What Should You Know Before Getting Started With EDI?
With the digital world changing around and constant evolution in technology, businesses are exploring opportunities to cut down additional costs. The aim is to enhance transactions and communication while replacing paper-based methods that are prone to errors. Whether your traditional communication system has started taking a toll on your internal resources or your partners has mandated electronic transmission, it’s high time that you implement EDI in your enterprise to trade with vendors and partners electronically. By incorporating advanced EDI software solutions into your business processes and transactions, rest assured that you can accomplish your complicated goals easily.
Electronic Data Interchange, EDI, is an electronic exchange of business information and documents between partners, suppliers, or customers. It includes the transmission of invoices, purchase orders, shipping receipts, etc. EDI ensures data security, improves accuracy, mitigates human intervention and mistakes, and increases reliability. Needless to say that with so many benefits, this automated software not only helps in business development but also establishes strong relationships with partners. However, implementing and integrating EDI is not so simple and hassle-free. There are many challenging aspects during the entire deployment process that you must take care of. Right from the beginning of strategizing until installation, you have to consider several factors for successful and effective implementation. You need a dedicated team, advanced software, and hardware, and much more to process EDI at maximum efficiency.
Depending on your business needs and goals, there are a few points that you must go through before adopting EDI. So, we have listed such factors below that will guide you through the process and help you in choosing the right solution.
Basic EDI Terminologies
Although EDI was introduced in the 1970s, many business owners are still not completely familiar with all its concepts and terminologies. They lack sufficient knowledge and understanding of basic yet key terms related to EDI. Mind you that these terms are important to know for selecting the right EDI software for your business. Considering the sophisticated and nuanced functions offered by the EDI, you can come across various complicated terms associated with it. Before you take your first step toward EDI integration in your business, it’s important to get acquainted with these concepts. This will help you select and build the most suitable transaction automation strategy.
- EDI or Electronic Data Interchange as you all know by now is an electronic technique to exchange transactions in a coded form.
- EDI Integration is the synchronization of the new EDI software with the existing system to ensure the sharing of EDI documents with other business units or entities.
- EDI Mapping refers to the process of converting EDI transactions from a coded form into usable and understandable documents.
- Compliance is adherence to retailer requirements and other statutory regulations for electronic trading.
By gaining an understanding of these key terms, we assure you that you can leverage the maximum potential of EDI within your organization.
EDI Transaction Volume
What is the reason to integrate EDI? Well, you are seeking a software development service for EDI so that it can adapt to your communication demands and scale up and down based on your needs. Hence, it is essential to consider all the possible future requirements and then pick the right solution. There are many questions that you must answer to find the expected EDI transaction volume, such as:
- How many partners or vendors are you working with at present and how many are you pursuing?
- Will you be using the EDI for cash-to-order transactions or for others as well?
- How many transactions will be done using the EDI? A few documents or it can be in thousands?
- Will you be communicating with selected customers and vendors or for you the entire trading network?
- Will you be using EDI exchange once a day or frequently?
- Are you expecting your trading network to grow?
These questions will help you determine if you are a light EDI user, super-user, or somewhere in between. If you intend to use EDI actively, then it is necessary that it is capable to match your growing demands.
Know Your Partners’ Needs
If you are an established manufacturer, then we are sure that you already have established retailer relationships. With an efficient EDI system, you can not only redefine these relationships but can also streamline your communication with them by augmenting the transaction process. For this, you have to make sure that the EDI is configured according to your partners’ specifications and requirements. Start by considering primary trading partners as you opt for the EDI integration service in the beginning. Customize your software so that it aligns with the needs and compliance requirements of these partners. This is because different retailers and trading partners may have different needs. Some may look for restocking their stores on a routine basis irrespective of inventory levels. On the other hand, some might want to replenish inventory as it depletes. Also, it is important to use EDI protocols and formats that are compatible with your partners. You have to make a decision based on their internal invoicing procedures, the ways used to generate invoices, etc. With the idea of these basic things, you can keep them happy and satisfied along with maintaining positive relationships.
Another major point to evaluate is deciding how you want to deploy EDI in your business. What type of support and service will suit your EDI transactions? You can either hire fully managed EDI service or outsourced EDI solutions or can have an in-house EDI team. For the former, you simply need to pay subscription fees and the amount for the services you avail of while in the latter, you have to invest heavily. You need to set up a different department to handle the entire process, pay them like other employees, invest in hardware and software, and whatnot. If EDI is not your core business function, then all these efforts and money are of no use. Moreover, it will divert your attention from other critical tasks. For cost-effective and secure EDI transactions, outsourcing is definitely a better option but make sure that you analyze all the aspects before making a decision.
Can’t decide Which EDI solution is best for your business? Then this blog will help you make the right choice. EDI Software 101: Types, Benefits, and Use Cases
EDI Implementation Choice
There are various EDI implementations options that companies offer, including:
Web EDI- This is an easy and economical EDI solution for small and medium-sized enterprises that occasionally utilize EDI. It offers services through the internet browser and streamlines the data interchange processes by handling orders, transactions, processing, and addressing shipping requirements. With web-based EDI software, you can have a replica of business documents in a web form that consists of fields to enter information. Once the fields are filled, it is converted into an EDI message automatically and shared via secure internet protocols, such as HTTPS and FTPS.
Direct EDI- This approach was brought to prominence by Walmart and offers more control to partners through a single secure direct connection between them. Also called point-to-point EDI, it connects you with each trading partner or vendor individually and is commonly used in retail space with larger customers and a lot of daily transactions.
EDI VAN- This is an alternative to the Direct EDI model. Also known as EDI network service, EDI via VAN is a simple and reliable way to connect with trading partners through a secured network. It was referred to as Value Added Network prior to the internet and is preferred by businesses to protect themselves from the complexities of varying EDI communication protocols. It performs an additional value-added service, such as document translation, operational support, message notification, audit reporting, etc.
Apart from these, there are various other types of EDI options available that you can choose according to your business transaction requirements. The list includes EDI via AS2, Mobile EDI, EDI Software, EDI Outsourcing, cloud-based EDI, and EDI via FTP/VPN, SFTP, and FTPS.
Make sure to take all the above-mentioned factors into account as it will help you select the right EDI software that ensures flexibility and higher ROI. Also, by considering these vital aspects, you can avoid any disruptions and downtime during transitions. If you still need more information or assistance regarding EDI, then feel free to connect with our team of EDI experts. With their regular guidance and expertise, your EDI implementation journey will be smoother and value-driven.