Electronic Data Interchange: A Definition and Perspective

Introduction In most firms, a significant effort is spent communicating with other firms. The information exchange pertains to such matters as requests for quote, bids, purchase orders, order confirmations, shipping documents, invoices, and payment information. A recent survey showed that almost 80% of the documents transacted between firms use paper as the medium to carry the information. Electronic Data Interchange (EDI) promises to replace paper with electronic communications. Its impact on firms can be significant: Information can move faster with greater accuracy; overhead costs may be reduced; inventories can be lowered; and customer relationships can be strengthened.