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What is EDI? How Does EDI work? What are the Benefits of EDI?

EDI = Electronic Data Interchange. Definition: Computer to computer exchange of
standard business documents such as purchase orders, invoices, inventory levels and
shipping notices.

EDI software solutions facilitate the exchange of business documents and data
across a variety of platforms and programs. What before would be manual
processes that used phone calls, faxes, or paper as communication between companies

ordering or selling goods, is now all done through EDI. It joins manufacturers,
distributors, and retailers, through their information systems, in a worldwide business-
to-business network.

HOW DOES EDI WORK?

All of your company’s information is stored within your ERP system, such as details
related to purchasing, inventory levels, invoicing and billing, shipping and so on. EDI
solutions like Madoc or Medisoft integrate with your Sage ERP system, accessing and
using the information needed to create the documents you need to do business with

other companies.
Both your suppliers and your clients have specific requirements as to how they do

business. Things like ship-to addresses, unique pricing, and so on, that are determined
when a deal is made and have to be taken into account when transactions take place.
This is the data that gets used by EDI solutions to facilitate trading between businesses.

EDI uses the standard of data (ANSI or EDIFACT) to ensure requests from one party
are compatible with the supplier’s information system so that the supplier can fulfil
orders placed. It helps companies doing businesses with each other, particularly
suppliers that can consistently meet the requirements and terms of their clients, like
retailers and distributors.

This is all organized during the implementation of EDI software, when fields are
mapped to each other so that the relevant data is used. When a request is received, the
data is converted to fit the system of the recipient and crucial information for the
transaction is used to generate all incoming and outgoing documents.