EDI extracts information from a business process (e.g. purchase order, invoice etc). The data is usually transmitted over a Value Added Network (VAN) and delivers it to a "trading partner". Alternatively data can be transferred directly. Direct transmission occurs when a company connects directly to the computer of its trading partner using a dial-up or dedicated line. Once the trading partner receives the information, the EDI systems will automatically translate the standardized EDI data and processed. EDI deposited information in the appropriate business application. EDI implementation is a totally automated interaction between the business applications, human intervention is not required.

Here is an example of how the electronic data interchange process works. Let's presume that a buyer is sending a purchase order to the supplier.

• Buyer prepared purchase order in his purchasing system

• The EDI translator will do compliance checking and translate the message into an EDI format.

• The EDI is then securely transmitted to the supplier by a communications connection (e.g. VAN, internet etc). The communication connection will ensure the EDI transactions are sent and received.

• The file is sent either directly to AS2 recipients, a mailbox, or FTP site.

• When the supplier's computer software received the EDI purchase order it will reformat the data and imported the data into an existing application's data files (e.g. Order Entry module could be one of the EDI input).

• Once order received, the EDI software will generates an acknowledgement back to the buyer.