Electronic Data Interchange (EDI)
Definition
Electronic Data Interchange (EDI) is the standardized, computer-to-computer exchange of business documents — purchase orders, invoices, ship notices — between trading partners without manual re-keying.
In Practice
EDI replaces emailed PDFs and faxes with structured messages in standard formats (ANSI X12 in North America, EDIFACT internationally). A purchase order leaves the buyer's ERP as an 850 transaction, lands in the supplier's system, and triggers an 856 advance ship notice and 810 invoice back — all machine-readable.
For supply chain teams, EDI is the plumbing that makes scale possible: thousands of orders a day flow between retailers, suppliers, and carriers with no typing errors and full audit trails. Retail compliance programs often mandate EDI, with chargebacks for late or inaccurate ASNs.
Example: a supplier shipping to a major retailer sends an 856 ASN the moment cartons are sealed; the retailer's DC scans the pallet label on arrival and receives the whole shipment in seconds because the contents were transmitted in advance.
Related Terms
An Application Programming Interface (API) is a defined way for one software system to request data or actions from another in real time, forming the connective tissue of modern supply chain tech stacks.
Data IntegrationData integration is the work of connecting different systems — ERP, WMS, TMS, supplier and carrier platforms — so data flows between them automatically, accurately, and in a consistent format.
Enterprise Resource Planning (ERP)Enterprise Resource Planning (ERP) is integrated software that runs a company's core business processes — finance, purchasing, inventory, manufacturing, and order fulfillment — on a single shared database.