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Electronic Data Interchange, or EDI as it is most commonly referred to, is a protocol that allows two systems to connect with one another for the purpose of exchanging data electronically. This EDI protocol has been around since the early 1960s when it was first used to send cargo information between the chemical company Du Pont and Chemical Leahman Tank Lines.
In 1982, companies like Ford and General Motors began requiring their suppliers to transfer information via EDI. By 1991, EDI was being used by around 12,000 businesses. Since then, that number has just continued to grow as businesses realized the efficiency they could gain through exchanging information through this secure channel.
To understand why EDI has become so popular among business users you must understand the basics terms of EDI. According to EDI Basics, the following definitions apply to EDI:
EDI has become a requirement in the transportation industry as shippers, carriers, and brokers all aim to integrate and exchange information as fast as possible. With millions of transactions, EDI affords the ability to exchange the bill of lading’s, shipping manifests, shipping statuses, invoices, and remittances. The major advantage of EDI is it reduces manual tasks, decreases costs, and eliminates human error.
|204||Carrier Load Tender||Used by shippers or 3PLs to tender an offer for a shipment to a full truckload motor carrier|
|210||Freight Details and Invoice||Electronic invoice complete with shipment details|
|211||Bill of Lading||Electronic bill of lading which states shipment date, reference numbers, shipper, consignee, and shipment contents|
|212||Delivery Trailer Manifest||Allows carriers to provide consignees with the contents of the trailer|
|214||Shipment Status Message||Provides shipments statuses including shipper information, consignee information, current shipment location, dates, proof of delivery, and shipment description|
While EDI has helped streamline information exchange between companies for decades, there are a few disadvantages to consider. The first is that EDI communication is always one-way, meaning information is sent from system A to system B without confirmation in the transaction set.
To receive a confirmation of receipt, system B would have to send a confirmation transaction back to system A. The second major disadvantage of EDI is that it does not provide a timeframe guarantee for transmissions. Transmissions can take anywhere from fifteen to two-hundred and forty minutes. In an age where information needs to be exchanged immediately, this can be a major deterrent to EDI use.
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