Whether you’re just getting started with EDI, working in a web-based EDI system, are looking to scale your EDI across multiple trading partners, or want a fully integrated solution, there are benefits at every level that save time and cost while mitigating risk. The right EDI solution is critical to your growth strategy as a business, driving efficiencies throughout the supply chain and all the way to the end user.
Integration through EDI
The most basic function of EDI is transacting with trading partners using electronic documents. Take big-box retail for example: EDI helps suppliers transact with retailers by streamlining critical information such as purchase orders and invoices. Behind the modern consumer experience are multiple documents across all of this inventory to ensure the right product makes it to the shelf on time.
By standardizing and automating painstaking paperwork and manual data entry, EDI decreases operating expenses and reduces errors, resulting in a greater return on investment. According to a 2016 study, Proactive Partnerships: Creating Supply Chain Value in the Digital Era, published by the University of Tennessee surveying more than 230 business across numerous industries, suppliers saved 25% by processing orderings electronically and 20% with electronic invoicing.
Notably, these suppliers also reported processing invoices nearly 4.5 days faster when using managed services such as EDI.
Whether they operate in bulk fulfillment or direct-to-consumer fulfillment, many companies have manual processes and multiple platforms for getting their products and services to the end consumer. These real-time efficiencies mean significant time savings that enable businesses to focus more on growth strategies and less on fulfillment processes.
What’s on your EDI checklist?
As your organization grows, so will your EDI needs. To determine these needs, it’s best to start with a simple list you can review with your core business team, as well as with cross-functional team members, to ensure goals are aligned across all segments of your business.
1. What are my business goals? Do I want to grow existing business, expand by adding new trading partners, or address optimization in my current supply chain or fulfillment processes? The 2016 University of Tennessee study notes that 40% of surveyed businesses reported improved efficiency in on-boarding new trading partners using a cloud-based integration.
2. How do I optimize processes? Analyze the time it takes to process orders, and how many people it requires. Determine where errors were made and how long it took to resolve them. How do these issues factor into your operating expenses?
For example, a medical device company selling hearing aids wanted to shift from working with health care professions to working with retailers. That meant taking phone calls and receiving emails for placed orders, then inputting information into manual invoices, printing them, and mailing them. Then depending on which retailer was selling their devices, the company’s back office personnel had to work in multiple EDI portals to ensure orders were placed and documented correctly in each business system to get the hearing aids delivered. By switching to an EDI solution, they saved a huge amount of time, enabling them to refocus on growing their trading partner network and expanding their business throughout the U.S.
3. What are my trading partners’ requirements? What documents (bills of lading, status reports, purchase orders, invoices, quotes, etc.) are required to do business throughout your supply chain or direct-to-consumer processes? What are the timing requirements? How do I stay in compliance with these requirements?
Consider what our big-box retailer needs to fulfill their end-user experience. They have to run a tight ship across hundreds and thousands of vendors to track and stock inventory regularly while staying compliant and timely. This is where EDI is critical to tracking assets and documentation in real time with automated processes—keeping the back office running at all times so items get from the supplier to the shelf successfully.
EDI allows you to pick and pack based on different goods in any industry you’re working in, ensuring items are organized in the most efficient way to your specifications. For instance, you can pack uniform items like shampoo the same way every time, whereas items like apparel may require color and size runs that vary for the distributor or retailer. Choosing how to pick, pack, and ship your items via EDI helps ensure smooth fulfillment across a wide range of products.
Fully integrated EDI
Many businesses need more than integration within their EDI platform—they need system integration with their ERP. While traditional EDI providers may outsource this to a third party, some also design their products to integrate directly with your existing business systems. This integration helps keep projects on time, decreases costs, and mitigates lost revenue, giving you a return on your investment with automated collaboration. Whether you use Oracle, Quickbooks, SAP, Microsoft Dynamics or other ERP platforms, you can seamlessly integrate with EDI data across your entire partner network.
As your business grows and evolves, it’s important to evaluate process optimization with your EDI provider. Whether you’re new to EDI or ready to integrate it fully into your ERP, your provider can help you find the right solution for reducing inefficiencies and identifying red flags that EDI can streamline for you and your trading partners.