Why EDI Evolved ?

Let us consider a simple business scenario. A Customer from PO department who wants to purchase an item creates a purchase order and then faxes it to the suppliers. At the moment vendor receives the purchase order and manually keys in a sales order. The vendor’s system generates a confirmation date that is sent back to the customer via fax or mail. The vendor then ships the goods via a carrier. The carrier delivers the products to the customer. When the goods are shipped, the vendor invoices the customer. The customer makes the payment by check, and the vendor deposits the check in the bank. Finally, funds are transferred from the customer’s account to the vendor’s account.

Now It clears how much of information needs to be transferred and tracked to run the business, which in reality it is called trading partner. This simple scenario requires the exchange of various documents between several business partners at different times.

All this electronic data was exchanged using floppy disks and other secondary devices. So, ANSI committee was formed to define the standards. Hence the electronic exchange of business documents in a standard format gave birth to what is known as EDI, today the business world had accepted as one of most important entity.