Electronic Data Interchange (EDI) is a method of transfer of business documents that relies upon a standard format and a value-added network (VAN) to deliver the translated documents.

Standard format
The purpose of a standard format is to allow businesses to exchange data without having to know the application layouts for each participant. Businesses agree on an externally defined EDI standard, and use special software to translate their application-format data into the standard format on the sending side, and translate from standard to application format on the receiving side. There are several standards in use, with the ANSI standards in most common use in the U.S., and the EDIFACT standard in most common use in Europe. In addition, industry groups have taken these standards, and created a subset of them for use in e-commerce within their respective industries. Raytheon uses the Aerospace Industry Association (AIA) implementation of the ANSI X12 standard, version 4010.

Value-Added Network
The VAN provides a central point to use for distribution (receipt and delivery) of electronic business documents. Each company transmits its translated EDI data to the VAN, which then distributes the electronic documents based on a code inside the EDI document. Trading partners do not have to use the same VAN; a VAN can deliver documents to other "mailboxes" on its system, or route documents to another VAN, where the trading partner's mailboxes reside. This arrangement keeps the transport mechanism separate from the translation work.

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