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A Complete Guide to EDI

Electronic Data Interchange (EDI) Explained

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What is EDI?

Electronic Data Interchange (EDI) is the secure, automated exchange of business documents in a standardized electronic format.

This ensures that businesses—regardless of their systems, locations, or industries—can exchange documents accurately, efficiently, and automatically, as the sending and receiving systems can understand each other without human intervention, eliminating confusion caused by different software, languages, or regional practices.

Understanding EDI
From Paper to Digital : Moving Beyond Traditional Communication

EDI is like a digital language for businesses. It replaces paper and email-based communication with machine-readable formats

Instead of using fax, mail, or email—which are slow, error-prone, and costly—EDI enables businesses to communicate faster, more accurately, and securely allowing computers from different organizations to exchange documents without manual intervention.

Advantages of EDI
EDI Process
How Does EDI Work?

From Document Creation to Seamless Data Exchange EDI uses a structured process to ensure accuracy, security, and automation

This process involves creating standardized documents, translating them into EDI-compliant formats, securely transmitting them, validating data, and automatically integrating it into the recipient’s system—reducing errors, ensuring compliance, and streamlining workflows.

Document Creation

A business system (e.g., ERP or accounting software) generates a document such as a purchase order, invoice, or shipping notice.

Data Translation to EDI Format

The document is converted into a standard EDI format using a translator or mapping tool. Common EDI standards include

  • ANSI X12 – widely used in North America
  • UN/EDIFACT – common internationally
  • TRADACOMS, OFTP2 – for specific regions or industries

Secure Transmission to Trading Partner

The EDI file is transmitted via secure communication protocols

  • AS2 – encrypted and widely adopted
  • SFTP/FTPS – secure file transfer options
  • VAN (Value-Added Network) – third-party EDI network
  • API-based transmission – emerging in modern EDI systems

Receipt and Validation

The recipient’s system receives the document, checks its structure and compliance with EDI standards, and sends back an acknowledgment (e.g., EDI 997 for X12).

Integration into Business Systems

Validated data is imported into the recipient’s ERP, WMS, or other systems for automated processing—such as fulfilling an order, updating inventory, or making a payment.

Common EDI Document Types

EDI uses unique transaction codes for different business documents.

If your business uses EDI (Electronic Data Interchange), you’ll come across many different codes. These codes represent documents like purchase orders, invoices, and shipping notices that are shared electronically between companies. But not all industries use the same codes. Each industry has its own set of EDI documents that support daily operations smoothly.

Learn More
EDI 850 – Purchase Order

Sent by a buyer to request goods or services. Includes item details, quantities, and prices.

EDI 810 – Invoice

Sent by a seller to request payment for delivered goods or services. Includes pricing, taxes, and payment terms.

EDI 856 – Advance Ship Notice (ASN)

Provides shipment details before delivery, such as contents, carrier information, and expected delivery date.

EDI 997 – Functional Acknowledgment

Confirms the receipt and format compliance of an EDI transaction.

EDI 940 – Warehouse Shipping Order

Used to instruct a warehouse to ship orders to customers.

EDI 211 – Bills of Lading

Provides shipping and carrier information for freight handling.

EDI 214 – Shipping Status Updates

Provides updates on the status of a shipment in transit.

EDI 846 – Inventory Reports

Communicates inventory levels, availability, and movement.

EDI 214 – Shipping Status Updates

Provides updates on the status of a shipment in transit.

Key Benefits of Electronic Data Interchange

While EDI was once predominantly used by large corporations, small businesses are now realizing the benefits it can provide.

EDI is proving to be a mandatory business requirement at present as it streamlines business processes by automating the exchange of documents between trading partners.

How EDI Help Small Businesses
Faster Document Processing

Cut processing time from days to minutes by automating document exchange.

Lower Operational Costs

Eliminate paper, printing, postage, and manual entry—saving money and resources.

Improved Accuracy

Reduce human errors with automated validation and standardized formats.

Enhanced Security & Compliance

Transmit sensitive data securely with protocols like AS2, SFTP, and VPN.

Better Partner Relationships

Meet trading partner requirements efficiently for smoother collaboration.

Real-Time Visibility & Integration

Track documents in real time and integrate with ERP, WMS, and financial systems.

How EDI Powers Different Industries

EDI is widely adopted across sectors where speed, accuracy, and security are essential.

Retail

Automates purchase orders, invoices, and shipping notices.

EDI-850 - Purchase Order
EDI-810 - Invoice
EDI-856 - Advance Ship Notice (ASN)

Healthcare

Enables HIPAA-compliant claims submission and payment processing.

EDI-837 - Health Care Claim
EDI-835 - Health Care Payment/Remittance Advice
EDI-270/271 - Eligibility, Coverage, Response or Benefit Inquiry

Logistics & Transportation

Improves shipment visibility and customs clearance.

EDI-940 - Warehouse Shipping Order
EDI-945 - Warehouse Shipping Advice
EDI-856 - Advance Ship Notice (ASN)
EDI-214 - Shipment Status Message

Manufacturing

Streamlines production schedules and supplier communication.

EDI-830 - Planning Schedule with Release Capability
EDI-850 - Purchase Order
EDI-862 - Shipping Schedule

Finance & Banking

Handles secure payments, remittances, and reconciliation.

EDI-820 - Payment Order/Remittance Advice
EDI-823 - Lockbox
EDI-821 - Financial Information Reporting

Frequently Asked Questions

AS2 (Applicability Statement 2) is a secure protocol used to transmit EDI documents over the internet. It ensures data privacy and integrity, making your EDI transmissions reliable and compliant with trading partner requirements.

EDI Generator manages both EDI file processing and AS2 transmissions within a single cloud-based platform, eliminating the need for multiple software installations and reducing manual workload.

The platform supports common EDI standards like ANSI X12 and EDIFACT, along with secure communication protocols such as AS2, SFTP, and API-based transmissions.

The demo includes a live walkthrough of features, an overview of supported EDI formats and protocols, a demonstration of real-time EDI processing and secure file transfer, and a Q&A session to explore customization options.

Yes, EDI Generator offers customization options to tailor workflows and integrations based on your company’s unique EDI requirements.
Cloud EDI Made Simple

Unlock the Benefits of our AS2 EDI Solutions to streamline your entire file exchange process

EDI Generator simplifies your workflow by managing EDI file processing and AS2 transmission—all without multiple software installations. Request a demo and we ll walk you through how it can empower your business to take full control of your EDI.

Live walkthrough of all platform features for smooth EDI integration.
Overview of supported EDI formats and communication protocols.
Real-time demonstration of EDI file processing and secure partner communication.
Direct Q&A session to address your needs and explore customization options for your workflows.
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