EDI and ERP: Differences, How They Work Together, and Why Integration Matters

EDI and ERP integration enables businesses to exchange standardised business documents, such as purchase orders, invoices, and shipping notices, directly between trading partners and internal systems. At its core, EDI functions as the external communication layer, while ERP acts as the internal system of record that executes finance, inventory, and fulfilment processes based on that data.

This integration is increasingly relevant for Australian organisations working with large retailers, manufacturers, and logistics networks. According to the Data Interchange report, 88% of EDI users have an ERP (Enterprise Resource Planning) system, an MRP (Materials Resource Planning) system or other planning system.

In this guide, you’ll learn what EDI and ERP are, how they differ, how integration works in practice, and why it matters for growing transaction volumes and compliance requirements.

What Is EDI (Electronic Data Interchange)?

Electronic Data Interchange (EDI) is a standardised method for exchanging structured business documents electronically between organisations’ computer systems. Instead of sending purchase orders, invoices, or shipping notices as paper files, fax, emails, or PDFs, EDI transmits data in predefined formats that systems can process automatically, eliminating manual data entry.

By standardising how documents are exchanged, EDI enables faster, more accurate, and more reliable exchanges between trading partners. Its adoption continues to grow as supply chains scale: the global EDI software market is projected to expand from USD 33.8 billion in 2023 to USD 86.4 billion by 2030, reflecting increasing demand for automated B2B document exchange (Fortune Business Insights).

EDI is commonly used in industries where large transaction volumes and trading partner requirements make manual processing inefficient, including:

• Retail and wholesale distribution
• Logistics and freight services
• Manufacturing and supply chains

Importantly, EDI is not an ERP system, a database, or a workflow engine. It does not manage internal operations or business processes. Its role is limited to ensuring that external business documents are exchanged accurately and consistently.

In practice, EDI is implemented through specialised platforms and networks such as SPS Commerce, B2BE, Crossfire, TrueCommerce, and Peppol access points, which manage document standards, partner connectivity, and message exchange. Once these documents are exchanged, they must be acted upon internally; this is where ERP systems take over, converting incoming data into executable business processes.

What Is an ERP System?

An Enterprise Resource Planning (ERP) system is an internal business platform that records, manages, and executes an organisation’s core operational processes within a single system of record. Its primary role is governing how internal transactions are created, validated, and controlled across the business.

ERP systems were designed to replace fragmented tools and spreadsheets by centralising data across departments, ensuring transactions are processed consistently and governed by shared rules. Industry research from Panorama Consulting shows that 83% of organisations said their ERP project met ROI expectations, highlighting the operational value of centralised systems. 

Core ERP functions typically include:

• Finance and accounting
• Inventory and warehouse management
• Procurement and supplier management
• Production and fulfilment operations
• Human resources management

Because ERP systems drive downstream processes like invoicing, stock allocation, and financial reporting, they rely heavily on accurate inbound data. Errors or delays in incoming transactions directly affect operational efficiency, which is why clean, automated data input becomes critical as transaction volumes grow.

Well-known ERP platforms include systems such as SAP S/4HANA, Oracle NetSuite, Microsoft Dynamics 365, and Odoo, all of which act as the internal system of record for executing and controlling business operations. This distinction becomes clearer when ERP is compared directly with EDI, which operates outside the organisation to exchange data rather than execute processes.

EDI vs ERP: Understanding the Core Difference

The core difference between EDI and ERP is scope and function: EDI manages the exchange of business documents between organisations, while ERP executes and controls business processes inside an organisation. They operate at different layers of the enterprise stack and are designed for distinct, complementary purposes.

The table below shows key differences between EDI and ERP in practice:

EDI ensures that documents such as purchase orders or shipping notices arrive in a consistent, machine-readable structure. ERP systems then consume that data to trigger internal actions, such as inventory allocation, financial postings, or fulfilment workflows.

In short, EDI and ERP solve different problems at different stages of the transaction flow: EDI standardises and delivers data from outside the organisation, whereas ERP governs how that data is processed internally. Understanding this separation makes it easier to see why integration is required and how ERP–EDI integration works in practice.

