Is your company currently using an ERP system and EDI application? Both of them offer a number of benefits, but separately. Switching between the two applications can be a bit tiring.
Worry not, as EDI ERP integration might be the answer you are looking for.
What is EDI integration?
EDI integration (or electronic data interchange integration) refers to the established workflow between two or more parties from one ERP (Enterprise Resource Planning) system to another. There are several factors to consider regarding EDI integration – for example, the receiving end of the document exchange process, the documents themselves, the IT system, the list of EDI transaction codes, or EDI communication protocols).
What is ERP?
Investopedia defines Enterprise Resource Planning (ERP) as a single platform that is used to coordinate and manage the key elements of business operations. It is an important software application as it assists in resource planning by integrating all the operations required to manage their operations into a single system. Simply put, a business’ key computer system is joined together by an ERP system.
What is ERP and EDI integration?
While ERP is what binds different software together, EDI is what keeps the information flowing from the external partners to the internal data system.
So, EDI ERP Integration provides users with the functionalities and benefits of both ERP and EDI, meaning this integration allows for the data flow both from the front-end – EDI, to the back-end, which is the ERP system.
EDI ERP integration is ideal for businesses on a larger scale dealing with a big amount of transactions on a daily basis. Of course, this model also suits businesses on a smaller scale but are looking to quickly expand in the future. This technology works well for most industries, namely warehousing, transporting, manufacturing, wholesale, distribution, and so on.
The ERP/EDI Relationship
A robust supply chain often relies on both EDI and ERP systems.
An ERP system is what connects the different aspects of a business together. It provides great insight into the entire business system, including every aspect that is needed to operate a company: HR (human resource), finance, procurement, services, and so on. The advances in technology have even utilized AI and ML in the system to deliver even more automation and greater efficiency. Business data is centralized in the ERP system as a single and consistent source of information for any future reference or reports. ERPs have proven their importance over the years as the market for ERP software is forecasted to reach $117.69 billion by 2030 and expand at 9.88% CAGR, according to GlobeNewsWire.
EDI, surely, has played a major role in business operations for a long time. It may seem like old technology to many – but the benefits a company stands to gain from it never get old. First, the established standards specific to industries eliminate the complications during the document exchange process. Then, there is a list of a variety of transaction codes that serve particular business processes. They are automatically sent and received. Moreover, the solution flags any errors during the preparation of the documents, minimizing as many mistakes as possible. Last but not least, the quick response rate would foster stronger relationships with both clients and trading partners. EDI is projected to be worth 4.04 billion in 2029 with an 11.6% CAGR, according to GlobeNewswire.
ERP systems and EDI already bring about numerous benefits separately. When combined together, the two technologies ensure the smoothest information flow and maximize efficiency. They work together to process, transmit and centralize data. Then, with the collected raw data, generate insightful reports to allow businesses to make suitable adjustments, identify trends, and make forecasts to prepare and mitigate any possible risks.
Is integrating EDI into ERP worth it?
The decision of adopting new technology brings about a number of implications – many of which are financially related. Therefore, it does not come as a surprise that businesses want to research everything thoroughly before deciding to invest.
Understanding such considerations, you can expect to enjoy these benefits from EDI ERP integration.
Seamless data synchronization
Gone are the days of manually entering and re-entering data. With ERP and EDI integration, files are digitalized, then automatically sent and received. No more fax or email or time-consuming paperwork. Moreover, the data is seamlessly synchronized, making it easy for you and your team to track and trace, follow, or backtrack information.
Speedy order processing
Customers enjoy a swift and efficient response to their needs. Having an integrated EDI and ERP system, you and your team are given the power to process orders faster, which means you can make and fulfill more sales. More sales – but with less manual work. Thus, there is less exhaustion from the manpower that goes into processing the orders.
Effective communication
Efficient file exchanges between departments and organizations are made possible via EDI. It effectively lessens communication that occurs on paper, which also means fewer errors, which then lead to fewer back-and-forth corrections. The complexity of communication is removed and the most essential data is exchanged automatically. Therefore, ERP software that integrates EDI cuts down procurement expenses and streamlines the purchasing process.
Real-time visibility
A supply chain is undoubtedly complex and multi-layered. Fortunately, EDI integration with ERP enhances the supply chain’s visibility. Better visibility allows for track and tracing, of where and when each item is moved and enables a business to expedite order processing, shorten the order to cash cycle, and attract partners who already use EDI.
Improved customer experience
Every business should be aware and pay attention to how customers’ inquiries are handled. Traditionally, the process of extracting the needed information and transmitting it is time-consuming, but not anymore with the help of EDI ERP integration. Data can be easily retrieved thanks to the seamless synchronization of the ERP and EDI integration, significantly shortening the time it takes to handle your customers’ questions and demands.
Boosts business growth
No success or growth comes without a price. The process of integrating EDI into your ERP system may seem troublesome at first, but it will definitely pay off in the long run. You need to keep in mind that major cooperations are often not willing to conduct businesses with companies that do not have an EDI system in place. This fact alone has already cost you a large volume of sales and unknowingly gives your opponents – those who have EDI integrated into their ERP system, an advantage.
Therefore, if you and your team are willing to push through the first few weeks to integrate and get accustomed to the software, it will only push your company’s growth further and further.
Why avoid using ERP “plug-in” EDI Modules?
Integration disadvantages
ERP with “plug-in” EDI modules may work well with one another, but problems will arise once your other applications need to connect to EDI.
EDI is used to communicate and exchange data. However, if other applications are having difficulty connecting to it – like WMS (warehouse management system), TMS (transport management system), or any other platforms; you may be forced to perform tasks manually. Many of those tasks could have been automatically performed should there be a stand-alone EDI software or an integrated EDI software. Clearly, having EDI software and not being able to use it is frustrating and defeats the purpose of even having it in the first place.
Onboarding disadvantages
Similar to the first problem, a built-in EDI in an ERP system significantly delays the onboarding process of a new trading partner. Again, should you use a stand-alone EDI software or a third-party EDI provider, the process often takes only a few hours – something which a bundled EDI ERP package fails to do.
Onboarding has become more and more important, so businesses cannot afford to delay the process, especially when compared to other enterprises onboard new partners rapidly.
ERP disadvantages
The ERP system itself already holds its limitations. They are not designed to optimize EDI transactions, and more often than not, lack essential EDI functions. Any additional features may require coding – an unwanted additional cost to the already pricey ERP system. Again, to cope with this problem, you and your team may be forced to perform tasks manually – which obviously defeats the purpose of having an EDI solution in the first place.
Have a dedicated modern EDI platform
With all the aforementioned EDI “plug-in” limitations, consider a dedicated EDI platform. Modern EDI platforms now seamlessly integrate with ERP systems. The integration process is now fast, and efficient, and does not interfere with the ERP system. Therefore, there is no need to worry about the complexity or time-consuming process. You no longer need to compromise the quality of a good EDI application. Having understood its many benefits, it is about time your business starts considering EDI ERP integration and enjoying its many perks. Do you still have questions? Worry not, let SCS Solutions team help you. Our team of experts is always happy to hear from you! If you have any questions, feel free to connect with SCS Solutions via https://www.scssolutions.io/, Linkedin, or Facebook.