The abbreviation EDI is used in a variety of business applications, but one can be forgiven for having trouble keeping track of the variety of initialisms, acronyms and abbreviations out there today. To clarify, EDI stands for electronic data interchange, which in essence means going paperless with automated data transfer in freight, logistics or anywhere else. In other words, all those many processes that could require an often lengthy paper trail and human effort do not with the automation of EDI. While it's not a new process (it traces its origins to the '60s), electronic data interchange allows information to move directly from a computer application in one organization to a relevant computer application in another - like an order management system, which can then generate documents automatically using that data. According to IBM, EDI standards "define the location and order of information in a document format." This means that in addition to saving trees, EDI allows businesses to exchange data practically instantaneously rather than waiting for physical documentation or even the additional step of email - ensuring security through the aforementioned direct, partner-to-partner connection or through a third-party network. It also cuts way down on human error that can occur through transcription. The freight and logistics industry uses many of the processes typical to any business, so there are obvious correlations there, but it may benefit even more from EDI than others.
How is EDI used in freight and logistics?
EDI has a number of applications in freight and logistics, with some of the most common forms of this automated data interchange including:
- Invoices
- Purchase orders
- Payment documentation
- BoLs (bills of lading)
- Advance ship notices and shipping status
In other words, EDI is used to automate just about any key data that makes day-to-day freight and logistics operations go. As a matter of fact, there are multiple references to EDI as the "lifeblood" of logistics as it allows all this documentation to go directly to the partner who needs it - and logistics is all about partners in some combination of carriers, shippers or logistics service providers (LSPs). The most accurate (and fastest) data comes through real-time EDI updates, and working with an LSP that integrates EDI as that third-party network mentioned above means a more efficient operation. The LSP can connect a shipper with multiple partners depending on their needs to effortlessly automate numerous freight and logistics tasks, while still overseeing operations with experienced professionals. This is also important for smaller companies that lack the resources to implement EDI on their own, as the LSP can help make that happen.
Want to make EDI work for you, or need help making it even better? Let us know and we'll follow up to discuss your company's unique shipping and logistics needs. For more information about us, or logistics and supply chain issues in general, check out our Freight Guides.
