Direct answer. EDI (Electronic Data Interchange) refers to the automated exchange of structured business documents — orders, invoices, shipping notices — directly between the information systems of two partner companies, in a standardized format, with no manual re-entry or human intervention on the content.
A common language between different companies' systems
EDI relies on standardized message formats (such as the EDIFACT standard or sector-specific formats derived from GS1) that let two companies exchange business documents even when their internal software (ERP, WMS) is completely different. Each type of document corresponds to a standardized message: a purchase order (ORDERS message), an invoice (INVOIC), or a shipping notice detailing the content of a parcel before it arrives (DESADV message). These messages generally pass through an EDI operator or a dedicated platform that handles translation between the two partners' formats.
The main benefit of EDI is eliminating the manual re-entry of business documents, a source of errors and delays when done by hand. In retail in particular, EDI is often a contractual requirement imposed by chains on their suppliers, especially for shipping notices, which make it possible to anticipate and make warehouse receiving more reliable — particularly in cross-docking operations where the time available to prepare for receiving is very short.
EDI differs from an API in how it operates: EDI relies on standardized messages, often sent in batches, with a long history of standardization between large accounts; an API enables more ad hoc, real-time exchanges, with more flexible formats, used more for newer or lighter-weight integrations between two systems. In many companies, the two coexist: EDI for long-standing business exchanges with major partners, APIs for more occasional or modern integrations, for example with a delivery-tracking tool.
FAQ
Is EDI mandatory for selling to large retailers?
In many cases, yes: major retail chains contractually require EDI from their suppliers for orders, invoices and shipping notices, in order to make their receiving more reliable and automated. The exact conditions vary by retailer and must be checked with each partner.
What is the difference between EDI and API?
EDI relies on standardized messages often exchanged in batches, historically used for structured business exchanges between companies. An API enables more flexible, real-time exchanges between two systems, with lighter formats, and is used more for modern software integrations.
Related terms
DESADV · API · WMS · ERP · Barcode / GS1 · SSCC · Cross-docking.
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