How Does EDI Work?
Essentially, EDI takes information from order processing, invoicing, or other systems and communicates it to a “trading partner” – someone that has an electronic business relationship with a business. This information is usually transmitted over a Value Added Network, or VAN. The VAN is like an electronic clearinghouse ensuring that information is securely sent and received. Once the trading partner receives the information, EDI translation software can help place it into the right areas of the receiving computer application. There are many types of information which may be sent including price lists, purchase orders, invoices, confirmations, shipping carrier information, etc. In order to transmit any of these “documents,” a standard form must be created – one (in most cases) for each of the transaction types. There transactions are typically referred to by a number, such as 850, 832, 867, etc., and are defined by the American National Standards Institute (ANSI).
