EDI (Electronic Data Interchange)

The acronym EDI stands for “Electronic Data Interchange." It refers to the standardized, digital exchange of business documents such as purchase orders, delivery notes, or invoices between companies.

With EDI solutions, businesses can automate processes and transfer documents directly from system to system. Communication is based on internationally recognized standards, known as EDI message formats. This accelerates workflows, reduces errors, and ensures efficient collaboration between business partners.

• Faster: Business documents are transmitted in real time – no waiting for mail or email.
• Fewer errors: Automated electronic data exchange reduces manual entries and transmission mistakes.
• Standardized: Consistent EDI message formats ensure seamless communication across all partners.
• Cost savings: Eliminating paper, postage, and rework makes processes more economical.
• Transparency & compliance: Every step is digitally documented and fully traceable at any time.
• Fewer media disruptions: Processes run completely digital from sender to recipient.
• Future-proof: EDI lays the foundation for fully digital supply chains – including international ones.

The EDI process is based on the standardized, digital exchange of business documents between different IT systems. The goal: eliminate media disruptions and achieve fully automated workflows across the company.

The process follows five key steps:

1. Data source: The ERP, merchandise management, or warehouse management system creates a business document – for example, a purchase order or an invoice. At this stage, the data is still in a company-specific format.
2. Conversion: An EDI converter translates the internal format into a standardized EDI message standard (such as EDIFACT or XML). Modern solutions like Yaveon EDI no longer require an external converter – the transformation takes place directly within the EDI software.
3. Communication: The standardized EDI message is transmitted via an EDI interface using secure transfer protocols such as AS2, OFTP2, or X.400 to the business partner.
4. Reception: On the recipient’s side, the process runs in reverse. The EDI solution receives the message, translates it into the required target format, and imports the data directly into the partner’s ERP system.
5. Automated processing: The receiving system continues processing the data – for example, for automatic goods receipt posting, invoice creation, or inventory updates. Everything runs seamlessly digital, without media disruptions.

Tip: With integrated cloud solutions such as Yaveon EDI, you can control and monitor all these process steps directly from your ERP system – with no additional software, interfaces, or system breaks.

ERP connector

The ERP connector links the ERP or merchandise management system with the EDI solution. It ensures that data is transferred automatically and in the correct format. This eliminates the need for manual document handovers or converting data from export files.

EDI converter

The EDI converter translates a company’s internal data formats (for example CSV, XML, or proprietary formats) into standardized EDI message formats such as EDIFACT or ANSI X12 – and back again. In this way, it acts as an “interpreter” between systems.

EDI communication adapter

The communication adapter (also known as the EDI interface) handles the transmission of EDI messages to the business partner. It ensures that data is encrypted and transferred using secure, internationally recognized protocols (e.g. AS2, OFTP2, X.400). This guarantees data protection and confidentiality.

When companies or business partners want to exchange data, documents, and information electronically, they need to agree on a “common language.” This is where EDI standards come in: they define how information is structured and transmitted – independent of the software being used.

EDI standards work like interpreters: they ensure that everyone involved can understand the data, no matter which system or language they normally use. If there is a recognized international standard for electronic data exchange, only one “interpreter” is needed – not a separate one for every single business partner. The result: collaboration becomes easier, more efficient, and more cost-effective.

EDIFACT:

The most widely used standard for the electronic exchange of business documents worldwide, especially in Europe. EDIFACT defines uniform formats for a wide range of business processes – from purchase orders (“ORDERS”) and delivery notes (“DESADV”) to invoices (“INVOIC”). This makes EDIFACT ideal for companies with many partners who all use the same message format.

ANSI X12:

This standard is primarily used in North America, where it is considered the industry standard in trade, manufacturing, and healthcare. It also includes clearly defined message types, such as 850 for purchase orders and 810 for invoices.

XML:

XML is a flexible, modern data format that is particularly suited for integration with web services. It is especially relevant for electronic invoices – for example, XRechnung, which is mandatory for public-sector clients in Germany. With the EU-wide electronic invoicing requirements, XML is gaining importance and preparing companies for fully digital invoice exchange.

Tip: Professional EDI software supports multiple international standards and message types. With an EDI interface, you can also easily connect new partners and systems. This keeps you flexible when collaborating with different business partners.

What is the difference between an EDI standard and a message type?

An EDI standard is the framework or “language” used to exchange electronic business documents. It defines how data is structured and transmitted.

Within each standard, there are different message types (also known as “message categories” or “transaction sets”). These specify what kind of business document is being exchanged – for example, a purchase order, an invoice, or a delivery note.

Examples:

• In the EDIFACT standard:
  
  • ORDERS is the message type for a purchase order
  • INVOIC is the message type for an invoice
  • DESADV is the message type for a shipping notice or delivery note
• In the ANSI X12 standard:
  
  • 850 is the message type for a purchase order
  • 810 is the message type for an invoice
  • 856 is the message type for a shipping notice

Put simply: the standard is the language – the message type is the subject of the document.

Electronic data interchange is used in almost every area of a business: from purchasing and sales to logistics and warehouse management, right through to accounting and master data management. The advantages are particularly evident in industries with high demands for speed, transparency, and traceability – such as the food industry.

