Electronic Data Interchange (EDI)

An Electronic Data Interchange is the exchange of information from one company to another using a computer network, such as the Internet.
Electronic data interchange involves computer-to-computer exchanges of invoices, orders, and other business documents and therefore more cost savings and improves efficiency because error is minimized stopping any error occuring if the same information has to be typed into computers more than once. At the same time, EDI provides an easily accessible mechanism for companies to buy, sell, and trade information. In the business-to-business market, major corporations have embraced EDI systems, and in order to reduce costs and improve efficiency and competitiveness, many corporate giants are now demanding that their suppliers convert their sales and purchasing operations into EDI systems as well. In the retail market, the use of EDI systems allows the retailer to implement quick response strategies that can reduce the time they must hold merchandise in inventory, which can result in substantial cost savings for the retailer.