EDI

What is EDI?

EDI (Electronic Data Interchange) is the structured, automated exchange of business documents such as orders, despatch advices and invoices between the computer systems of different organisations, in a pre-agreed message standard and without manual intervention. Where a PDF sent by email has to be read and retyped by a person, the receiver’s ERP system reads an EDI message directly. That makes EDI the digital backbone of supply chain collaboration in retail, logistics, automotive, pharmaceuticals and food.

EDI = doing business system-to-system, without paper, email or retyping.

🧠 What exactly does EDI do?

EDI replaces the paper or manual document flow in the order-to-cash chain. With EDI, organisations can:

• Send and receive orders automatically - the customer’s order arrives as a record in the supplier’s order system
• Confirm or change orders - the supplier replies with an order response, including adjusted quantities or delivery dates
• Share despatch information - the delivery note travels ahead digitally, with SSCC pallets, GTINs, batch numbers and best-before dates
• Confirm receipt - the buyer reports which goods actually arrived, including differences and damage
• Process invoices digitally - the invoice is matched automatically against order and receipt (three-way match)
• Share stock, prices and sales - for vendor managed inventory and inventory management across the chain

The result is fewer keying errors, shorter lead times and a reliable basis for tracking and tracing. EDI does not deliver compliance by itself, but it does provide the digital trail you need to trace batches quickly, for example under GMP or in the food chain.

📦 Which EDI standards exist?

EDI is not one standard but a family of message formats. The most important ones:

An EDIFACT message is compact text: segments end with ', data elements are separated by + and components by :. An interchange opens with the UNB envelope and closes with UNZ; each message inside runs from UNH to UNT.

🔄 Which EDI messages are used most?

DESADV is the hinge between IT and the physical flow: the label with the GS1-128 barcode on the pallet carries the same SSCC as the message, so the receiver’s WMS recognises the pallet as soon as it is scanned.

🔧 How are EDI messages transmitted?

Besides the format, partners agree on the transport. Common routes:

• AS2 - defined in RFC 4130 (2005): messages travel over HTTP(S), are signed and encrypted with S/MIME, and the receiver returns a signed receipt (MDN). This provides non-repudiation
• AS4 - a more modern web-services-based counterpart (a profile of OASIS ebMS 3.0); mandatory in the Peppol network since 1 February 2020, after which AS2 was phased out there completely
• SFTP - file transfer over SSH, simple but without built-in per-message acknowledgement
• VAN (Value Added Network) - an EDI service provider that routes, translates, archives and monitors messages, so you need one connection for hundreds of trading partners
• APIs - modern platforms offer REST/JSON alongside classic EDI, often through an integration platform that translates between the two

In practice an EDI translator (mapping) sits between the network and the ERP: it converts EDIFACT or X12 into the internal format (for example an SAP IDoc) and back.

🏭 How does EDI connect to ERP, WMS, MES and TMS?

In ISA-95 terms, EDI is a level 4 matter: it connects the business systems of different organisations. Yet the shop floor feels it immediately. In automotive, a DELJIT message from the carmaker calls off parts in production sequence, and the supplier’s MES and WMS must respond within hours. EDI is therefore a link in supply chain management where IT outages can bring factories to a standstill.

🧱 How do you implement EDI with a trading partner?

A typical project runs in six steps:

1. Collect the partner’s requirements - which messages (ORDERS, DESADV, INVOIC), which standard and version (for example EANCOM D.01B) and which transport (AS2, VAN, Peppol)
2. Align master data - GLNs for locations and GTINs for items according to GS1, so both sides use the same codes
3. Build the mapping - translate the fields of the partner message into your ERP and capture business rules (units, VAT, discounts)
4. Test with the partner - exchange test messages and check both syntax and content, including error scenarios and cancellations
5. Go live with monitoring - watch acknowledgements (MDN or CONTRL) and set alerts for messages that get stuck
6. Manage the lifecycle - renew certificates in time through certificate management and follow the partner’s new versions

A simple partner with three message types often takes a few weeks with an experienced integrator; large retailers provide their own implementation guides for this.

🔐 What security risks does EDI carry?

EDI connections cross organisational boundaries by definition, which makes them part of your supply chain risk:

• Encryption and integrity - use TLS and signing (AS2/AS4), and never unencrypted FTP
• Certificate management - expired AS2 certificates are a classic cause of stalled order flows
• Invoice fraud - a changed IBAN in an INVOIC can be processed unnoticed; always confirm changes to bank details outside EDI
• Dependence on service providers - an outage or ransomware attack at a VAN or EDI provider halts the order flow of hundreds of customers
• Segmentation - EDI servers belong in a DMZ, not in the same network as production systems

Under NIS2 and the Dutch Cybersecurity Act, essential and important entities must manage the security of their supply chain. Include EDI service providers in your third party risk management and supplier security.

🇪🇺 What does the European e-invoice mean for EDI?

E-invoicing is a specific form of EDI that legislation is pushing forward:

• Since 1 January 2017, suppliers to the Dutch central government must invoice electronically under new contracts
• Since 18 April 2019, all Dutch contracting authorities must be able to receive e-invoices under EN 16931 (Directive 2014/55/EU, implemented in the Public Procurement Act 2012)
• ViDA (VAT in the Digital Age), adopted by the Council in March 2025, makes e-invoicing under EN 16931 mandatory for B2B transactions between EU member states from 1 July 2030; a PDF sent by email will then no longer count as an e-invoice

Companies already using EDIFACT INVOIC should therefore check whether their invoices also comply with EN 16931 or can be sent through a Peppol access point.

❓ Frequently asked questions

What is the difference between EDI and an email with a PDF?

A PDF sent by email is readable for people, but it has to be retyped or read with OCR. EDI delivers structured data that the receiver’s ERP system processes directly. EDI is therefore faster, less error-prone and suited to large volumes.

What is the difference between EDIFACT and EANCOM?

UN/EDIFACT is the general, international EDI standard of the United Nations, with hundreds of message types. EANCOM is a subset of EDIFACT that GS1 has narrowed down and documented for retail and other sectors. Every EANCOM message is therefore a valid EDIFACT message.

Is EDI the same as Peppol?

No, Peppol is an international network with agreements for exchanging e-invoices and orders, originally set up for public procurement but increasingly used for B2B as well. Peppol is a form of EDI that uses UBL messages and the AS4 protocol. Classic EDI usually uses EDIFACT or X12 over AS2, SFTP or a VAN.

Will APIs replace EDI?

APIs are increasingly used for real-time information such as stock levels and track-and-trace statuses. For orders and invoices between large supply chain partners, EDI remains the norm because the message standards and implementation guides have been worked out over decades. Many integration platforms therefore support EDI and APIs side by side.

What is a DESADV message?

A DESADV (Despatch Advice) is the electronic despatch message a supplier sends before the delivery. It describes which items in which quantities are on which pallets, identified by SSCC codes. This lets the receiver scan and check the delivery quickly.

What does EDI cost?

The cost of EDI consists of an EDI translator or integration platform, building mappings per partner and often a subscription or transaction fees at a VAN. Small suppliers sometimes use a web portal (WebEDI) from the provider instead of a full integration. The more messages you process, the faster a full EDI integration pays for itself.

📌 In summary

EDI is the standardised, automated exchange of orders, despatch advices and invoices between organisations, and therefore the digital backbone of supply chain collaboration. Standards such as EDIFACT, EANCOM and X12 define the format; AS2, AS4, SFTP and VANs handle the transport. If you connect EDI properly to ERP and WMS, manage certificates and include the EDI chain in your supplier security, you are also ready for the mandatory e-invoice from 2030.