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EDI is short for Electronic Information Interchange. It is a trade exchange method that replaces frequent company types and documents such as acquire orders, invoices, shipping documents, and so on., with a personal computer-based communications and records keeping program. One more definition of EDI: Electronic Data Interchange is the inter-organizational, computer-to-computer system exchange of business documentation in a common machine-processable format. There are a number of crucial points in this definition that tends to make EDI very distinct from other forms of paper or electronic communications. Firstly, EDI occurs between firms, it is cross enterprise. While the growth in the use of computers and other advanced technologies has been tremendous in the course of the past decades, the very same trend is beginning to happen amongst companies. Even though the technology of EDI can be employed internally within an organization, by definition EDI is organization to organization. EDI occurs amongst computers. The purpose of EDI is not to remove paper, but rather to remove the time and the information entry connected with paper. It is generally accepted that 70 percent of 1 computers organization data output becomes a second computers information input. In a paper atmosphere with out EDI this signifies that the very same info is getting entered, in distinct processes, into both computers. With EDI, the computers are linked such that duplicate data entry does not take place. The objective of EDI is to improve the flow and management of organization data. Any information that, today, is on a business form of any kind, is suitable for EDI. EDI is at present being used for all of the most widespread organization transactions such as buy orders, invoices, quotes, bills of lading, status reports, receiving advices and also for some really precise transactions such as residential mortgage insurance coverage applications, healthcare claim payments, and material security data sheets. Simply because EDI is computer-to-computer communication, rather than personto-individual communication, the information becoming exchanged in EDI must be understandable to a pc. This signifies the information must be in some pre-established, structured format, therefore allowing the data to be read and understood by the computer without having human interpretation. As stated earlier, the purpose of EDI is to increase info management. EDI accomplishes this by minimizing non-value added time and eliminating redundant information entry. The standard functioning of EDI, as compared to a paper-based system is illustrated in the paragraph below. In the standard EDI transaction that would be shown in a figure, the buyers computerized acquiring technique creates an order on a paper form. The paper buy order is delivered through some manual method to the supplier. When the order is received by the supplier, an order entry clerk abstracts information from the obtain order and enters it into an order entry program. With EDI, on the other hand, the information moves directly from the buyers computer to the sellers computer system, without having any delivery or processing delays. In EDI, the transformation to a paper format, the interpretation of that paper format by an order entry clerk, and the re-entering of the information are functions that are no longer needed. edi 850