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 1970s 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 (e.g., fax, mail, telephone) documents with your trading partners, your savings could be tremendous. AMR Research estimates that it costs $175 to process a paper transaction and only $15 to process the same transaction electronically, meaning EDI transactions cost less than 10% of the cost of paper transactions.

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