Electronic Data Interchange

What is EDI and why should I care?

Back then

Once upon a time ...

Once upon a time, there was no getting around paper. Retailers would fill out and send purchase orders to their suppliers. The suppliers would process the order, fill out an invoice to mail to the retailer, and record the transaction in a manifest. These days there are more efficient options.

The pencil-paper-and-post transaction was unwieldy, time-consuming and ripe for copying-errors that could result in shipping the wrong product at the wrong quantity at the wrong price to the wrong place and a month late.

Computers, evidently, haven’t made things a lot better for many smaller businesses. For example, a 2015 survey of 200 companies showed that 50 % receive most of their invoices as a piece of paper sent through the postal service.

That data entry and filing work might be manageable for doing business with a stable list of small trading partners. But it might not get you anywhere when the opportunity to sell through big box retailers arises. For that, you will likely need to use EDI. What does EDI stand for? It stands for Electronic Data Interchange.

It can be that simple

Finally time again for the important work

EDI is often the required access point for trading with a big retailer. It is how that company sends purchase orders, receives invoices and otherwise exchanges all business documents directly between their computer system and yours. If a big corporation wants your product, you may have no choice but to use EDI. Big retailers deal in high volume and may not accept email, let alone paper.

It used to be that only large corporations could afford the cost of EDI because of the programming, integration and network maintenance costs. The good news for smaller businesses is EDI doesn’t have to be cost-prohibitive anymore. The fact is, EDI has a long history, and it isn’t going away any time soon.