What is Electronic Data Interchange (EDI)?
Electronic Data Interchange (EDI) is the computer-to-computer exchange of business documents in a standard electronic format between business partners.
EDI was first developed in the 1960s with the objective of speeding the movement of shipping and transportation documents. Its application has expanded from enabling the electronic exchange of purchase orders, acknowledgments and invoices to include global procurement and sourcing.
How does Electronic Data Interchange (EDI) work?
EDI replaces postal mail, fax and email. While email is also an electronic approach, the documents exchanged via email must still be handled by people rather than computers. Having people involved slows down the processing of the documents and also introduces errors.
Instead, EDI documents can flow straight through to the appropriate application on the receiver’s computer (eg, the Order Management System) and processing can begin immediately.
EDI for transporters
EDI has become very popular in the haulage and transportation industry as transportation companies and brokers are adapting their systems to cater for EDI document exchange.
The advantages for those working in the transportation industry is that routine high volume communications can be automated allowing dispatchers and accounts receivables staff more time to focus on more productive/profitable tasks and provide clients with better customer service.
One of the main advantages of EDI is that a dispatcher no longer has to manually key information into the dispatch operational and billing system.
This saves time and money while eliminating any costly data entry mistakes. The other advantage is that transportation companies who are EDI compliant can communicate seamlessly and electronically with all parties in the supply chain process.
EDI for shipping lines
Before EDI systems became commonplace, a hard copy of the manifest was handed over to the captain of the ship. In addition, a hard copy was couriered or posted to the relevant discharge ports.
Then, as technology improved, there was the process by which the manifest was sent to the relevant discharge ports by email. The manifests thus received by the discharge port agents were manually captured into their respective computer systems.
With the advent of EDI this data can be instantly downloaded into the recipient’s system thereby avoiding manual capture which in turn avoids any typographical errors and also saves a lot of time.
EDI messaging is also used to send the data to Customs (manifest, bill of entry), Port (container stowage planning, cargo dues, load/discharge list, container moves), principals (load/discharge list, container moves, bookings).
Sources: Wikipedia, EDI Basics and Shipping and Freight Resources.
