What is EDI (Electronic Data Interchange)?

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EDI (Electronic Data Interchange) is the computer-to-computer exchange of business documents — purchase orders, invoices, shipping notices — in a standardized electronic format, without human involvement. Instead of emailing a PDF invoice for someone to re-key, one company’s system sends the document straight to the other company’s system in a structure both can read automatically.

The point of EDI is to remove manual handling from high-volume trading relationships. When two companies exchange thousands of orders and invoices, retyping them by hand is slow and error-prone. EDI standardizes the format so documents flow directly between systems — a buyer’s ERP issues a purchase order, the supplier’s system receives and processes it, and the acknowledgment, shipping notice, and invoice come back the same way, with no one keying anything in.

EDI relies on agreed standards that define exactly how each document is structured, so both parties interpret the data identically. The most common are:

• ANSI X12 — dominant in North America
• EDIFACT — the international standard, common in Europe and global trade
• Common documents — purchase order (850), invoice (810), advance shipping notice (856), and their EDIFACT equivalents

EDI has been a backbone of B2B trade for decades and remains essential for enterprise supply chains, large retailers, and manufacturers, many of whom require it to do business at all. In ecommerce, EDI connects a store to its trading partners so orders and invoices exchange automatically — but it’s typically custom integration work: each partner relationship can need its own document maps and testing, and, like every B2B feature, it’s only as reliable as the ERP and order data feeding it.