Electronic Data Interchange (EDI)

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An exchange of information or documents electronically between companies

Electronic Data Interchange (EDI) is a system of business communication used widely today, but not many know that it stemmed from a diplomatic row.

In June 1948, three years after World War II ended, the Soviet Union cut off transportation links between western Germany and parts of Berlin controlled by the Allies.

This meant that food, supplies, and medicine could not reach the millions of Germans still reeling from the effects of the war.

To overcome the blockade, the Allies started a massive effort called the Berlin Airlift over the next 13 months, sending millions of tons of food and other supplies into Berlin.

To track the massive volumes of cargo, a US logistics team, led by US Army Master Sergeant Edward Guilbert, developed a standard manifest system that could be transmitted by telex or telephone.

This simple but brilliant idea then evolved to become what we know as EDI today.

Think of EDI as a universal language between computers that allows for the structured transmission of data. This can come in the form of standardized business documents including invoices, purchase orders, bills of lading and shipping orders.

EDI not only makes it easier to transmit these documents through electronic means but also cuts down on costs, reduces errors and boosts productivity. This is especially useful in logistics, where paper documentation is crucial in the transportation of goods across borders.

Some of the biggest retailers in the world, such as Costco, use EDI as a way to manage the information flow of their supply chains. It makes business sense and saves them money at the same time.

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