What is EDI in B2B?

EDI (Electronic Data Interchange) is the electronic exchange of standardized business documents between companies’ computer systems. It allows businesses to exchange information such as purchase orders, invoices, shipping notices, and order confirmations without manually entering the data.

Common EDI documents in B2B commerce include:

• Purchase orders (POs) – Communicate products, quantities, prices, and purchasing requirements.
• Order acknowledgments – Confirm that an order has been received or accepted.
• Advance shipping notices (ASNs) – Provide shipment and delivery information.
• Invoices – Communicate amounts owed for supplied products or services.
• Inventory information – Share stock availability and related data.
• Shipping and receiving documents – Support logistics and fulfillment processes.

For example, a retailer can send an electronic purchase order through EDI to a supplier. The supplier’s system can automatically receive and process the order, send an acknowledgment, and later transmit an invoice and shipping notice.

EDI can help B2B businesses reduce manual data entry, improve processing speed, reduce errors, standardize communication, and automate transactions between trading partners. It is commonly integrated with ERP, procurement, warehouse, and eCommerce systems.

EDI implementations can use different standards and communication methods, so businesses need to ensure that their systems and trading partners use compatible formats and requirements.