Electronic Data Interchange

Electronic Data Interchange: Still Dominating In Global Trade

EDI standard is used to exchange more electronic ordering around the globe than any other communication format. The history of EDI can be found here. However, technology and data formats have changed over the years, so maybe there is a better way than EDI? Today Electronic Data Interchange is still the only option accepted by large retailers and hubs. The format was designed to be flexible enough to accommodate the needs of multiple companies. File transfer between computers using FTP became available in 1973, and couple of years later EDI standards were released. Some large grocery companies adopted EDI and in 1979 Electronic Data Interchange was framed as X12 standard by the American National Standards Institute Accredited Standards Committee (ANSI ASC).

In 2000 some biggest USA retailers mandated its suppliers to use EDI as the only way to establish business communication. That move effectively solidified the adoption of EDI for a great number of suppliers. That were first steps of EDI adoption on the USA retail market. Later Electronic Data Interchange was implemented in other industries like Administration, Commerce, Transport, Banking, Health Care, Telecommunication, Warehousing etc.

The EDI standard format is an open text format that can be read and understood, and it offers enough flexibility to accommodate every industry that’s tried to adopt it. This makes EDI mostly universally appealing! But you can ask, what about other ways of business communication formats and standards..? Of course, they exist, and XML format is a vivid example. When it appeared, it was considered more flexible and modern than EDI. XML proponents believed the XML documents would be smaller and thus less expensive to transfer, as well as simpler to manage. However, these visions did not turned out to be significant advantages of XML to substitute EDI. The thousands of trading systems and major enterprises continued using Electronic Data Interchange format.

Today converting transaction files between EDI and XML (or even other formats) is a standard function. That has made it simple for those companies already standardized on EDI X12 to do business with trading partners that use other formats. EDI transactions are routinely translated from one company’s version to another to conform with each enterprise’s internal processes and ERP systems. Each trading partner chooses the format that best suits its needs, eliminating any reason to switch away from the EDI standard.

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