EDI in practice: how food companies get their products onto the shelf

A medium-sized food manufacturer wants to place its products with major retail partners such as EDEKA or REWE. The prerequisite: seamless digital processes and the exchange of all relevant business documents via EDI.

• Orders and call-offs are received directly in the food company’s ERP system via EDI – with no manual data entry required.
• Shipping notices (DESADV) are automatically transmitted to retail partners like EDEKA or REWE – including batch numbers, best-before dates, and pallet details, all essential for retail traceability.
• Goods receipt and quality checks take place digitally and automatically at the retailer’s site: the EDI-provided delivery, batch, and BBD data are used directly for acceptance and inspection of the goods.
• Invoicing is paperless: invoices are sent electronically and processed digitally by the retail partner – shortening payment cycles and reducing potential errors.

The introduction of an EDI solution usually follows a structured roadmap. Whether you are deploying EDI in your company for the first time or migrating from existing EDI software to a more modern system – with the right preparation, the transition runs smoothly.

Typical steps in EDI implementation

1. Requirements analysis and definition of objectives:
   The starting point is to clarify: Which document types and business partners need to be integrated? Which processes should be digitized? It is particularly important to involve all relevant departments early on to ensure that requirements are captured in full.

2. Selecting the right EDI software:
   The choice between an on-premises or cloud solution depends on available IT resources and future requirements. What matters is that the solution supports all necessary EDI standards and integrates seamlessly with the ERP system. A solution that is too rigid or proprietary makes later adjustments or connecting new partners more difficult.

3. Partner integration and master data management:
   Partner data and communication channels are defined. Incorrect or outdated master data are among the most common causes of issues at go-live. Clean master data management is therefore essential.

4. Mapping and configuration:
   ERP data fields are assigned to the EDI message fields. Modern EDI solutions usually provide practical tools and templates to simplify this configuration.

5. Testing phase:
   Before going live, all processes are tested together with the partners to detect errors at an early stage. Sufficient test runs with all business partners help prevent disruptions in day-to-day operations.

6. Go-live and ongoing operations:
   After successful testing, the productive system goes live. The EDI software monitors message flows and supports error handling during operations.

Tip: Choose an EDI solution that grows flexibly with your processes, provides regular updates, and supports you in connecting new partners. A modern EDI system not only saves time and effort during implementation but also future-proofs your business for further digitalization projects.

EDI migration: switching to a new EDI solution

Many companies switch to a modern EDI solution because their existing software is too rigid, does not support current standards such as XRechnung, or is too complex to maintain and operate. Other common reasons include missing cloud functionality, high costs, or an inflexible licensing model.

The migration process is similar to a new implementation but requires additional careful planning: existing partner connections, message mappings, and master data must be secured and transferred. Often, the old and new systems run in parallel for a transitional period. Close coordination with business partners is particularly important to prevent data loss. Many modern EDI solutions provide dedicated migration tools and expert consulting – ensuring a smooth transition with minimal risk and no downtime.

Not every EDI landscape is fully integrated – but without clearly structured processes, up-to-date standards, and centralized control, much of the potential remains untapped. This self-check helps you see how professional your electronic data exchange really is today.

Do the following statements apply to the EDI processes in your company?

• Business documents are already exchanged electronically with customers, suppliers, or partners.
• An EDI solution is in place that automates the exchange of purchase orders, invoices, and delivery notes.
• New business partners can be connected quickly, in a standardized way, and without custom development.
• The EDI solution is directly integrated into the ERP system – eliminating external standalone solutions or middleware.
• The EDI converter is built into the solution, so no external converter is required.
• Large retail chains and platforms such as EDEKA, REWE, or Amazon can be integrated and supplied without difficulty.
• The EDI solution supports all common standards and message types.
• Partner data, communication channels, and message types are managed centrally and transparently.
• Changes in EDI standards or legal requirements can be addressed flexibly and at short notice.
• Incoming and outgoing EDI messages are automatically reconciled with ERP data and correctly posted.
• Errors or discrepancies are identified immediately and reported to the responsible teams.
• Transparent monitoring and logging functions enable control of all key EDI processes.

Result: The more statements you can answer with “yes,” the smoother and more future-ready your EDI processes are.

Modern EDI software should offer more than just the exchange of business documents. It needs to integrate seamlessly into the existing IT landscape, remain adaptable at all times, and meet both legal and industry-specific requirements.

The key requirements of a professional EDI solution at a glance

• Seamless ERP integration:
  An optimal EDI solution is directly embedded in the ERP system. This ensures that all processes run automatically – without system breaks.

• Support for all relevant EDI standards and message types:
  Whether EDIFACT, XML, XRechnung, ANSI X12, or industry-specific formats – the software must handle diverse partners and requirements with flexibility.

• Central management and simple partner onboarding:
  Business partners, communication channels, and master data are managed centrally within the EDI software. New partners can be integrated quickly – without long setup times.

• Automated monitoring and error handling:
  The EDI solution offers real-time monitoring, logs all message flows, and automatically reports errors or discrepancies.

• Scalability & future readiness:
  The EDI system grows with the business and supports new business models, platforms, and international partners.

• User-friendly interface and transparent processes:
  All EDI processes are traceable, while the interface remains intuitive even for business departments – no programming knowledge required.

• Cloud-ready:
  A cloud-based EDI solution adapts to your growth, stays up to date at all times, and is ready to use immediately – with no additional IT investments.