ERP systems often use EDI technology to facilitate communication between businesses. EDI, a technology released in the 1980s, was used to transmit electronic documents both inside and between businesses. ERP works to manage internal and external resources of an organization, helping enhance communication and decision making by consolidating business process and operations. ERP and EDI work together to make programs more efficient by adding potential communication facility and supply chain management technologies to businesses.
EDI replaced traditional methods of business communication, i.e. telephone and fax, with electronic means of document transmission. Using computers to electronically exchange communication and documents has greatly decreased administrative costs. Although ERP and EDI systems can work together to integrate all members of a business to the same communication and database system, EDI does not require ERP. EDI can run simply with a computer and access to the Internet.
ERP systems coordinate supply chain management with EDI communication exchange across organizations to streamline administrative tasks. ERP systems can reduce human error, make the business more cost efficient, and aid in communication, essentially amplifying the original benefits that EDI brought to traditional business. ERP and EDI systems together reduce the amount of paperwork needed to communicate between businesses.
Within supply chain management, EDI is the technology that focuses on the delivery of electronic communication between businesses. This communication can include orders, payment notices, and shipment verification. Since many companies use a form of EDI, many ERP systems include EDI technology in their programs. Together, ERP and EDI systems ensure that these documents are standardized based on industry and legal standards.
Consulting firms and organizations often have ERP and EDI specialists to help them handle system requirements. EDI specialists handle translation methodologies and interfacing techniques and support EDI partnership systems. ERP specialists understand the organization’s needs and processes and work to construct an ERP system to meet these needs. Both ERP and EDI specialists may also work to train users to best take advantage of the systems operating within a business.
Extensible Markup Language, or XML, is argued by some to be a replacement for EDI in some organizations. While XML is similar in nature to EDI, it is considered different because of the way each technology structures the data it contains. Currently, XML format is too large and lacks standards to implement it on as wide of an industrial scale as EDI technology. XML is not a threat to EDI, however, as all forms of e-commerce support additional advancements in e-communication, thus supporting EDI technology.