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Nobody likes change, but as your business grows, you don’t have a choice but to embrace it. You need to consider adopting efficient solutions like EDI to streamline transactions with trading partners. But given the wide variety of EDI software and services on the market today, it can be difficult to find the one that best fits your company’s needs. Whether you’re new to EDI or a long-term user, this buyer’s guide will help you better understand your choices so you can find the EDI solution best suited to deliver a strategic advantage to your company.
Specifically, this guide will provide you with information on the following topics:
Electronic Data Interchange (EDI) software is a robust technology that facilitates the exchange of business documents from one computer to another in a standard electronic format between trading partners, allowing them to work together efficiently. Thousands of standard business documents can be sent automatically through the EDI software. Some common examples include shipping statuses, invoices, purchase orders, inventory documents, and customs information.
EDI technology eliminates manual B2B communications, allowing companies to save time and money across the supply chain, increase processing speed, reduce errors, improve collaboration between trading partners, and increase customer satisfaction and loyalty. Because EDI is entirely paperless and requires little to no human intervention, business documents flow directly from the sender’s computer system (e.g., a logistics system or an enterprise software) to the recipient’s computer system (e.g., an order management system).
|Identifies the data necessary to write, retrieve the necessary information from any corresponding system (ERP or sales order, for example), arranges the data in a structure that the vendor can understand (meets the format of their system or a pre-agreed upon order structure), and send the request to the vendor
|Translates information to a format that is more easily used in new environments. This includes flat-file, XML and others.
|Use of protocols such as Secured FTP and HTTPS to secure communication and keep your transactions between the involved parties.
EDI has been around since the late 1960s, and the benefits have always proven to be dramatic. Here’s a look at some of the benefits of EDI software:
|Accelerate the business cycle by about 61 percent. EDI messages can be sent automatically using pre-configured workflows, so transactions between trading partners can be completed in just a few minutes rather than days or weeks.
|Processing transactions manually has a greater risk of human error, which can greatly affect your business. Experts estimate that data quality problems cost U.S. companies approximately $3 trillion per year. EDI can deliver around a 30 to 40 percent reduction in transactions with errors.
|Reduced transaction costs
|Decrease your transaction costs by about 35 percent. For buyers handling numerous transactions, EDI software allows savings up to millions of dollars annually due to early payment discounts.
|Better customer experience
|Ensure the synchronization of expectations between the seller and the buyer, thereby reducing ambiguity between parties and achieving higher levels of customer satisfaction. Some estimates suggest that EDI can decrease the order-to-cash cycle time by about 20 percent, improving business partner transactions and relationships.
|Improved inventory management
|Inventory management is crucial, as it affects every area of your business - from the warehouse floor to customer support. By automating the process of exchanging business documents, you can easily increase your supply chain visibility. EDI has a tracking feature that allows you to easily determine what inventory you have and where it is. And because EDI provides real-time updates, you can effectively allocate your resources, prevent shortages and virtually eliminate excess inventory.
Whether your company is a small business, a nonprofit organization, or a multinational corporation, you must have an accurate, efficient and timely way to exchange business documents with your trading partners. This means the integration of EDI solution into your current B2B communication system. Without an EDI-based system, passing orders and other documents to trading partners is costly, time-intensive, and error-prone.
There are many different types of EDI, including direct EDI (also known as point-to-point), web-based EDI, an EDI network, and full B2B integration. Each type of EDI has its benefits and drawbacks depending on the size and need of your business.
Choosing the right EDI solution for your company is quite difficult, as there is a wide range of choices available on the market. While some organizations prefer to manage their own internal EDI system, many look to work with an EDI provider. Whichever path you choose, here are some of the popular EDI solutions to consider:
While EDI holds a lot of promise, there are some challenges as well. Here are some of the most common EDI issues:
Understanding EDI document flow is key to considering the different service and software offerings available to you on the market:
Given the number of steps in the EDI document flow, it’s not surprising that there are providers who focus on each step. There are also end-to-end solutions providers. In fact, some ERP systems include EDI as an integrated module that is part of the underlying system.
The first step of the EDI document flow is converting a business document into an EDI file. Many software solutions on the market provide EDI translation. An important consideration when reviewing EDI translation software is compatibility with your accounting/ERP software. Interoperability is the key concern when evaluating EDI translation offerings.
EDI VAN providers handle the delivery of the EDI document. The VAN provider will map the document to the recipient’s standards, provide testing services, and ensure proper file delivery.
One of the most important considerations when purchasing an EDI solution is the breadth of the service. Whether you are looking for translation software, a VAN provider to partner with, or a full ERP solution which incorporates EDI capabilities, there are a large number of options available to your company to consider. If you are looking to uncover the ones that are appropriate for your business, consider utilizing our free software search service.