Electronic data interchange (EDI) is the computer-to-computer exchange of structured business documents in standardized electronic formats between organizations. It replaces or supplements paper-based business documents such as purchase orders, invoices, shipping notices, and payment advice, allowing them to be exchanged and processed automatically between computer systems.

EDI relies on standardized document formats that are independent of particular communication technologies. Major standards include UN/EDIFACT, ANSI ASC X12, GS1 EDI, TRADACOMS, ODETTE, and HL7. EDI is used across a wide range of industries. EDI documents can be transmitted using a variety of communication protocols, including Internet-based protocols, either directly between trading partners or through value-added networks.

By reducing paper handling and manual data entry, EDI can reduce costs and improve the speed and accuracy of business transactions, although implementation may require significant changes to existing business processes and information systems.

History Like many other early information technologies, EDI was inspired by developments in military logistics. The complexity of the 1948 Berlin airlift required the development of concepts and methods to exchange, sometimes over a 300 baud teletype modem, vast quantities of data and information about transported goods. These initial concepts later shaped the first TDCC (Transportation Data Coordinating Committee) standards in the US. Among the first integrated systems using EDI were Freight Control Systems. One such real-time system was the London Airport Cargo EDP Scheme (LACES) at Heathrow Airport, London, UK, in 1971. Implementing the direct trader input (DTI) method, it allowed forwarding agents to enter information directly into the customs processing system, reducing the time for clearance. The increase of maritime traffic and problems at customs similar to those experienced at Heathrow Airport led to the implementation of DTI systems in individual ports or groups of ports in the 1980s.

Standards

EDI provides a technical basis for automated commercial "conversations" between two entities, either internal or external. The term EDI encompasses the entire electronic data interchange process, including the transmission, message flow, document format, and software used to interpret the documents. However, EDI standards describe the rigorous format of electronic documents, and the EDI standards were designed, initially in the automotive industry, to be independent of communication and software technologies.

EDI documents generally contain the same information that would normally be found in a paper document used for the same organizational function. For example, an EDI 940 ship-from-warehouse order is used by a manufacturer to tell a warehouse to ship a product to a retailer. It typically has a 'ship-to' address, a 'bill-to' address, and a list of product numbers (usually a UPC) and quantities. Another example is the set of messages between sellers and buyers, such as request for quotation (RFQ), bid in response to RFQ, purchase order, purchase order acknowledgement, shipping notice, receiving advice, invoice, and payment advice. However, EDI is not confined to just business data related to trade but encompasses all fields such as medicine (e.g., patient records and laboratory results), transport (e.g., container and modal information), engineering and construction, etc. In some cases, EDI will be used to create a new business information flow (that was not a paper flow before). This is the case in the Advanced Shipment Notification (ASN) which was designed to inform the receiver of a shipment, the goods to be received and how the goods are packaged. This is further complemented with the shipment's use of the shipping labels containing a GS1-128 barcode referencing the shipment's tracking number.

Some major sets of EDI standards: The UN-recommended UN/EDIFACT is the only international standard and is predominant outside of North America. The US standard ANSI ASC X12 (X12) is predominant in North America. GS1 EDI set of standards developed the GS1, predominant in global supply chain. The TRADACOMS standard developed by the ANA (Article Number Association, now known as GS1 UK) is predominant in the UK retail industry. The ODETTE standard used within the European automotive industry. The VDA standard used within the European automotive industry, mainly in Germany. HL7, a semantic interoperability standard used for healthcare data. HIPAA, The Health Insurance Portability and Accountability ACT (HIPAA), requires millions of healthcare entities who electronically transmit data to use EDI in a standard HIPAA format. IATA Cargo-IMP, IATA Cargo-IMP stands for International Air Transport Association Cargo Interchange Message Procedures. It is an EDI standard based on EDIFACT created to automate and standardize data exchange between airlines and other parties. NCPDP Script, SCRIPT is a standard developed and maintained by the National Council for Prescription Drug Programs (NCPDP). The standard defines documents for electronic transmission of medical prescriptions in the United States. The NCPDP Telecommunications standard includes transactions for eligibility verification, claim and service billing, predetermination of benefits, prior authorization, and information reporting, and is used primarily in the United States. Edig@s (EDIGAS) is a standard dealing with commerce, transport (via pipeline or container) and storage of gas. Many of these standards first appeared in the early to mid-1980s. The standards prescribe the formats, character sets, and data elements used in the exchange of business documents and forms. The complete X12 Document List includes all major business documents, including purchase orders and invoices.

