The Advantages and Disadvantages of Electronic Data Interchange (EDI)

The Advantages and Disadvantages of Electronic Data Interchange (EDI)

It is quite easy to see how the technology we use today has vastly improved the processes of many industries.  For one, technology improves the workforce by introducing something known as Electronic Data Interchange, or EDI.  According to the National Institute of Standards and Technology, EDI is “the computer-to-computer interchange of strictly formatted messages that represent documents other than monetary instruments.”

In addition, the NIST states that EDI could also refer to “a sequence of messages between two parties, either of whom may serve as originator or recipient. The formatted data representing the documents may be transmitted from originator to recipient via telecommunications or physically transported on electronic storage media.”

This Fencecore process, then, involves using machines to perform what would have traditionally been a human task (or tasks).

EDI ADVANTAGES

It should not come as much of a surprise that there are many advantages to using EDI in your business.

  • Cost effective:  cutting paper waste and all paper processing quickly reduces paper costs
  • Efficiency: cloud-computing and machine learning eliminates computational repetition, redundancies, and errors that would be more common among humans
  • Speed: the electronic transfer of data ensures more consistency and accuracy without sacrificing pace
  • Accuracy: by using cloud computing technology, you are able to transfer documents faster than would have otherwise been possible
  • Service: faster processing means better customer service, over all; in turn, helping you to expand your customer base

EDI DISADVANTAGES

As with all things, wherever there are advantages their might also be disadvantages. So, with that, here are some ways that EDI might not serve your business; which means you should consider a different way to network and incorporate information technology.

  • EDI uses multiple standards which can often limit how many devices can be connected to the network. The XML web-text language, for example, does not have strict standardization and that allows for multiple programmers to contribute to the coding.
  • In addition to rigorous standards, EDI could also have too many rigorous standards bodies with too many document formats which can malfunction in the face of cross-compatibility issues, which you will definitely encounter as you continue to apply more standards
  • EDI has a higher price point, which can be a little pricey for new business owners
  • Large companies might actually find that EDI can limit the types of partnerships you can develop with.
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