EDI EDI has no single consensus definition .Two generally accepted definitions are : Standardized format for communication of business information between computer applications . Computer- to- computer exchange of information between companies, using an industry standard format . In short , Electronic Data Interchange (EDI) is the computer-to-computer exchange of business information using a public standard. EDI is a central part of Electronic Commerce (EC), because it enables businesses to exchange business information electronically much faster, cheaper and more accurately than is possible using paper-based systems. Electronic Data Interchange, consists of data that has been put into a standard format and is electronically transferred between trading partners.Often ,an acknowledgement is returned to the sender informing them that the data was received. The term EDI is often used synonymously with the term EDT. These two terms are indeed different and should not be used interchangeably. EDI VS EDT The terms EDI and EDT are often misused . ¢ EDT, Electronic Data Transfer, is simply sending a file electronically to a trading partner. ¢ Although EDI documents are sent electronically, they are sent in a standard format. This standard format is what makes EDI different than EDT. HISTORY OF EDI The government did not invent EC/EDI; it is merely taking advantage of an established technology that has been widely used in the private sector for the last few decades. EDI was first used in the transportation industry more than 20 years ago. Ocean, motor, air, and rail carriers and the associated shippers, brokers, customs, freight forwarders, and bankers used it.Developed in 1960 s to accelerate movement of documents.Widely employed in automotive , retail , transportation & international trade since mid-80s .Steadily growing. EDI FEATURES # Independent of trading partners' internal computerized application systems. # Interfaces with internal application systems rather than being integrated with them. # Not limited by differences in computer or communications equipment of trading companies. # Consists only of business data, not verbiage or free-form messages. Let's take a high level look at the EDI process. In a typical example , a car manufacturing company is a trading partner with an insurance company. The human resources department at the car manufacturing company has a new employee who needs to be enrolled in an insurance plan. The HR representative enters the individual into the computer. The new employee's data is mapped into a standard format and sent electronically to the insurance company. The insurance company maps the data out of the standard format and into a format that is usable with their computer. An acknowledgment is automatically generated by the insurance company and sent to the car manufacturer informing them that the data was received. Hence, in order to summarise the EDI process , the sequence of events in any EDI transaction are as follows : The sender 's own business application system assembles the data to be transmitted .This data is translated into an EDI standard format (i.e., transaction set) .The transaction set is transmitted either through a third party network ( eg : VAN) or directly to the receiver's EDI translation system .The transaction set, in EDI standard format, is translated into files that are usable by the receiver's business application system .The files are processed using the receiver's business application system