Without electronic integration, data exchange between companies can quickly become cumbersome and costly in day-to-day operations. Electronic Data Interchange (EDI) allows structured data transfer based on internationally recognized standards, enabling automated data processing without manual entry.
EDI serves as an umbrella term that encompasses multiple standards designed for various purposes, partners, and IT systems. To ensure consistency across industries, sector-specific associations continuously develop and refine these standards.
The roots of electronic data exchange trace back to the 1960s in the United States. Although the initial exchanges were far from standardized, the rise of privately operated networks highlighted the benefits of EDI. As the demand for seamless integration grew, early adopters sought to establish a shared foundation for information exchange to reduce connection costs. This led to the development of SEDA (Standard Rules for Unified Data Exchange Systems) in 1977, the first standardized messaging format for invoicing and orders in the consumer goods industry.
Shortly thereafter, the economic benefits of standardizing delivery schedules became evident. In 1978, the VDA 4905 standard emerged, facilitating data exchange between Volkswagen and Hella. The adoption of these standards accelerated rapidly, leading to international standardization. In 1986, the United Nations (UN) adopted the first version of EDIFACT (Electronic Data Interchange for Administration, Commerce, and Transport) – a messaging standard still widely used today.
UN/EDIFACT is a cross-industry international standard for electronic data formats in business transactions. Currently, the standard includes over 200 message types and is utilized by more than 300,000 companies worldwide.
How Does EDI Work?
EDI consists of two primary components – the message format and the transmission method. EDIFACT defines the message format, but the transmission method is flexible.
To transform a document, such as an invoice (INVOIC), into an EDIFACT message, data is extracted from the issuer's ERP or inventory management system and sent to an EDI converter. Since ERP systems do not natively operate with EDIFACT, the converter translates the internal format into the recipient's agreed-upon format and transmits the data. Once the message is received, the recipient’s ERP system processes the data. As best practice, the recipient typically sends an acknowledgment of receipt.
Transmission Methods
The method of transmission varies depending on company needs and industry requirements. Factors such as budget and regulations (e.g., in the healthcare sector) play a significant role. Common transmission methods include:
AS2/AS3
sFTP
Email
HTTP
Common EDIFACT Message Types
EDIFACT supports a wide range of business processes, from orders and invoices to customs declarations and pension notices. Over 200 message types exist today. Each message is identified by a unique six-character code:
ORDERS – Purchase Order
ORDRSP – Order Response
DESADV – Dispatch Advice
INVOIC – Invoice and Credit Note
PRICAT – Price Catalog
A complete list of EDIFACT messages (version D.01B) can be found here: UN/EDIFACT List.
Requirements for EDI Implementation
EDIFACT is not a rigid standard – it offers flexibility in determining which data elements (fields) are transmitted. ERP systems typically do not generate EDIFACT files directly. Instead, they produce internal formats that are converted via an EDI converter tailored to the recipient's requirements.
Key requirements include:
ERP System with EDI Interface – Most ERP providers offer EDI modules to facilitate data extraction.
EDI Management System – This system houses the converter, transforming ERP data into EDIFACT format. It also includes communication software for transmitting messages.
EDI systems can either be on-premises or hosted in external data centers (EDI clearing). Increasingly, companies opt for external providers to avoid high upfront investment costs and reduce IT maintenance efforts.
How Can We Support Your EDI Implementation?
We are here to assist with every step of the EDI implementation process – from initial analysis to full deployment. Contact our sales team with your project details or reach out through our contact form. We look forward to collaborating with you!