Electronic Data Interchange (EDI) is the method of communicating vital information required for supply chain function. With increasing competition companies are doing what they do best and outsourcing tasks which can done better by others. Also, customers are increasingly going global with their market in far of countries. Companies are having multi site operations to leverage on low-cost labor, tax holidays and other advantages offered by certain regions.
To make all this work, key partnerships between various suppliers, customer and your own sister companies need to be established. EDI is a critical piece to make such partnerships work. Each of your partner will likely have their own systems and hence a common language to link these disparate systems becomes critical.
EDI provides seamless integration between different systems by adopting an industry standard. Various industry standards have emerged to meet this need. However, X12 used mainly in the Americas and EDIFACT in the Europe are the most widely used standards. In addition, Rosettanet, a xml standard has gained popularity in the last few year.
EDI helps to have information exchange between various partners in near real-time and hence is a crucial piece for an effective supply chain.