Electronic Data Interchange (EDI)

Published July 15, 2020

Electronic Data Interchange (EDI) is the structured, computer-to-computer exchange of business documents between trading partners in a standardized electronic format. EDI replaces paper documents — purchase orders, invoices, advance ship notices (ASNs), bills of lading — with electronic equivalents that flow directly between business systems without manual re-entry. In the shipping and logistics industry, EDI is the foundation of automated order processing, shipment notification, and carrier communication.

Common EDI Transaction Sets in Shipping

• EDI 810: Invoice — electronic billing from supplier to buyer
• EDI 820: Payment order/remittance advice
• EDI 850: Purchase order
• EDI 856: Advance Ship Notice (ASN) — notifies the receiver of an incoming shipment’s contents, packaging, and expected arrival
• EDI 204: Motor carrier load tender — shipper tenders freight to a carrier
• EDI 214: Transportation carrier shipment status message — carrier provides shipment tracking updates
• EDI 997: Functional acknowledgment — confirms receipt of an EDI transaction

EDI and Retailer Compliance

Large retail buyers (Walmart, Target, Amazon, Home Depot) require their suppliers to be EDI-capable as a condition of doing business. Non-compliance — including late ASNs, incorrect document formats, or missing transactions — triggers chargebacks that can represent a significant percentage of invoice value. EDI compliance is a supply chain hygiene requirement for any company selling into major retail channels.

EDI vs. API Integration

Traditional EDI uses AS2, VAN (Value Added Network), or FTP to exchange fixed-format files between trading partners. Modern API-based integrations offer more real-time data exchange and easier implementation, but many legacy retailer and carrier systems still require EDI. Companies frequently run both EDI and API connections depending on the trading partner.