How ERP EDI Integration Works

At an operational level, ERP–EDI integration connects external document exchange with internal process execution. EDI is responsible for sending and receiving structured business documents between trading partners, while the ERP system converts those documents into actionable business records and executes internal workflows. This integration ensures data flows automatically from trading partners into internal processes, and back out again, without manual re-entry.

Inbound EDI Flow (From Trading Partner to ERP)

This flow describes how an external document sent by a trading partner becomes a usable transaction inside the ERP system.

1. Transport: A trading partner sends a standardised Purchase Order through an agreed EDI channel. The document arrives in a structured format designed for machine processing rather than human reading.
2. Translation: The incoming EDI file is converted into a format the receiving system can understand. Translation changes the document structure and syntax, not the business meaning of the data.
3. Mapping: Each data element, such as item numbers, quantities, or delivery dates, is aligned to the correct fields inside the ERP system. In simple terms, translation changes the language, while mapping decides where each piece of information belongs.
4. Validation: Business rules are applied to check for completeness, accuracy, and logical consistency before the data is accepted.
5. ERP Transaction Creation: Once validated, the ERP system automatically creates a corresponding purchase order record, triggering internal workflows such as inventory planning or supplier confirmation.

By automating these steps, they remove the need for manual re-keying, allowing orders to enter the system accurately and consistently, even at high transaction volumes.

Outbound EDI Flow (From ERP to Trading Partner)

This flow explains how internal ERP activities are converted into compliant EDI documents and delivered to an external trading partner. This ensures that partners receive timely, standardised updates directly from the system of record, without manual intervention.

1. ERP Event: An internal action, such as shipping goods or issuing an invoice, occurs within the ERP system. This event acts as the trigger for document generation.
2. Data Extraction: The ERP identifies and extracts the relevant transaction data associated with the event. This typically includes order references, item details, quantities, shipment information, pricing, and tax data. Only validated, approved records are selected to ensure accuracy.
3. Translation: The extracted data is converted into the appropriate EDI document format, such as an Advance Ship Notice (ASN) or Invoice. Translation applies the correct document structure, segment order, and syntax expected by the trading partner.
4. Transmission: The EDI document is sent to the trading partner through the agreed communication channel. This may include direct connections, VANs, or API-based networks, depending on the integration model in place.
5. Acknowledgements and Error Handling: Confirmation messages indicate whether the document was received successfully, while errors are flagged for review and correction without disrupting internal processing.

Together, inbound and outbound flows show how ERP EDI integration links external data exchange with internal execution. EDI ensures information moves accurately between organisations, while ERP systems act on that information to run operations. This operational linkage explains why businesses integrate EDI with ERP in the first place, to support speed, accuracy, and scale as transaction volumes grow.

Why Businesses Integrate EDI with ERP Systems

Integrating EDI with ERP systems allows businesses to remove manual handoffs between external transactions and internal execution, improving accuracy, speed, and control as transaction complexity grows.

• Reduced errors and rework: When EDI feeds documents directly into ERP records, businesses avoid re-entering data from emails, PDFs, or spreadsheets. This reduces human error, maintains data consistency, and prevents downstream corrections that disrupt finance, fulfilment, and reporting.
• Faster order-to-cash cycles: Integrated EDI allows orders, shipping notices, and invoices to be reflected in the ERP system as they are received or generated. This shortens approval cycles, accelerates invoicing, and reduces delays between order receipt, fulfilment, and payment.
• Inventory and supply chain visibility: By synchronising external transactions with internal records, businesses gain a more accurate, real-time view of stock positions, commitments, and movements. This visibility supports better planning and reduces the risk of shortages or over-allocation.
• Trading partner compliance: Many large retailers, distributors, and logistics partners require suppliers to exchange documents using specific EDI standards. ERP–EDI integration ensures these requirements are met consistently without adding operational overhead.

These benefits typically become critical when organisations experience growth-driven triggers, such as onboarding more trading partners, handling higher transaction volumes, or meeting the technical requirements of large customers. At this stage, standalone document exchange is no longer sufficient, and integration becomes necessary to maintain efficiency and control.

