EDI Basics
How EDI works
Az EDI működését összefoglaló cikksorozat első része
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Fundamentals & Guide
What is EDI?
Electronic Data Interchange explained simply.
EDI (Electronic Data Interchange) is the technology for direct, automated, and standardized data exchange between enterprise systems. It allows purchase orders, dispatch advices, and invoices to flow from one ERP to another in seconds without human intervention.
EDI IN 1 MINUTE
B2B STANDARD
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Buyer ERP
Order generation
ORDERS
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EDI Network
Standards & AS2
INVOIC
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Supplier ERP
Instant booking
0 manual data entry
99.8% accuracy rate
-80% admin time
Comparison
Why are PDF invoices and emails not enough?
Many mistakenly assume that emailing a PDF or Excel sheet constitutes electronic data interchange. In reality, the difference between the two worlds is vast:
✕
Traditional workflow (PDF, email, paper)
- Designed for human eyes: A PDF is digital paper; the recipient must open it and manually re-type the data or rely on uncertain OCR into their ERP.
- Frequent errors: Incorrect item numbers, mistyped prices, missing line items, misunderstood units of measure.
- Slow turnaround: Processing an incoming order or booking an invoice takes hours or even days.
- Lack of transparency: No guaranteed way to confirm whether the recipient received or properly processed the attachment.
✓
Real EDI Integration (Automated Data Exchange)
- Direct machine-to-machine link: Data moves directly from the sender ERP database into the recipient ERP without human involvement.
- 100% data accuracy: Syntax and business validation ensure only verified, error-free documents pass through.
- Sub-second speed: Multi-line purchase orders or complex invoices appear in the partner ERP seconds after dispatch.
- Two-way acknowledgments (MDN & CONTRL): Cryptographically verifiable, non-repudiable proof of delivery for every individual document.
Under the hood
How does EDI work in practice?
While users simply see documents appear automatically, behind the scenes a well-orchestrated 5-step process takes place:
01
1. Data generated in the ERP
The buyer approves an order in their enterprise system (SAP, Dynamics 365, etc.). The ERP exports the order in its internal format (XML, JSON, CSV, or database record).
02
2. Conversion and Mapping
The EDI Gateway translates internal ERP data into standard international formats (typically UN/EDIFACT ORDERS D:96A or GS1 EANCOM) and runs syntax validation.
03
3. Secure Transmission (Protocol)
The encrypted and digitally signed payload travels over secure internet protocols: most commonly AS2 in retail, and OFTP2 or SFTP in automotive.
04
4. Reception and Acknowledgment
The supplier EDI gateway receives the package, decrypts it, validates schema integrity, and immediately issues a technical receipt (AS2 MDN or CONTRL message).
05
5. Ingestion into Recipient ERP
The standard message is mapped into the supplier internal structure and automatically inserted as a sales order. The warehouse can immediately start picking.
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Curious to see what a real EDI message looks like?
Try our free EDI Playground and EDIFACT Validator tools, which decode raw segments into clear descriptions!
Industry Mandates
Who requires EDI?
Across domestic and international commerce, EDI adoption is driven primarily by mandatory supply-chain standards set by large enterprises:
FMCG & RETAIL
Supermarkets & Retail Chains
Major supermarket and pharmacy chains require all shelf suppliers to send and receive business documents strictly via EDI:
Typical standard: GS1 EANCOM / UN/EDIFACT (ORDERS, DESADV + SSCC pallet labels, INVOIC).
AUTOMOTIVE & MANUFACTURING
Automotive OEMs & Tier 1 Suppliers
Just-in-Time (JIT) and Just-in-Sequence (JIS) manufacturing lines cannot operate without second-by-second electronic call-offs:
Typical standard: VDA, ODETTE, EDIFACT (DELFOR call-offs, DESADV advance shipping notices, OFTP2 protocol).
LOGISTICS & E-COMMERCE
3PL Warehousing & Marketplaces
The engine behind outsourced fulfillment and marketplace stock synchronization (Amazon, regional platforms, and carrier networks):
Typical standard: EDIFACT (IFTMIN transport instruction), XML API, AS2.
Decision Guide
Does your business need EDI? And which type?
Select the statements that best describe your current operations in the interactive checklist below:
ℹ️
Check the items above for an instant evaluation!
This interactive guide helps you decide whether WebEDI (browser portal) or integrated ERP EDI is best for you.
Core Message Types
The 5 Pillars of EDI Communication
While more than 200 distinct message types exist, over 95% of daily business transactions are carried out using these five core documents:
ORDERS
Purchase Order
Sent by buyer ERP: article barcodes (EAN/GTIN), quantities, delivery address (GLN), and requested delivery date.
Documentation & sample → ORDRSPOrder Response
Supplier feedback: confirming availability, proposed quantity adjustments, or delivery date confirmations.
Documentation & sample → DESADVDespatch Advice (ASN)
Sent to the buyer warehouse upon truck dispatch. Includes SSCC pallet barcodes for instant barcode receiving.
Documentation & sample → RECADVReceiving Advice
Buyer warehouse confirms exact quantities physically received. The authoritative basis for invoice matching.
Documentation & sample → INVOICElectronic Invoice
Structured electronic invoice automatically three-way matched against purchase order and receiving advice in the ERP.
Documentation & sample →
Independent Advisory
Planning an EDI project? Get quotes in one place!
Unsure which provider best matches your industry, ERP, and budget? Complete our free 4-step quote request and connect with verified regional and international EDI providers.
✓ Free & non-binding
✓ Regional & international providers
✓ Tailored technical solutions
Start quote request (approx. 3 min) →
FAQ
Frequently Asked Questions about EDI
Everything companies ask most frequently regarding implementation, operations, and costs:
What is EDI (Electronic Data Interchange)?
EDI (Electronic Data Interchange) is the direct, standardized, and automated transfer of structured business documents (such as purchase orders, invoices, and despatch advices) between independent computer systems of trading partners without human intervention.
What is the difference between EDI and an emailed PDF invoice?
An emailed PDF is digital paper meant for humans; someone still has to open it and manually key in the data or rely on error-prone OCR. An EDI document consists of structured data that flows directly from sender ERP into recipient ERP, being parsed, validated, and booked automatically without human re-keying.
Who is required to use EDI?
While not mandated by general commercial law, it is strictly mandated by commercial partners. Major retail chains and automotive OEMs require all suppliers to exchange orders, ASNs, and invoices via EDI as a mandatory condition of supply.
How much does EDI implementation and operation cost?
Costs depend on transaction volume and architecture. Low-volume suppliers can use WebEDI portals with minimal setup for 30-100 EUR/month. Fully integrated ERP EDI typically requires a one-time onboarding fee per partner plus ongoing monthly traffic/VAN fees.
What is the difference between EDI and tax reporting portals?
Government tax reporting portals record only fiscal transaction data for tax authorities. EDI encompasses the full B2B commercial cycle between private partners: purchase orders, confirmations, packing/despatch advices with SSCC codes, receiving advice, and commercial invoices.
What is the difference between EDI and EDIFACT?
EDI is the overarching technology concept (Electronic Data Interchange), like "speech" or "communication". EDIFACT is a specific international standard (language) maintained by the United Nations specifying syntax, segments, and message definitions. Other standards exist (like ANSI X12 or VDA), but EDIFACT/EANCOM is the dominant format across Europe.
Knowledge Base
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