Electronic data interchange, or EDI, is the system-to-system exchange of standardized business documents between trading partners. It replaces manual re-entry with structured messages that receiving systems can validate and process.
Which documents are exchanged?
- Purchase orders and order acknowledgments
- Advance shipping notices
- Invoices and credit notes
- Inventory and product data
- Remittance advice
- Transport and customs messages
How does an EDI transaction work?
- The sending system creates a business document.
- A mapping converts it to the agreed standard and version.
- The message is transmitted through the approved channel.
- The receiver validates syntax and business rules.
- The target system records the transaction or raises an exception.
- Acknowledgments confirm technical or business receipt.
EDI vs. API
EDI usually exchanges standardized business messages, often in scheduled or asynchronous flows. An API exposes functions or data for direct software interaction, often in near real time. Many supply chains use both.
What should an implementation define?
Agree the message standard, version, partner identifiers, required fields, code lists, transport method, acknowledgments, retry rules and exception ownership. A technically valid message can still fail a commercial rule.
How should it be monitored?
Track volume, rejection rate, processing time, duplicates, missing acknowledgments and reconciliation gaps. Preserve the original message and transformations so disputes can be traced.
