Electronic data interchange (EDI) is the electronic exchange of business information—purchase orders, invoices, bills of lading, inventory data and various types of confirmations—between organizations or trading partners in standardized formats. EDI also is used within individual organizations to transfer data between different divisions or departments, including finance, purchasing and shipping. When the focus of EDI centers on payments, especially between banks and companies, the term financial EDI (FEDI) is sometimes used. Along with digital currency, electronic catalogs, intranets and extranets, EDI is a major cornerstone of e-commerce overall.Two characteristics set EDI apart from other ways of exchanging information. First, EDI only involves business-to-business transactions; individual consumers do not directly use EDI to purchase goods or services. Secondly, EDI involves transactions between computers or databases, not individuals. Therefore, individuals sending e-mail messages or sharing files over a network does not constitute EDI. While the concept of e-commerce did not receive widespread attention until the 1990s, large companies have been using EDI since the 1960s. The railroad industry was among the first to adopt EDI, followed by other players in the transportation industry. By the early 1980s, EDI was being used by companies in many different industry sectors. In the beginning, companies using EDI transferred information to one another on magnetic tape via mail or courier, which had many drawbacks including long lead times and the potential for a tape to be damaged in transit. During the 1980s, telecommunications emerged as the preferred vehicle for transferring information via EDI.
Tags: Data, Electronic, Interchange