EDI (Electronic Data Interchange)

EDI is the computer-to-computer exchange of business documents in a standard electronic format between trading partners.

Examples: A retailer sends a purchase order via EDI to a supplier, who responds with an invoice and shipping notice.

Advantages: Eliminates paper, reduces errors, speeds up communication, and improves supply chain visibility.

Challenges: High setup costs, reliance on legacy standards, and complexity in onboarding new partners.

Real-world example: Walmart requires suppliers to use EDI for purchase orders, invoices, and shipping notices.

Explain like I’m five: It’s like texting but for companies — computers send each other important forms instead of people writing them.

FAQ: Is EDI being replaced by APIs? APIs are more modern and flexible, but EDI is still widely used in logistics.

Bottom line: EDI remains a backbone of supply chain communication, though newer technologies are slowly reducing its dominance.