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History of EDI

As the name suggests, electronic data interchange (EDI) is a way for businesses to use computers to exchange documents and other information that previously would have been printed on paper and transmitted via fax or traditional mail. While it has come into widespread use since the Internet Age, EDI has actually been around in one form or another for decades. And its origins can be traced even farther back than that.

The history of EDI is in many ways still being written, since relevant technology has advanced rapidly in recent years with few signs of slowing down. That said, here is a basic primer of how EDI began, how it has historically been used, and how it streamlines operations for today’s complex businesses of today.

Where Did EDI Come From?

As is the case with many advancements in the field of information technology, EDI originated from military logistics. Most notably, it came from strategies implemented during the 1948 Berlin airlift that involved incredible volumes of vital operational data to be transmitted over long distances quickly, often via teletype modem. In the 1960s, U.S. Army Master Sgt. Edward Guilbert designed a proto-EDI system built for the more advanced computers of the time and used it to manage army shipment supply chains. Heathrow Airport incorporated similar principles into a freight control system called the London Airport Cargo EDP Scheme (LACES) in 1971.

The direct trader input (DTI) method used by LACES, which allowed forwarding agents to quickly process cargo by entering relevant information directly into the system, spread to various other ports throughout the 1980s. The 90s saw widespread adoption of EDI systems and technologies throughout private industries. Nowadays, some of the biggest multinational businesses in the world use EDI to ensure smooth, secure, and streamlined information exchanges. The retail and automotive industries, in particular, are now leading the way.

Common EDI Standards

To make sure connected computer systems can quickly read and understand data exchanged, various EDI standards have been established over the years that set rules regarding how transmitted data should be structured and what protocols apply to the exchanges themselves. The most prominent EDI standard worldwide is the UN-recommended Electronic Data Interchange for Administration, Commerce, and Transport (EDIFACT). This is the standard followed by most countries engaged in international commerce. North America generally follows a different standard, known as ASC X12, chartered by the American National Standards Institute.

Certain industries in particular countries and/or geographic areas have their own unique EDI standards. For example, the European automotive industry follows the ODETTE standard, while the retail industry in the United Kingdom predominantly uses the TRADACOMS standard. Most of these standards date back to the late 1970s or 1980s. One of the most widely known in the U.S.—the Health Insurance Portability and Accountability Act, or HIPAA — was established in 1996 to govern the exchange of medical information between healthcare entities.

What is EDI Via a Value-Added Network?

EDI played a central role in the advancement of globalization during the latter half of the 20th century. By itself, it is not easy to scale and can quickly become inefficient if each individual partner for a business has its own distinct EDI connection. A value-added network (VAN) service provider can act as an intermediary between a business and all its partners at once. This simplifies the exchange process by routing EDI documents through a secure central network.

Consult Our Team About Modernizing Your EDI System

The history of EDI stretches back decades but many people still have no idea what it is or how it is used. We want to simplify the process. Working with an EDI VAN provider could make a dramatic difference in how efficiently and effectively your business can operate. Get in touch with BOLD VAN today to learn more.