a standardized inter-business communication method that eliminates manual effort and errors. 

  • Cost and time-efficient 

An electronic data interchange (EDI) is an automated process that replaces manual processes that were time exhaustive. Automation also eliminates the chances of human error, resulting in businesses saving costs. 

  • Increased efficiency and productivity 

Implementing an electronic data interchange (EDI) increases efficiency and productivity in a business as they are seamlessly able to plan and implement operations.  

  • Improved visibility and traceability

The electronic data interchange (EDI) technology supports and is compatible with a range of IT software/computer applications. This feature enables businesses to transfer documents quickly and gain data insights, thus improving visibility and traceability.  

Prerequisites for Electronic Data Interchange (EDI)  

These are the prerequisites required by businesses to effectively implement an electronic data interchange (EDI) method.

  • Standard language

A standard language needs to be set up between businesses before implementing the electronic data interchange (EDI) method.

  • Secured network

The electronic data interchange (EDI) method requires the presence of secure networks, allowing businesses to securely transfer any form of data without the threat of a security breach. 

Use Case of Electronic Data Interchange (EDI) 

Electronic data interchange (EDI) is a must-have technology for e-commerce businesses as it allows them to collect information from business partners, quickly, reliably and securely. A business can cut labor and IT cost by moving from manual to electronic data exchange.

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