Ultimately, businesses integrate EDI with ERP systems to ensure external transactions are processed accurately, quickly, and at scale within their internal operations. The next consideration is how EDI should connect to the ERP. This leads to different integration approaches, each suited to varying levels of complexity and control.

Common EDI and ERP Integration Approaches

There are several established ways to connect EDI platforms with ERP systems. Each approach differs in how integration is built, who maintains it, and how control, complexity, and cost are balanced. The right model depends on transaction volume, partner requirements, internal technical capability, and long-term scalability needs.

Direct EDI Integration

Direct integration uses pre-built connectors or native modules developed by EDI or ERP vendors for specific ERP systems. These connectors translate EDI documents and connect directly to ERP workflows using vendor-maintained logic. This approach suits organisations with stable trading partner requirements that want faster deployment and predictable performance. The trade-off is reduced flexibility and potential vendor lock-in, as customisation options are limited to what the connector supports.

VAN-Based EDI

Value-Added Networks (VANs) act as intermediary networks that manage document exchange, partner connectivity, and compliance. This approach is widely used in industries with established EDI standards and large trading partner networks. While VANs reduce complexity and compliance burden, they usually involve ongoing transaction or subscription costs.

API / iPaaS-Based Integration

API-driven or iPaaS-based integration connects EDI platforms with ERP systems through middleware or custom-built interfaces rather than vendor-supplied connectors. iPaaS platforms provide cloud-based tools to orchestrate data exchange, transformation, and routing across multiple applications. This approach is well-suited to organisations integrating multiple systems beyond EDI and ERP. It offers strong scalability and flexibility, but relies on third-party platforms and requires integration governance.

Managed EDI Services

Managed EDI services outsource most technical and operational aspects of EDI integration. Providers handle setup, monitoring, error resolution, and partner onboarding. This option works well for businesses prioritising operational simplicity, though it reduces direct control and may increase long-term service costs.

In practice, EDI–ERP integration ranges from fully internal control to fully managed services, with each model offering different trade-offs between flexibility, cost, and operational responsibility. Understanding these options prepares businesses to evaluate how EDI is commonly implemented across leading ERP platforms.

ERP Systems Commonly Integrated with EDI

Most ERP platforms support EDI through external platforms, partner networks, or integration services rather than embedding EDI as a native function. In practice, ERP systems act as the internal system of record, while EDI platforms handle document standards, partner connectivity, and message exchange. The following examples illustrate how EDI is commonly implemented across different ERP systems.

SAP S/4HANA

SAP systems enable EDI through integration components that connect SAP applications with external EDI platforms, partner networks, or collaboration services. Internally, SAP uses its own message format, IDocs, which serve as the system’s structured transaction messages. 

In practice, EDI integration with SAP relies on message conversion between external EDI standards and SAP IDocs:

• Inbound EDI documents (such as purchase orders) are translated from EDI formats into SAP IDocs before being processed by SAP’s ordering and logistics workflows.
• Outbound transactions (such as invoices or shipping notices) are generated as IDocs in SAP and then converted into EDI formats for transmission to trading partners.

Oracle NetSuite

Oracle NetSuite integrate with EDI through NetSuite-certified EDI partners that connect external EDI standards with NetSuite’s internal records. NetSuite remains the system of record for orders, shipments, and inventory, while external partners handle EDI document conversion and transmission.

In practice, EDI integration is commonly used with NetSuite WMS for outbound processes such as Advance Shipment Notices (ASNs):

• NetSuite WMS generates shipment data as internal records
• An EDI partner converts this data into EDI formats (for example, EDI 856)
• Documents are transmitted to customers based on configured rules

This approach allows NetSuite to manage warehouse and fulfilment execution, while EDI platforms handle external standards and partner compliance.

Microsoft Dynamics 365 Business Central

Microsoft Dynamics 365 Business Central supports EDI through external add-ons, connectors, or integration services. Business Central remains the internal system of record, while EDI platforms manage document standards and partner communication.

In typical deployments, EDI integration works as follows:

• External EDI platforms receive and translate partner documents
• Data is mapped into sales, purchase, or inventory transactions in Business Central
• Outbound documents are generated from ERP records and sent via EDI providers

This model enables Business Central users to meet EDI requirements without embedding EDI logic directly into the ERP system.

