How did EDI originate?

EDI began in the mid-1960s when advances in technology made computer-to-computer data transmission possible using agreed formats. US railroad operators were the first industry to develop standard EDI formats, forming a committee to reconcile how shipping companies, airlines and trucking firms presented cargo information, initially focused on order-to-cash and procure-to-pay processes.

How does EDI reduce errors compared with paper-based processes?

By automating the exchange of trading documents, EDI removes much of the manual data entry that introduces human error into paper-based processes. Fast, secure file transfer supports accurate sales performance tracking, inventory operations and overall supply chain management, while also removing the time-consuming, repetitive tasks that come with printing, posting or rekeying documents.

Do small businesses benefit from EDI as much as large retailers?

Yes. While EDI became established to support large-scale business-to-business transactions, small and medium businesses increasingly benefit too, whether they are mandated to use it by a retail trading partner or adopt it independently as they scale. Businesses that prefer not to manage the technical detail themselves can rely on a provider to handle onboarding, mapping and ongoing support.

← All articlesEDI

EDI in the supply chain

Learn how EDI in the supply chain allows businesses, from SMEs to large corporations, to automatically exchange data with eachother frictionlessly.

Transalis13 October 2021Updated 24 September 2026

Key takeaways

EDI automates the exchange of business documents such as orders, invoices, Advance Shipment Notices, remittance advice and inventory lists between supply chain trading partners.
EDI traces back to the 1960s, when US railroad operators first agreed standard formats to reconcile how shipping, airline and trucking partners exchanged cargo information.
The development of File Transfer Protocol in the 1970s and 80s spread EDI use beyond transport into sectors such as food and beverage, banking and automotive.
By automating invoice and document exchange between trading partners, EDI speeds up payment, helps optimise stock and inventory, and improves cashflow while reducing errors from manual data entry.
Businesses of all sizes benefit from EDI, including SMEs, some mandated by a retail partner and others adopting it independently as they scale up their operations.

What is EDI and how does it benefit the supply chain?

EDI, or Electronic Data Interchange, is technology that lets supply chain trading partners exchange business documents, such as orders, invoices, Advance Shipment Notices and inventory lists, automatically and in a standardised format. It removes the need for manual data entry, speeds up processing from days to minutes, reduces errors, and helps businesses manage cashflow, stock levels and trading partner relationships more efficiently.

EDI in the supply chain delivers a host of benefits over paper-based processes including accuracy improvements and the avoidance of time-consuming repetitive tasks and the risk of human error. How can you transform your business with EDI in the supply chain?

EDI, standing for Electronic Data Interchange, has revolutionised how business is done in industries across the world. It is the technology that enables supply chain partners to automate how they transfer business information to and from each other.

Trading partners access EDI through a standardised format to facilitate the exchange of a vast range of document types.

They include orders, invoices, amendments, acknowledgments, Advance Shipment Notices, remittance advice, inventory lists, delivery instructions, product catalogues, and sales reports.

The present-day use of EDI in the supply chain is ubiquitous in many sectors, with larger retail players mandating its use by their manufacturers, suppliers and partners in warehousing, logistics and delivery.

How EDI started

EDI in the supply chain can trace its origins back to the mid-1960s when advances in technology made the computer-to-computer transmission of data in agreed formats possible.

The first industry to develop standard EDI formats was transport, specifically US railroad operators. They formed a data coordinating committee whose aim was to reconcile the many different ways that industry partners such as shipping companies, airlines and trucking firms presented cargo information. Initially the processes supported centred around order-to-cash and procure-to-pay cycles.

With the development of FTP (File Transfer Protocol) in the 1970s and 80s, the use of EDI in the supply chain expanded to other sectors such as food and beverage, banking and automotive. Along with the spread into different industries came a plethora of EDI standards governing format and communication protocols.

Now more and more EDI users, including small businesses, are tapping into the benefits of automated processes.

Accuracy and transparency

By automating the exchange of essential trading information, EDI in the supply chain delivers many benefits, including cost efficiencies, speed of turnaround, and improved accuracy and transparency.

Fast and secure file transfer supports business relationships, sales performance, inventory operations and overall supply chain management. Not to mention by dispensing with paper-based processes altogether, EDI can legitimately claim to be a green technology.

Through EDI, the Accounts Receivable team of the supplier is seamlessly and automatically connected to the accounts payable system of the buyer. This cuts down the timing of any given transaction from days or weeks to just minutes or hours.

By removing the need for human intervention, the risk of errors is minimised. This has obvious advantages:

Speeding up payment
Optimising stock and inventory
Improving cashflow

In turn, enhanced performance can boost a company’s reputation for efficiency in the eyes of its partners and customers, so strengthening the chances of loyalty and repeat business.

Benefits for businesses large and small

While EDI has become an accepted technology to support large-scale B2B transactions, more and more SMEs are reaping its benefits too. Some small businesses are mandated to use it by a retail partner, with others keen to adopt it anyway as they scale up.

Here at Transalis, we know that most businesses prefer not to get involved with the complex ins and outs of EDI in the supply chain. They just want to enjoy the benefits and rely on a provider to do the heavy lifting.

With us, you do not have to spend time on the technicalities or keep up with regulatory requirements. Instead, you benefit from price transparency, frictionless migration to maintain BAU (Business As Usual), shorter lead-in times for implementation, comprehensive operator training and reliable, ongoing post-sale support. We also offer a dedicated on-boarding process for your trading partners.

Frequently asked questions

How did EDI originate?: EDI began in the mid-1960s when advances in technology made computer-to-computer data transmission possible using agreed formats. US railroad operators were the first industry to develop standard EDI formats, forming a committee to reconcile how shipping companies, airlines and trucking firms presented cargo information, initially focused on order-to-cash and procure-to-pay processes.
What kinds of documents can businesses exchange using EDI?: EDI supports the exchange of a wide range of trading documents, including orders, invoices, amendments, acknowledgements, Advance Shipment Notices, remittance advice, inventory lists, delivery instructions, product catalogues and sales reports. Trading partners access these through a standardised format so different computer systems can read and process the same document correctly.
How does EDI reduce errors compared with paper-based processes?: By automating the exchange of trading documents, EDI removes much of the manual data entry that introduces human error into paper-based processes. Fast, secure file transfer supports accurate sales performance tracking, inventory operations and overall supply chain management, while also removing the time-consuming, repetitive tasks that come with printing, posting or rekeying documents.
Do small businesses benefit from EDI as much as large retailers?: Yes. While EDI became established to support large-scale business-to-business transactions, small and medium businesses increasingly benefit too, whether they are mandated to use it by a retail trading partner or adopt it independently as they scale. Businesses that prefer not to manage the technical detail themselves can rely on a provider to handle onboarding, mapping and ongoing support.

Want this working in your business?

We will look at how you trade today, and show you what moving to Transalis involves, while your business keeps trading.