EDI is an abbreviation for Electronic Data Interchange. The basic definition of EDI is:

Computer-to-computer communication of business documents, in a standardized format, between two companies.

Although it has a technical-sounding name, EDI is fundamentally a business initiative, which has been developed over the past thirty years. It was pioneered by the transportation, retail, and grocery industries, in an effort to increase quality and customer service, and offer long-term cost benefits. EDI also represents a major step in creating a paperless office.

By replacing paper documents such as purchase orders or invoices, with its EDI “equivalent” – a computer-readable EDI document - four key benefits are realized:

• 1) Accuracy is increased, since human intervention (the acts of entering and re-keying data) is eliminated
• 2) Timeliness is increased (the electronic transmission of forms eliminates the delays inherent in conventional mail, or even Fax)
• 3) Customer service is improved
• 4) Bottom line costs are reduced
  

Definition Explained

A further breakdown of the definition of EDI helps explain this business initiative:

"Computer-to-computer" means that the data you send or receive from a bookstore (the most common examples are Invoices or Purchase Orders) is communicated via electronic transmission, without human intervention or interpretation.

"Business documents" means that you will use EDI for the exchange of specific documents only, such as Purchase Orders or Invoices.

"Standardized format" is at the heart of EDI. EDI requires you to follow standards that define the format and content of your business documents. When you start using EDI, your PO’s and Invoices will be converted by the EDI translation software program into the exact same format as those used by all other publishers using EDI. (The publishing industry EDI standards have been set by the BISAC - recently renamed BASIC - committee of the Book Industry Study Group). This means that each Purchase Order, Invoice, or Pack Slip will be completely readable by any computer used by any bookseller using EDI.

Summary of Definition

In summary: when you do business via EDI, you send business documents directly from one computer to another, the documents are in machine-processable form, the exchange is limited to documents, and the document exchange is governed by standards.