What is Electronic Data Interchange (EDI)?

Electronic Data Interchange (EDI) is correctly defined as a system linking the computers of two companies to send orders and invoices directly. This technology enables businesses to exchange documents electronically in a standardized format, which streamlines communication and reduces the need for paper-based processes. EDI facilitates faster transaction times, minimizes errors associated with manual entry, and enhances overall efficiency in business operations.

In this context, EDI serves as a critical tool for integrating supply chain processes, allowing companies to enhance collaboration and improve responsiveness to customer demands. Through EDI, businesses can automate order processing, invoicing, shipment notifications, and other essential functions, ultimately leading to cost savings and improved accuracy.

The other choices do not accurately represent EDI. For instance, a system for conducting virtual meetings relates to video conferencing rather than document exchange. A method of sending internal memos pertains to internal communication rather than inter-company transactions. A software for creating meeting agendas focuses on organizing discussions rather than facilitating the exchange of trade documents.