EDI - Electronic Data Interchange

The term EDI (Electronic Data Interchange) describes the process of electronic data exchange between two companies.

Definition EDI

The abbreviation EDI stands for Electronic Data Interchange and translates as "electronic data interchange". EDI describes the electronic process of standardized data exchange of information between two companies. The EDI system is linked to the ERP system of the respective company, thus providing a point-to-point connection and the perfect solution for faster, secure and paperless data exchange. The EDI platform is mainly used in the field of logistics and supports, for example, in the area of orders. The digital information is sent encrypted to the recipient, who can decrypt and read the documents in the appropriate EDI format. 

How does EDI work?

EDI messages are used to exchange all relevant data between two business systems. The process is as follows: 

A file is created in Business Partner A's ERP system, which is then converted to the desired EDI standard using EDI software. In the next step, the EDI document is transmitted to business partner B. The recipient (business partner B) receives the EDI message, converts it into its own target format and can then process it.

Since the data from the source system is automatically converted into the standardized EDI format of the respective company, the ERP systems of the business partners do not have to be compatible. With classic EDI, all data is automatically transferred from the ERP system and processed. 

EDI data exchange

In order to use an EDI system, interfaces to all systems of a company must be created. This includes the ERP software or other software solutions. The systems of the business partners must also be connected to the EDI software. The EDI interface connects the ERP system with the EDI converter to the EDI Clearing Center, so that the data transfer can run smoothly. By linking the EDI software with the ERP system, the business process is supported and optimized. 

Setting up this EDI communication is very complex and costly, but brings a high ROI. Smaller companies therefore often turn to WEB-EDI as a SaaS solution, because it works independent of location and does not involve installation costs.


EDIFACT is an EDI solution and one of the international EDI standards. EDIFACT is the abbreviation for "Electronic Data Interchange for Administration, Commerce and Transport" and was published by the United Nations in 1986 and includes over 200 different message types. More than 300,000 companies worldwide use EDIFACT to send EDI messages.

Benefits of EDI

EDI supports companies and business partners and is especially important in the area of supply chain management, because the digital exchange of information improves the supply chain: a high time saving as well as digital and faster business processes contribute to an optimal supply chain. Moreover, the electronic data exchange is just-in-time and the recipient can open the electronic documents in his preferred format without any problems. The EDI system speeds up the delivery of data, while electronic communication also reduces manual intervention and associated errors. With the help of EDI, external exchange of data with business partners can be easily managed within the IT systems, and is therefore a good solution to handle business processes of different companies in the shortest possible time. 

Benefits of EDI at a glance:

  • Fast and error-free data transfer
  • Easy communication
  • Better supply chain management
  • Reduction of lead times
  • Cost savings
  • Increased processing speed
  • Improved cooperation

Disadvantages of EDI

Both parties have to agree on the same system, which is why the use of an EDI solution always involves costs and therefore does not always pay off for small and medium-sized companies. Since the EDI format has to be maintained every 10 years, this is often associated with a high IT effort. For small to medium-sized companies, the use of EDI is therefore often too expensive and too time-consuming.

Disadvantages of EDI at a glance:

  • High complexity
  • High costs

EDI Alternatives

An alternative is, for example, a so-called software-as-a-service solution (SaaS) for the digital connection of suppliers. This solution also enables the digital exchange of documents, but is less complex and more cost-effective. For example, suppliers without their own EDI system can also participate in the digital data exchange. 

Noch mehr Wissen in unseren REMIRA Whitepapern

In unseren Whitepapern erhalten Sie nützliche Praxistipps rund um die Themen Supply Chain und Omnichannel Commerce.

Integriertes Sales & Operations Planning Bild

Integrated Sales & Operations Planning

Our whitepaper "Integrated Sales & Operations Planning" shows you how to use the strategic approach of S&OP to network sales, production, and purchasing planning and other corporate areas, and how to use a coordinated process to create a valid database for making business decisions quickly.

Out-of-Stocks vermeiden - Verfügbarkeit erhöhen Bild

Avoid Out-of-Stock - Increase Availability

The REMIRA white paper "Avoide Out-of-Stocks - Increase Availability" shows why inventory management is an important competitive factor, how digital inventory management can be introduced during ongoing operations, and why it quickly provides significant savings.

Die optimale Supply Chain für den Ersatzteilhandel Bild

The Optimal Supply Chain for the Spare Parts Trade

The REMIRA white paper "The optimal supply chain for retailers" shows the challenges for dealers in the aftermarket and provides assistance for optimizing the supply chain. It also shows the most important aspects you need to consider as a spare parts dealer and how you can always determine the optimal demand and ensure high availability with the help of artificial intelligence.

Lagerverwaltung für Logistikdienstleister Bild

Warehouse Management for Logistics Service Providers

In our whitepaper "Warehouse Management for Logistics Service Providers", we explain how you can easily manage complex warehouse processes, which systems are used in logistics and give you practical help in selecting a warehouse management system.

Leitfaden Lieferantenintegration Bild

Supplier Integration Guide

Our whitepaper "Supplier Integration Guide" shows the opportunities and benefits of digital procurement. You will get practical assistance on the way to digitizing your procurement and learn which processes you can already digitize today without much effort. We also show you how you can also integrate smaller suppliers into the processes - with or without an EDI project.

Einfach Inventur: Der Inventurleitfaden Bild

Easy Stocktaking: The Stocktaking Guide

Our whitepaper "Easy Stocktaking: The Stocktaking Guide" presents all legally permitted alternatives to full inventory and shows you how you can significantly reduce your inventory effort. In addition, you will learn how to determine your optimization potential and how sample stocktaking can be easily carried out in the cloud.

Vendor Managed Inventory: Vorteile für Händler und Lieferanten Bild

Vendor Managed Inventory: Advantages for Retailers and Suppliers

Our white paper "Vendor Managed Inventory: Advantages for retailers and suppliers" shows why vendor-managed inventory management is an important competitive factor, what potential suitable software solutions offer, and how the introduction of appropriate software works. 

S&OP in der Lebensmittelbranche Bild

S&OP in the Food Industry

Our whitepaper "S&OP in the Food Industry" shows you how to combine and optimize your planning and decision-making processes in a unified process, gives you an insight into Sales & Operations Planning and demonstrates the benefits of using Sales & Operations Planning - with a focus on the food industry.