Electronic Data Interchange is used to transfer electronic documents or business data from one trading partner to another trading partner without human intervention.
Electronic data interchange saves a company money by providing an alternative to, or replacing information flows that involve a large amount of human interaction and materials such as paper documents, meetings, faxes, etc.
Electronic data interchange minimizes the handling expenses of distributing, organizing, and searching paper documents. It enables a company to take advantage of the benefits of storing and manipulating data electronically without the cost of manual entry. Another benefit of electronic data interchange is reduced errors because eliminates the need to reenter documents on the destination side. Another advantage over paper documents is the speed in which the trading partner receives and incorporates the information into their system thus greatly decreasing cycle times. For this reason, electronic data interchange can be a significant component of just-in-time production systems.
There are a few barriers to implementing electronic data interchange. One of the most noteworthy barriers is the change in business procedures. Existing business processes built around slow paper handle may not be suited for electronic data interchange and would require changes to accommodate automated processing of business documents. Another significant barrier is the time and money spent in the preliminary set-up. The initial expenses and time that surfaces from the adoption, customization and training can be expensive and therefore may discourage some companies.