EDI and eProcurement

EDI (Electronic Data Interchange) and eProcurement platforms automate B2B order exchange between companies. They represent the most integrated form of B2B commerce — orders flow directly from one company’s system to another’s, without human intervention.

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What Is EDI?

“EDI is the ability for two companies to communicate in an integrated way their different ordering processes. Through EDI, I can actually send a sales order over to a manufacturer or over to a distributor.”
— C1, Module 2 Lesson 3

EDI is a standardized electronic format for exchanging business documents:

  • Purchase Orders (850) — buyer to seller
  • Order Acknowledgments (855) — seller confirms receipt
  • Advance Ship Notices (856) — seller notifies buyer of shipment
  • Invoices (810) — seller invoices buyer electronically
  • Inventory Status (846) — real-time inventory levels

EDI has been used in B2B for 30+ years. It is ubiquitous in large enterprise B2B transactions and is often mandatory for large retail/distribution relationships.

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How EDI Works

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“It’s often done between two ERP systems. When someone places an order in one ERP, they want that ERP to send that order over to whoever they’re buying it from.”
— C1, Module 2 Lesson 3
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What Is eProcurement?

eProcurement is a platform that automates the purchasing process, enabling buyers to connect with suppliers and manage transactions through a portal or marketplace. Common eProcurement platforms:

  • Ariba (SAP) — enterprise procurement marketplace
  • Coupa — spend management and procurement
  • Jaggaer — B2B procurement for large enterprises
  • OCI/Punchout — connects eProcurement systems to distributor websites

Punchout catalogs are a key eProcurement integration: a buyer in an eProcurement system “punches out” to a distributor’s eCommerce site, shops normally, and then the cart is transferred back to the eProcurement system as a PO. The distributor gets the order in their ERP without the buyer leaving their procurement workflow.

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EDI vs. eProcurement

Feature

EDI

eProcurement

Age

30+ years old

15–20 years

Format

Fixed data format (X12, EDIFACT)

Web-based portal or API

Use case

High-volume, high-frequency reorders

Procurement workflow management

Flexibility

Low (rigid formats)

High (configurable)

Buyer profile

Large enterprise with IT resources

Mid-large enterprise with purchasing dept

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Impact on eCommerce Strategy

Large B2B buyers often don’t use the eCommerce website for ordering — they use EDI or eProcurement. This means:

  • eCommerce is more important for mid-market customers who don’t have EDI
  • Punchout integration extends eCommerce reach into eProcurement workflows
  • The eCommerce platform must support all three channels: website, EDI, and eProcurement
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Key Stat

  • Companies using EDI can reduce order processing costs by up to 35% compared to paper-based methods (C1, Module 2 Lesson 3)