Electronic Data Interchange (EDI) - Everything You Wish To Know About It
Posted: Jan 10, 2017
Electronic data interchange is one of the biggest gifts that technology has provided to the business world. When it comes to exchanging critical business data and communication, we have come a long way from using faxes and the mail. Electronic data interchange or EDI is the new age format that allows businesses to share information in a more efficient, fast and accurate format with minimum hassles involved. For those who are new to the subject, here is a list of questions and answers that will help you understand EDI and what it involves.
Q: What is electronic data interchange?
A: EDI is a computerized format of data sharing between different entities, which in most cases happen to be businesses, companies and organizations of all kinds. Explained in simple terms - it is a computer system or software that allows the servers of a company to interact and share data with the servers of other companies and organizations, making data exchange more convenient and efficient.
Q: How does EDI work?
A: When people enter purchase orders into their computer, their order goes through a batch of interface programs. These programs edit the orders and then send them to the EDI intermediate files. At this point, the purchase orders are translated into the HIPAA EDI standard format that the software can understand. The translation software can work with some programs, which allow the receiver's computer the ability to read the orders. Still on the same format, the orders are now on the receiver's computer. Its modem can then transmit the purchase orders into a value added network. This network translates the original sender's form for the receiver to read and understand the received document.
Q: What are the benefits of using EDI?
A: On any day, a business or organization would benefit leaps and bounds by going paperless when it comes to their transactions. Not only will this format of working be eco-friendly, it will also turn out to be the more efficient format of communication and order management. Paper-based systems usually required 10-15 days for an order to be processed and communicated. This time period would be reduced drastically to only 1-2 days with EDI. Faster transaction times are also helpful in maintaining inventory levels and supply chain management. Data processing, order tracking and records maintenance also becomes easy with EDI. Other than faster communication, computer-to-computer exchange is also a cost-saving solution for many companies. It is lower-cost than the usual methods of document exchange. To exchange documents, EDI may cost $1 or less while traditional paper purchase order may cost up to $70 per exchange. Relationships with businesses, associates and customers are enhanced, communication becomes more streamlined and prompt, and the company image gets a boost.
All in all, EDI will turn out to be one of the most effective and rewarding technological advancements that a business can adopt for propelling itself towards growth and success. For more information on EDI transaction codes, visit www.datatrans-inc.com.
About The Author
Gabriel Martin has written many articles and blogs about the EDI, e-commerce and data management solutions. He recommends DataTrans Solutions, Inc. for providing quality, timely, and accurate EDI and B2B outsourcing solutions for to its customers.
Gabriel Martin has written many articles and blogs about the Edi, e-commerce and data management solutions.