Odoo ERP

Odoo supports EDI primarily through electronic invoicing and external EDI integrations, rather than as a built-in, end-to-end EDI network. Odoo remains the internal system of record, while document exchange and standards handling are managed either through local e-invoicing frameworks or third-party EDI providers.

In practice, EDI integration with Odoo commonly includes:

• Native support for e-invoicing standards (such as Peppol) in supported countries
• Automated generation and receipt of structured invoice documents (XML formats)
• Integration with external EDI platforms, such as SPS Commerce, Crossfire for retail and supply-chain documents

This approach allows Odoo to execute internal accounting, inventory, and fulfilment workflows while relying on external services for EDI compliance and trading partner connectivity.

Across ERP platforms, the integration model is consistent: external EDI systems handle document standards and partner communication, while the ERP executes and records transactions internally. The next section explores the key business documents most commonly exchanged through EDI in ERP environments.

Common EDI Documents Used with ERP Systems (Australia)

In Australia, EDI–ERP integrations typically centre on a core set of standard business documents that automate order-to-cash (O2C) and procure-to-pay (P2P) workflows across retailers, wholesalers, manufacturers, and logistics partners. These documents are commonly required by large Australian retailers, distributors, and 3PLs to ensure consistent, auditable transactions.

• Purchase Order (EDI 850): Used to place orders from buyers to suppliers. When integrated with ERP, incoming orders automatically create sales orders, reducing manual entry and order processing time.
• Purchase Order Acknowledgement (EDI 855): Confirms that the supplier has received and accepted the order. This helps ERP systems track order status and manage fulfilment expectations.
• Advance Shipment Notice (ASN – EDI 856): Sent before goods arrive, providing shipment contents, packaging details, and delivery timing. ERP and warehouse systems use ASNs to prepare receiving, schedule labour, and update inventory.
• Invoice (EDI 810): Automates billing by sending structured invoice data directly into the customer’s ERP or accounts payable system, accelerating payment cycles and reducing disputes.
• Goods Receipt / Receiving Advice (EDI 861): Confirms that goods were received and verified. ERP systems use this to reconcile purchase orders, deliveries, and invoices, supporting three-way matching and financial accuracy.
• Inventory Inquiry / Advice (EDI 846): Shares stock levels and availability between partners, supporting replenishment planning and reducing stockouts.

Together, these documents form the digital backbone of automated supply-chain transactions between organisations. Understanding the key document types helps clarify how EDI supports daily ERP operations.

Frequently Asked Questions About EDI and ERP for Australia

What is ERP in EDI?

In an EDI context, ERP acts as the internal system that receives, processes, and records transactions created through EDI. EDI handles the document exchange, while the ERP executes the operational workflows behind those transactions.

Does Odoo integrate with EDI systems?

Yes. Odoo can integrate with EDI platforms and e-invoicing networks through external connectors, APIs, and third-party EDI providers. This allows EDI documents, such as purchase orders or invoices, to automatically create or update records inside Odoo without manual data entry.

Is EDI a requirement for Australian retailers?

Often, yes. Many large Australian retailers, distributors, and logistics partners require EDI for supplier onboarding, especially at higher transaction volumes or for ongoing compliance.

What EDI standards are commonly used in Australia?

The most common standards used in Australia include EDIFACT and ANSI X12 for supply-chain transactions, and Peppol for electronic invoicing. The required standard depends on the industry, trading partner, and whether transactions involve private businesses or government entities.

EDI and ERP solve different parts of the same operational challenge. EDI manages how businesses exchange standardised documents with trading partners, while ERP executes the internal processes triggered by those transactions. Integration connects these external and internal worlds, allowing orders, shipments, and invoices to move without manual re-entry.

The right approach depends on transaction scale, partner requirements, and operational complexity. As an ERP implementation partner working with leading EDI providers such as Crossfire, SPS Commerce, and B2BE, Havi helps businesses design practical, scalable integration pathways with ERPs, such as Odoo and Dynamics 365, aligned to real supply chain needs.