What is EDI capable?
EDI, or electronic data interchange, is the process of exchanging electronic messages between two entities. These electronic messages bear the following features:
- They are automated and do not involve human intervention.
- They are standardized documents
- They are often business documents. The most common documents are purchase orders (POs), invoices, and shipping notices.
There are several EDI communication protocols and EDI transaction codes for different industries. It is also clear that EDI bears many advantages over traditional means of information exchange.
Now that we have quickly covered EDI’s definition, it is time to move on to the next question: What is EDI capable?
Simply put, to be EDI capable means to implement EDI software for sending and receiving electronic data complying with the pre-determined formats based on certain standards.
As straightforward as the definition may seem, the B2B (business-to-business) integration is a much broader strategy with the ultimate goal of boosting efficiency.
What does becoming EDI capable really mean?
With EDI’s domination in the supply chain industry, it is one of the main forces that keeps everything flowing. After all, documentation standardization is not new in the supply chain industry as it plays a vital role in delivering a plethora of complex information. Every business needs to comply with these pre-determined standards, whether they use EDI or not. Then again, the question of whether your business is “EDI capable” or not is really about whether you and your team can handle modern, ever-changing business demands.
EDi is no doubt complex. You need to invest time and money right from the implementation process, then build a team with extensive EDI knowledge to handle your partner’s complicated regulations, the many communication protocols, transaction codes, and the overall EDI workflow. Additionally, your team needs to handle the maintenance of the system. EDI is a serious investment.
Then how does your team handle all these steps? How does your business become EDI capable? But first, why should your business become EDI capable in the first place?
What are the advantages of becoming EDI capable?
Almost every business can reap benefits from being EDI capable. As mentioned earlier, EDI offers standardization for the transaction process, eliminating any complexity or miscommunication. Of course, it is not the only benefit businesses can enjoy from being EDI capable.
Shorter business cycles
Being EDI capable also means that most of your business processes are both automated and streamlined. The integration automatically synchronizes your system’s data – no need to go back and forth to cross-reference your documents. The documents are sent, received, and processed much faster, cutting down the time it would have normally taken the traditional means. Therefore, your business cycles are shortened significantly.
According to Technologyadvice.com, productivity is boosted due to automation and eliminating repetitive business processes. Employee workload is cut down significantly, too. This is exactly what EDI software does, and more.
Automation also means that errors during the manual data entry process are minimized. No matter how skilled an operator is, they are still humans, so making errors is almost inevitable. The accuracy speeds up the entire business cycle, as there is little back-and-forth correction. The enhanced accuracy has a direct impact on the company’s bottom line – the production cost, chargebacks, and late shipment would then be dramatically reduced.
Firstly, being EDI capable means your business has strict control over which staff has the authority to access the software. Then, the electronic messages sent via EDI are encrypted through a variety of secured communication protocols and document standards: there are verification steps and electronic signature requirements. Of course, the data is kept secure while making sure all your partner’s requirements and global regulations are met. Lastly, this enhanced visibility and control allow for better transparency between trading partners.
Better growth opportunities
Being EDI capable gives you a lot more opportunities to conduct business with more and larger organizations in the fields of healthcare, transportation, logistics, distribution, retail and consumer packaged goods, manufacturing, etc.
Furthermore, you are now on par with larger competitors. Being EDI capable means that you have the same capability to handle the complicated process of exchanging business documents as your bigger competitors. You now stand a better chance of competing and growing both online and offline.
More environmentally friendly
Gone are the days of printing, then finding room to stack up thick business documents. Gone are the days of fearing the papers are misplaced and you will later need to spend hours looking for them. EDI provides you with the space and maintenance of electronic data.
No more printing tons of paper reduces not only cost but also waste, and surely is doing our planet a huge favor.
All in all, the major benefits of EDI all come down to the reduced cost. You know what they say, “Time is money.” Once EDI takes over the repetitive, time-consuming tasks with a high accuracy rate, your business fulfills orders at a much faster rate. Furthermore, you will have more time to focus on the strategic objectives. These may include improving the team’s workflow, monitoring real-time data, or managing risk. More confident and informed financial decisions will follow suit.
All the aforementioned benefits boil down to the relationships in your business. With the high precision and timely response and delivery, not only will your partner be happy but your customers also receive better service. You and your team will be on the way to building strong and long-lasting relationships with a well-earned reputation.
How does a business become EDI capable?
EDI aims to make your business document exchange process less difficult by utilizing standardization, automation, institutionalization, and simplification. As simple as it may sound, every EDI operator is aware that it takes time and extensive skill to achieve such results. Fortunately, there is more than one way to do so. However, no matter what method the company chooses, the software should be scalable.
A business can opt to implement on-premises EDI software or an EDI provider. The biggest difference between the two is that on-premises EDI requires you to have a dedicated IT team with extensive EDI knowledge to operate and maintain the system. As for third-party EDI services, the provider takes care of the whole process for you. The first choice may seem more costly; however, outsourcing does cost you quite an amount if your transaction volume increases.
While becoming EDI capable, there are, of course, other aspects your business needs to take into consideration:
- ROI (return of investment) of manual processing vs. ROI of automation
- Business model
- Business growth strategy
- Risk management
- Managing chargebacks
- Enhancing partner service levels
Once again, becoming EDI capable is not an easy or simple task. It requires serious investment. Nonetheless, considering its benefits and long-term payoff, all the trouble is going to be worth it.
Where do you get started?
Should your business depend on the supply chain, even if it’s just the slightest, EDI is going to be impossible to avoid. It is not necessarily a bad thing – EDI effectively connects business partners and streamlines complex data exchanging processes. When choosing EDI software for your business, do not settle for outdated EDI solutions! Let SCS Solutions provide you with scalable, customizable, and modern EDI services that best fit your business needs. As long as you know what your business needs are and what you seek to automate, we will help you turn them into reality. Contact SCS Solutions via our website https://www.scssolutions.io/, Linkedin, or Facebook. We would love to discuss your vision for your business’ customized EDI solution.