Within the last twenty years, the use of information technology to exchange data and information in electronic form between organizations and applications has increased tremendously. This exchange of correct information between organizations has helped to build the economy and make many organizations prosper. When an organization can share data and information with another organization in an agile and reliable manner electronically, it can stay competitive in business and international trade. As the volume of this information exchange is increasing in high numbers, it needs to be in a standardized form. This way of exchanging information electrically between each other is known as Electronic Data Interchange or EDI.
Electronic Data Interchange, or EDI, is the exchange of business information or documents between any two organizations in a standard or structured machine-readable format. If these organizations are business entities, they are called trading partners. It standardizes the information communicated between organizations, which makes “paperless” exchanges a reality. With this standardization and electronic format, all the manual steps like data entry tasks are eliminated.
Use of EDI formats
EDI is used in many organizations throughout many departments within that organization. Below are some examples where EDI is used in different sectors.
Manufacturing Industry
- Shipping orders
- International Shipping/orders
Automotive Industry
- Parts order fulfillment
- Pricing Information
- Payment process Receipt
Finance/Banks
- Trading
- Electronic Transfer Between Banks
- Financial Information
- Electronic Fund Transfer (ETF) format
Healthcare
- Dental/Health Information
- Health Insurance Claims
- Prescription Drugs Information
Logistics
- Scheduling Shipments and Tracking orders
Accounting Department
- Invoices
- Audit Trails
Aviation Industry
- Flight Information
- Passenger Name Records
EDI Standards
As EDI documents are processed by computers, it needs to have a standard format that a computer understands. Below is the popular EDI Format that is being used today.
HL7
It stands for Health Level Seven and is used for exchanging electronic health information.
NCPDP
It stands for National Council for Prescription Drug Programs. Furthermore, it is ANSI certified format that is used to process healthcare claims.
UN/EDIFACT
It stands for United Nations Rules for Electronic Data Interchange for Administration, Commerce, and Transport. This standard is popular outside North America.
TRADACOMS
It was designed mainly for UK domestic trade and is mainly popular in the retail industry.
ANSI ASC X12
It stands for American National Standards (ANSI) Accredited Standards Committee (ASC) X12. It is used to exchange information like purchase orders, invoices, etc.
VDA
It stands for Verband der Deutschen Automobilindustrie in German or Association of the Automotive Industry. Furthermore, it was established in 1901 to standardize the German Automobile Business.
UBL
It stands for Universal Business Language and is used for business-related transactions.