Electronic Data Interchange Intercompany computer-to-computer exchange of business documents in standard formats.

Determines capability of communicating information between two organizations electronically instead of traditional mail, courier or even fax. LIS would consist of real time data on inbound material flows, production status, product inventories, customers shipments and incoming orders. Can be visualized in two different perspectives viz. external perspective and internal prospective. (a)External perspective includes need to communicate order shipment and billing information with vendors, financial institutions, transport carriers, and customers. (b)Internal perspective includes exchange of information on production schedule and control data. Benefits of EDI are: (a)Increased internal productivity though faster information transmission as well as reduced information redundancy. (b)Better accuracy by reducing the number of times and individuals involved in data entry. (c)Improved channel relationship. (d)Increase ability to compete internationally.