Any idea since when EDI has been used as a business solution? It goes back to as early as the 1970s. Yes, contrary to what most people believe, EDI is quite an old technology dealing with the exchange of documents between trading partners, businesses, or companies in an electronic format. Stands for Electronic Data Interchange (EDI), it facilitates the interchange of business data across various platforms and programs. The software has replaced manual processes of faxes, phone calls, paper communication between partners for ordering or selling goods and services. Thus, bringing manufacturers, retailers, and distributors together through electronic information systems in a business-to-business network.
Put simply, EDI is a computer-to-computer exchange of documents between businesses converted into a standard electronic format. The system translates data from an organization into universal standards and transmits them to trading partners and map them into useful and understandable information. From invoices to automated purchase to health insurance codes and shipments, EDI enables the handling of all crucial B2B communication tools. There are two primary elements for EDI:
- Electronic documents in EDI replace paperwork
- Data exchange takes place in a standardized format
EDI integration services offer benefits, such as automated workflows, reduced costs, reduced errors, faster document processing, and enhanced relationship between partners & customers. One common example of EDI is – a retailer submitting an order for goods to purchase from the manufacturer, the latter sending an electronic invoice, and both the parties exchanging acknowledgment receipts.
In this blog, we will discuss EDI integration and its benefits in detail. So, here is an overview of EDI integration and its advantages for businesses:
What Is EDI Integration?
ERP system stores all your company information, including inventory levels, details about purchases, shipping, invoicing, billing, and more. Once integrated with your EDI, the latter access and use the information required and create electronic documents you need for your business. When you collaborate with partners, suppliers, or clients, they have specific requirements about how they want to conduct the business. Hence, everything from pricing, to ship-to-addresses, and more is determined while finalizing the deal, forming the basic guidelines to be followed when transactions take place. This is the whole idea behind EDI integration to facilitate trading between partners or businesses.
Considering the hyper-digital world that we live in today, most businesses use this EDI system for all the important B2B transactions. However, the companies that are reaping the maximum benefits of automation through EDI data are the ones that tap into its full potential. It uses data standards, such as EDIFACT or ANSI to make sure that the request sent by one party is accessible or understandable by the supplier’s information system for successful transmission and order placing. Needless to say that it contributes to successful collaboration between companies, especially helping suppliers to consistently fulfill all the requirements and conditions of their clients, be it distributors or retailers. EDI software implementation organizes all this when fields are mapped to each other, ensuring that only relevant data is used. Once the request is received, the system converts the data so that it matches with the recipient’s system. Also, significant information is used to generate outgoing and incoming documents.
EDI integration refers to setting up a comprehensive EDI workflow between partners and includes elements, such as:
Trading partners- the ones you are exchanging business documents with using EDI
EDI documents and transactions- messages, or documents that you need to exchange with your trading partners
Endpoints- the IT system that needs to send, receive, and process EDI data, such as ERP, sales system, logistics systems, etc.
EDI standards- EDI formats that transmitted messages need to follow
EDI protocols- technologies that are used to transmit messages
Once you define all the above-mentioned elements, you can move ahead to set up the EDI workflow and system using the best technology or software. As you integrate EDI, you will witness the following benefits to your business:
A small and simple error can take a toll on business success and health. Hence, companies are trying to curb mistakes that are common in manual tasks and that is what EDI exactly helps in. With an EDI service provider on board, your employees no longer have to enter data manually into ERP (Enterprise Resource Planning) software or order system, which is quite prone to errors. This improves the reliability of the information exchanged between partners or businesses. The whole process is automated, eliminating manual data exchange and human-made errors. Also, there is no duplication of data which saves a lot of time and effort. By accessing the ERP system, EDI serves as a trusted medium to transfer information and also ensures that the data received is accurate and all the conditions are fulfilled. Thus, enhancing the relationship between trading partners, reducing costly chargebacks, incorrect pricing, and late deliveries.
Saves Time & Money
There are some straightforward and obvious benefits of EDI development solutions and enhanced speed in which information is traveled between EDI systems is one of the top ones. It automatically creates incoming orders without any user input or additional efforts by an employee. Moreover, there are no delays in the process due to differences in time zones or getting familiar with the whole team over a phone call. EDI cust processing time remarkably by 40-60%. No more paper trails, faxes, or manual exchange of data leads to better cash flow, improved buy-sell cycle time, reduced inventories, and short lead times. Also, transactions can be done within minutes which earlier used to take weeks due to manual transfer. To add more to benefits, it costs one-third of what paperwork would, saving money usually spent on paper, reproduction, printing, storage, and postage and also reduces production costs. With a streamlined documentation process, companies can easily comply with EDI service standards, thereby avoiding fines and penalties due to delays, SLA violations, and other performance gaps.
Once you implement EDI in your organization, your employees and staff can easily find the data as it generates invoices, reports, sales orders, and other information automatically. Therefore, making the work for sales and workhouse staff simpler. Hire EDI experts and your company will feel much safer and more secure with the entire model in place. It is designed specifically to restrict access to information. It checks that only authorized users can access the system and is equipped with audit trails and archives tracking that ensures strict security. With electronic confirmation for receipts between parties, there is complete transparency in business relationships. Companies can exchange data securely across various communication protocols and security standards while complying with mandatory rules for global business.
Apart from being fast and accurate, EDI is also known to boost efficiency, making it a popular and credible method for integration and automation for enterprises. It automates paperwork which allows company executives and employees to focus on core activities and invest their valuable time in other high-priority tasks. Seek software development solutions for the EDI system and your company no longer have to indulge in hands-on processing. Thus, improving customer relationships with reduced errors and faster delivery of goods and services. Furthermore, lesser TAT for document processing will help you attain your business goals effectively. Exchange of data through EDI will distribute critical data in time.
Now that you have realized how critical EDI integration is for your business success, why wait to use it in your business? It is a reliable solution to meet customer needs, streamline the delivery of products, and improve employee efficiency. The list of benefits it offers is never-ending and once you implement the EDI solution, your business will be on the right track of growth and success.
Connect with the experts for more information about Electronic Data Interchange services and we will help you with all our might.
Author’s Bio: Scarlett works with the technical content writing team at A3logics. She has worked well to earn the organization a goodwill in the field of employee benefits services. She works closely with the team and helps document the process to be shared with the client for easy understanding of the functions and operations of the solutions. In her free time she loves to enjoy reading Agatha Christie.