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"EDI is short for Electronic Data Interchange. It is a trade exchange system that replaces typical company forms and documents such as purchase orders, invoices, shipping documents, etc., with a computer system-based communications and records keeping technique.
Another definition of EDI: Electronic Data Interchange is the inter-organizational, computer system-to-computer system exchange of company documentation in a normal machine-processable format.
There are a number of crucial points in this definition that makes EDI quite different from other forms of paper or electronic communications. Firstly, EDI happens amongst firms, it is cross enterprise. While the growth in the use of computers and other advanced technologies has been tremendous throughout the past decades, the exact same trend is beginning to take place between organizations. Whilst the technologies of EDI can be utilised internally inside an organization, by definition EDI is organization to organization.
EDI takes place amongst computer systems. The purpose of EDI is not to eradicate paper, but rather to eliminate the time and the information entry associated with paper. It is usually accepted that 70 percent of one computers business information output becomes a second computers data input. In a paper atmosphere without having EDI this means that the same details is getting entered, in diverse processes, into both computers. With EDI, the computers are linked such that duplicate information entry does not take place.
The objective of EDI is to boost the flow and management of business data. Any info that, today, is on a company form of any sort, is appropriate for EDI. EDI is presently being utilized for all of the most frequent business transactions such as purchase orders, invoices, quotes, bills of lading, status reports, receiving advices and also for some really particular transactions such as residential mortgage insurance applications, healthcare claim payments, and material safety data sheets.
Since EDI is computer system-to-pc communication, rather than personto-individual communication, the information being exchanged in EDI should be understandable to a computer. This implies the data must be in some pre-established, structured format, thus allowing the data to be read and understood by the computer without having human interpretation.
As stated earlier, the objective of EDI is to improve data management. EDI accomplishes this by lowering non-value added time and eliminating redundant data entry. The standard functioning of EDI, as compared to a paper-based technique is illustrated in the paragraph beneath.
In the basic EDI transaction that would be shown in a figure, the buyers computerized buying technique creates an order on a paper form. The paper acquire order is delivered through some manual technique to the supplier. When the order is received by the supplier, an order entry clerk abstracts info from the purchase order and enters it into an order entry system. With EDI, on the other hand, the data moves directly from the buyers pc to the sellers computer, without any delivery or processing delays. In EDI, the transformation to a paper format, the interpretation of that paper format by an order entry clerk, and the re-entering of the data are functions that are no longer needed. edi company"
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