Electronic Data Interchange ( EDI )

Abstract Electronic data interchange (EDI), the computer‐to‐computer exchange of business transactions in standardized formats, is one of the earliest forms of electronic commerce. Business benefits of EDI include reduced costs, improved accuracy, and support for just‐in‐time (JIT) inventory management and continuous replenishment process (CRP) strategies. EDI also has the potential to drive up costs, particularly for smaller organizations. This article provides an understanding of how EDI works and explains the technical and administrative aspects of implementing EDI. The article covers the standards developed for EDI and provides example applications of EDI. Although EDI pre‐dates commercial use of the Internet, Internet‐based EDI is rapidly evolving and offers the potential to make it easier and less expensive to attain the benefits of EDI. Organizations that implement EDI need to consider business process reengineering and trading partner relationships to be successful.