EDI stands for Electronic Data Interchange, and describes the computer-to-computer exchange of business documents. It replaces postal mail, fax and e-mail, and whilst e-mail is, of course, electronic, it still requires handling by a person rather than another computer. EDI takes away the need for the manual human element of the process.
This can be illustrated in the following diagram:
1.) A typical manual process:
Research has shown that EDI costs around one third of a paper based equivalent, a huge saving within a company of any size. Speed and accuracy are also increased- An American car company reduced one process time by approximately 97% – a 30-day cycle was reduced to a mere 24 hours. The knock on effect of which is that business efficiency is also increased.