The evolution of EDI

As more and more companies switch to EDI for business to business communication, there is no doubt that it does bring significant benefits. This sudden popularity notwithstanding, EDI is anything but a revolutionary concept.

As communications networks and the internet grew, so did the realization that these can be used to simplify and speed up inter-business communication. It is a natural evolution to go from paper-based orders to an electronic one. Some companies have been trying to make the transition work, but a standard was needed in order to make it safe and secure.

Electronic data interchange is not new. Companies have been using it to great effect for decades. These are usually industries where the products have a short shelf life but high value. The airline industry is a good example; as empty seats are lost profits.

How has EDI suddenly become so popular? One reason appears to be the drop in implementation costs. Almost every part of the system is now cheaper. Computer hardware is cheaper. Telecom links interconnecting the globe have also dropped in cost. This had made the transition costs more palatable to a wider swatch of businesses.

The another reason is the business efficiency that comes with it. A company can EDI outsource to another firm entirely and then enjoy the benefits without having to go through the implementation. Then a whole plethora of different business process improvements will be made possible.

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Act Data is an EDI service bureau that provides EDI solutions and logistics standards implementation like ucc128.