Electronic Data Interchange ( EDI)

EDI is Electronic Data Interchange. It is an inter-organisational exchange of documents in a structured and processable form. It is a key to today’s paperless office. EDI has become a major means of business communications among large companies in the U.S.

The use of EDI eliminates many of the problems associated with traditional information flow. Such as the delay associated with order marking any time required to re-enter data.  Chances of error are reduced due to non-repeatedly keyed data. So also, the labour costs can be reduced. Time delays are reduced as there is more certainly in information flow.

EDI eliminates paper documents associated with common business  transaction. The other advantages in the use of EDI is that it generates the functional acknowledgement whenever an EDI message is received and its is electronically transmitted to the sender. This acknowledgement states that the message is received.

The repeated rekeying of identical information in the traditional paper-based method business communication creates a number of problems that can be eliminated or signnificantly reduced through the usage of EDI. These problems include..

• Increased Time
• Low Accuracy
• High Labour Charges
• Increased Uncertainity

EDI has become a major means of business communication among large companies in the U.S. EDI can do, for communication between unrelated companies, what Electronic Funds Transfer (EFT) has done for transactions between large financial organisations — subsitute electronic transcations for paper.