EDI (Electronic Data Interchange)

What is an electronic data interchange (EDI)?

EDI (Electronic Data Interchange) is the automated, computer-to-computer exchange of standard business documents between trading partners in a structured, machine-readable format. In the context of fulfillment and supply chain management, EDI replaces manual communication methods—such as email, fax, or paper—with a standardized digital protocol. This allows different computer systems (e.g., a retailer's ERP and a 3PL's WMS) to "talk" to one another instantly.

How does EDI work in a supply chain?

Trading partners agree on a document format, such as American National Standards Institute (ANSI) X12 in North America or the United Nations standard EDIFACT elsewhere. They then exchange messages through a direct connection or a network provider. Common documents include purchase orders, advance shipping notices, invoices, and inventory updates.

Why do retailers require EDI?

Many large retailers require their suppliers and warehouses to use EDI, and some issue chargebacks for late or inaccurate documents. Setup usually involves testing with each trading partner, so you'll want to plan lead time before a launch.

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