The EDI standard prescribes mandatory and optional information for a particular document and gives the rules for the structure of the document. The standards are like building codes. Just as two kitchens can be built "to code" but look completely different, two EDI documents can follow the same standard and contain different sets of information. For example, a food company may indicate a product's expiration date while a clothing manufacturer would choose to send colour and size information.

Transmission protocols EDI can be transmitted using any methodology agreed to by the sender and recipient, but as more trading partners began using the Internet for transmission, standardized protocols have emerged.

This includes various technologies such as:

Modem (asynchronous and synchronous) FTP, SFTP and FTPS Email HTTP/HTTPS AS1 AS2 AS4 OFTP (and OFTP2) Mobile EDI

When some people compared the synchronous protocol 2400 bit/s modems, CLEO devices, and value-added networks used to transmit EDI documents to transmitting via the Internet, they equated the non-Internet technologies with EDI and predicted erroneously that EDI itself would be replaced along with the non-Internet technologies. In most cases, these non-internet transmission methods are simply being replaced by Internet protocols, such as FTP, HTTP, telnet, and e-mail, but the EDI documents themselves still remain.

In 2002, the IETF published RFC 3335, offering a standardized, secure method of transferring EDI data via e-mail. On July 12, 2005, an IETF working group ratified RFC4130 for MIME-based HTTP EDIINT (a.k.a. AS2) transfers, and the IETF has prepared a similar RFC for FTP transfers (a.k.a. AS3). EDI via web services (a.k.a. AS4) has also been standardized by the OASIS standards body. While some EDI transmission has moved to these newer protocols, the providers of value-added networks remain active.

Internet As more organizations connected to the Internet, eventually most or all EDI was pushed onto it. Initially, this was through ad hoc conventions, such as unencrypted FTP of ASCII text files to a certain folder on a certain host, permitted only from certain IP addresses. However, the IETF has published several informational documents (the "Applicability Statements"; see below under Protocols) describing ways to use standard internet protocols for EDI.

As of 2002, Walmart has pushed AS2 for EDI. Because of its significant presence in the global supply chain, AS2 has become a commonly adopted approach for EDI.

Specifications Organizations that send or receive documents from each other are referred to as "trading partners" in EDI terminology. The trading partners agree on the specific information to be transmitted and how it should be used. This is done in human-readable specifications (also called Message Implementation Guidelines). While the standards are analogous to building codes, the specifications are analogous to blueprints. (The specification may also be called a "mapping," but the term mapping is typically reserved for specific machine-readable instructions given to the translation software.) Larger trading "hubs" have existing Message Implementation Guidelines which mirror their business processes for processing EDI and they are usually unwilling to modify their EDI business practices to meet the needs of their trading partners. Often in a large company, these EDI guidelines will be written to be generic enough to be used by different branches or divisions and therefore will contain information not needed for a particular business document exchange. For other large companies, they may create separate EDI guidelines for each branch/division.

Transmission: Direct EDI and VANs

Trading partners are free to use any method for the transmission of documents (as described above in the Transmission protocols section). Further, they can either interact directly or through an intermediary.

Direct EDI: peer-to-peer

Trading partners can connect directly to each other. For example, an automotive manufacturer might maintain a modem-pool that all of its hundreds of suppliers are required to dial into to perform EDI. However, if a supplier does business with several manufacturers, it may need to acquire a different modem (or VPN device, etc.) and different software for each one.

As EDI and web technology have evolved, new EDI software technologies have emerged to facilitate direct (also known as point-to-point) EDI between trading partners. Modern EDI software can facilitate exchanges using any number of different file transmission protocols and EDI document standards, reducing costs and barriers to entry.

Value-added networks

To address the limitations in peer-to-peer adoption of EDI, VANs (value-added networks) were established decades ago. A VAN acts as a regional post office. It receives transactions, examines the 'from' and the 'to' information, and routes the transaction to the final recipient. VANs may provide a number of additional services, e.g. retransmitting documents, providing third party audit information, acting as a gateway for different transmission methods, and handling telecommunications support. Because of these and other services VANs provide, businesses frequently use a VAN even when both trading partners are using Internet-based protocols. Healthcare clearinghouses perform many of the same functions as a VAN, but have additional legal restrictions.

VANs may be operated by various entities: telecommunication companies; industry group consortia; a large company interacting with its suppliers/vendors; managed services providers.

Costs, trade-offs and implementation