# EDI 101: What is EDI?

### EDI, or electronic data interchange, is the technology that enables businesses to share important information with each other in a standardized digital format.

## What is EDI?

Electronic Data Interchange (EDI) is key to enabling reliable and accurate communication in the supply chain. It simplifies how companies connect, automating the exchange of documents like purchase orders, invoices and shipping notices.

Gone are the days of relying on email, paper or fax machines—EDI brings speed, accuracy and efficiency to everyday business transactions. It works seamlessly with a variety of systems, including eCommerce platforms, ERPs, warehouse management systems and accounting software.

EDI helps businesses communicate better, faster and with fewer errors, making it an essential tool for modern supply chain operations.

## How does EDI work?

EDI enables businesses to exchange key documents electronically in a standardized format, making it possible for partners to communicate in sync with each business’s specific processes and rules. For example, an [850 Purchase Order](https://www.spscommerce.com/edi-document/edi-850-purchase-order/) initiates an order, an [855 Purchase Order Acknowledgment](https://www.spscommerce.com/edi-document/edi-855-purchase-order-acknowledgment/) confirms it, an [856 Advance Ship Notice](https://www.spscommerce.com/edi-document/edi-856-advance-shipping-notice/) provides shipping details and an [810 Invoice](https://www.spscommerce.com/edi-document/edi-810-electronic-invoice/) completes the transaction.

## Why does EDI matter?

EDI improves efficiency and accuracy across the supply chain. It replaces slow, error-prone tasks like manual data entry with fast, automated transactions, ensuring greater accuracy of orders, invoices and shipments. EDI is a necessity for staying competitive and meeting customer expectations.

## How will EDI benefit my business?

- **Faster transactions**—Automate order processing, invoicing and shipments to keep business moving without delays.
- **Fewer errors**—Eliminate manual data entry mistakes, ensuring order and payment accuracy every time.
- **Lower costs**—Reduce expenses from paper-based processes, lost documents and inefficiencies.
- **Stronger partnerships**—Meet trading partner requirements and improve communication and collaboration.
- **Scalability**—Handle more orders easily and keep up with increasing demand without extra manual work.

What is EDI? A real-world retail example - YouTube

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[What is EDI? A real-world retail example](https://www.youtube.com/watch?v=L_oYavCSpes)

#### EDI system integrations  
Need EDI added to an ERP, TMS or other software system? Explore our 400+ pre-built solutions.

[View integration options](https://www.spscommerce.com/products/integrations/)

#### EDI for sellers  
SPS is the only full-service EDI solution on the market. Find out why so many sellers rely on SPS Commerce Fulfillment.

[Learn more about our product](https://www.spscommerce.com/products/fulfillment/edi/)

#### EDI for retailers  
Get the data you need to improve collaboration and create an efficient replenishment order process with SPS Community solutions.

[Learn more about our product](https://www.spscommerce.com/products/community)

## How healthy is your supply chain?

Wondering where to get started? Take our five-question Supply Chain Health Vitals Checkup, where we identify gaps in your existing processes and share personalized resources to help you get started.

[Get evaluated now](https://www.spscommerce.com/resources/health-vitals-assessment/)

#### Want to learn more about the benefits of EDI? Schedule a consultation for your business today!

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