EDI (Electronic Data Interchange) is the computer-to-computer exchange of business documents between business partners. It makes the workflow of a logistics company more simple and reliable through the standardization, automation, integration, and simplification of those critical data exchanges.
An EDI system converts the information from the documents into ones and zeros and transmits the information to the receiver.
EDI includes business documents such as purchase orders, invoices, shipping notes, dispatch data, etc. Electronic Data Interchange empowers businesses by enabling them to eliminate manual processes, cut costs, reduce errors, and communicate more effectively with their trading partners.
Through electronic data interchange solutions, both the load and the traceability of a product are monitored, so the person in charge knows the status of the merchandise at all times. Users can validate the information that arrives and solve possible incidents quickly.What is EDIFACT in EDI?
EDIFACT is what industries use as a "language" to transfer information.
EDIFACT is a structured schema for a sending computer to transmit data to a receiving computer.
Specifically, the UN/EDIFACT, the United Nation/Electronic Data Interchange for Administration, Commerce, and Transport.
This is a real mouthful! And it describes what the EDIFACT standard is purposed for:
Typical EDI workflow process
- Administrative Purposes
- Commercial Purposes
- Transportation Purposes
The buyer company sends the supplier a message with the list of goods they are planning to purchase.
The Purchase Order contains:
- Time and date of delivery
- Reference to the contract
- Quantity of goods
- All other necessary information
The supplier sends the buyer's response to his order, noting his consent to the transaction and indicating how accurately the order can be executed. It may also indicate the change in prices for the product selected by the buyer. The buyer receives advance confirmation of prices and quantity of goods from the supplier, and then reserves the goods in his warehouse for delivery.
The supplier sends a notice to the buyer once it has been shipped. This helps simplify and speed up the process of goods acceptance, as EDI856 (DESADV) contains detailed information about the cargo. For example, container numbers, the hierarchy of packages indicating their types, barcodes, and contents, as well as the physical characteristics of the goods, etc.
When the buyer accepts the goods from the supplier, he sends him a RECADV message on the received and delivered goods. The receiving advice would therefore be a report from the buyer to the shipper indicating that the order arrived undamaged at its final destination. Moreover, rapid notification of the supplier allows him to generate invoices quickly.