How should you go about your business’s EDI (Electronic Data Interchange) implementation? The process can be particularly challenging – EDI systems are complex.
Let’s go through the frequently-encountered problems during the EDI implementation process and find solutions for them.
EDI implementation challenges
What does EDI implementation mean?
EDI implementation refers to the process of setting up the EDI system to enable a business to send and receive data via the EDI system with the trading partner (businesses that operate the business electronically). This term also refers to the process of setting up the system to be able to send and receive documents via EDI with a specific trading partner. When the term is used with this meaning, EDI implementation guidelines are often involved.
Though many have talked about the numerous benefits of implementing EDI solutions for a business – the automation that eliminates any human error-prone data entry, the valuable time and money saved since the error rate significantly decreased, and the boosted productivity – there are still some glaring challenges any businesses must face when considering this technology.
Costly. EDI software is costly. The implementation can be costly. Should you choose to implement in-house EDI software, you also need to have a dedicated team with EDI expertise to operate the system and maintain it.
Regarding pay-as-you-use models, the costs can quickly skyrocket should your volume of documents increase as your business expands. Other times, upgrading or extending your service can cost you extra, too. Don’t forget you need to spend on constant employee training, EDI license, and consultancy. Therefore, the solution for such cases might be looking for vendors to handle the transmissions cloud-based – you will be able to save a significant amount of money.
Flexibility. One of the biggest problems any EDI software faces is scalability. The digital world is continuously evolving, introducing new technologies to the world. These new technologies would require companies to adapt accordingly, especially as the market becomes more and more competitive. As a result, business processes need to change to catch up. Therefore, it is only reasonable that EDI standards adjust, too, to accommodate these changes. These changes may be:
- A change in the communication method
- New business rules and regulations
- Additional verification processes, policies, or restrictions
Any configuration would be particularly hard for on-premises EDI software – the system may not be able to support the data growth. This may result in harming the business in the long run. To solve this problem, businesses often use a third-party EDI service.
Inaccuracy. EDI documents are made for machines to read and understand, not for humans. Therefore, when there are incorrect pieces of information or any inaccuracies in data, it is extremely difficult to detect. Searching for the errors, or a lot of times, a single error in the EDI document can be extremely time-consuming and costly.
Therefore, to ensure EDI’s smooth operation, it is crucial to input correct data from the beginning. One effective way is to directly integrate the EDI system into your existing warehouse management system or your ERP system, or your partner’s system to minimize human error as much as possible.
EDI software cost
Let’s briefly go over the cost of EDI software to better understand how you should prepare your finances. As mentioned earlier, there are two types of EDI software: on-premise and in the cloud.
As for in-house EDI software, it will be a big investment. Often, companies that wish to control their data opt for on-premises EDI software. Businesses need to cover not only the implementation fee but also the costs of a dedicated IT team with extensive knowledge to manage the software.
Regarding the cloud-based EDI, you pay for the services you use. The higher the volume, the higher the costs.
The investment in EDI solutions, once again, seems massive, but it is all worthwhile in the end considering the money, time, and labor you save in the long run. Your business will also enjoy the benefits of improved relationships with your partners and clients. All these smaller factors will lead to growth acceleration and better return on investment – which makes all the trouble you experience at the moment worth it.
To achieve the smoothest EDI implementation process, it might be helpful to take a systematic approach toward the journey.
Who will carry out the implementation?
One of the first steps you need to consider is determining who will be in charge of implementing the EDI software. There is a list of people you can choose from, including
- EDI coordinator: This person can be an in-house team member or an outsourced expert. Either way, he or she has comprehensive knowledge regarding EDI solutions.
- Executives: This team is made up of team leaders who are under the direct impact of the EDI implementation and are often led by the EDI coordinator.
- EDI team: this is an IT team who carries out the implementation of the system. Should it be an in-house EDI solution, this team is also in charge of maintaining and fixing the system if any problem comes up.
Step-by-step EDI implementation
During your EDI implementation process, you should at least go through these basic categories and ask yourself questions during the process. It is highly recommended that you focus on improving the overall business processes rather than just simply automating them. Ask yourself fundamental questions:
- Can EDI software streamline the business process and eliminate all the redundancy?
- Will there be less manual work?
- Will EDI help improve your and your partner’s relationship?
- Will EDI betters the customer experience?
- Does EDI help you better manage the inventory?
Understanding your business’ demands
You and your business need to identify what role EDI plays in your business model. Try to answer the following questions:
- Which of your business’ part implements EDI?
- Which cycles/ parts are ready for implementation?
- Does any type of specific implementation save you more money than the others?
- Which implementations will save you the most money?
- What kind of data do you wish to exchange?
- Should the exchange be a one-way or two-way process?
Building company structure.
It is crucial that:
- The EDI team has the ability to carry out the implementation within the organization.
- Has the specific and essential expertise and resources to operate the software.
Choose your preferred type of EDI
The type of EDI you choose is the different approaches toward data exchange. Depending on your business demands, the different types of EDIs will affect your business experience with the technology. You and your business can choose from Point-to-point EDI (or direct EDI), EDI using VAN, or Web EDI. Each has its pros and cons, so make sure you and your team have seriously carried out your research in order to choose the type that meets your business demands.
Collecting necessary information
As part of conducting your research regarding your preferred type of EDI, gather every piece of essential information including
- EDI document standards
- EDI communication protocols
- EDI translator
- EDI file transmission
- EDI data requirements, etc.
- Any necessary written agreements
If you are using an outsourcing model, have the connection between you and your EDI provider ready. If you are setting up an in-house EDI system, make sure your infrastructure is ready to facilitate the exchange. Then, adapt your EDI system with your internal ERP or WMS.
Once the data structure is understood, move on to the mapping. It identifies how the data from the EDI transaction relates to that of the internal system. EDI providers often have this problem covered with a variety of choices.
Test the EDI solution
Now that you have completed all the above-mentioned steps, it is time to put the software to test. Often, it is necessary to launch a pilot project to test the software with a client and adjust or fix any errors during this time.
After this trial period, the software is ready to be put to use in real life and boost your business’ productivity and efficiency.
Implementing EDI software seems like a lot of work, especially with all the challenges, steps, and costs that you need to invest in in the beginning. Nonetheless, in the long run, it will all be worth it. You will come to notice that you have saved a lot of money and time, and even human resources. Therefore, this is a journey worth embarking on.