EDI stands for Electronic Data Interchange. It’s made up of two pieces of software that work together to exchange data, like purchase orders and invoices, electronically in an unattended fashion. Back in the day when I first started doing EDI, I had a manager that explained it like this:

You have one ERP system speaks one language and the customers ERP that speaks another. In order to do business, we need a translator that understands and speaks both languages. This is what EDI does. It allows you to export a file from your ERP in any format (i.e XML, .csv, etc) that EDI will then translate into standardized EDI X12 format that your customer’s EDI system will know how to read and process.