The ABCs of EDI

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If you’re interested in engaging an EDI solution like BOLD VAN, but are wondering, “what exactly is EDI?”, you’ve come to the right place.

EDI stands for electronic data interchange — it may sound like rocket science, but it’s actually quite simple. EDI is the transmission of documents in a common electronic format between two business partners. The documents are exchanged computer-to-computer, eliminating the need for human involvement. Documents serviced by EDI technology include purchase orders, invoices, bill of lading, customs forms, and much more. 

The process removes the physical paper trail of sending documents via fax or postal mail — a concept that is already going by the wayside in today’s modern world. 

EDI vs. Email

While sending documents through email does eliminate the paper trail, EDI is a quicker and more cost-effective way of doing business. Why? Email requires person-to-person interaction. There are more opportunities for errors, such as sending the wrong attachment. Important messages could end up hanging out in a SPAM folder for days before anyone notices the transaction has stalled. These lags clearly do not happen with EDI. 

Perhaps the most important difference: Email doesn’t offer the same level of protection. 

Security is the name of the game with EDI, and BOLD VAN stays current on the latest security technologies to ensure peace of mind. All EDI data sent via BOLD VAN is protected by passwords, user authentication, and encryption if requested.

An EDI example

Let’s take a look at one example of how EDI technology works between two companies. 

Suppose business partner A needs to purchase a good from business partner B. Partner A enters the data into its EDI software program, which generates a purchase order. Next, the software converts it into an EDI document that will be readable by partner B’s software. The PO is sent rapidly — and securely — to business partner B’s system. (When we say, “rapidly,” we mean it can take a matter of seconds.) 

Once partner B receives the EDI purchase order, its system creates an assignment for warehouse staff to ship the goods to partner A, as well as an invoice. 

(This is just one example; there are countless other transactions that utilize EDI technology.)

Standard data format

Just as a translator allows two people who don’t speak the same language to communicate, EDI takes data and sends it electronically to the other partner in a format both parties can understand.

The cornerstone of EDI is its standard format — a set of rules that determines how data is entered so the computers on both ends of the transaction can communicate seamlessly. For example, the standard format defines how a date will look, such as mmddyy. 

EDI is used across many different industries all over the world — retail, automotive, health care, financial services, and more. There are several different types of EDI formats for various parts of the world and industries, and BOLD VAN supports these and more: UN/EDIFACT (EDIFACT), ASC X12 (ANSI X.12), TRADACOMS, ODETTE, and VDA. 

But don’t let the names scare you — they merely represent the region or industry. For example, UN/EDIFACT is an international standard used predominantly between trading partners outside of North America, and ODETTE is used within the European automotive industry. 

Today, scores of companies all over the world will only do business with vendors using EDI. To learn more about BOLD VAN’s offerings and to discover how we can enhance your business, connect with us today. Call 844-265-3777, email info@boldvan.com, or start your three-month trial.  

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