What is EDI integration?
What does EDI integration mean? First, let’s remind ourselves what EDI means.
EDI, or electronic data interchange, is the digital business document exchange between two or more parties. The electronic data exchange consists of certain standards that documents must follow – e.g. list of EDI transaction codes or EDI communication protocols.
So, what does EDI integration mean?
EDI integration refers to the complete workflow where two or more parties automatically exchange business digital messages from one ERP (Enterprise Resource Planning) system to another. It takes several elements into consideration, which include the following:
- List of EDI transaction codes – which EDI transaction codes are suitable for the transaction conducted? What sets of standards do you need to follow?
- EDI communication protocols – which technology are you going to use to carry out the transaction?
- EDI documents – which business documents are you planning on sending to and receiving from your partner?
- IT system: which IT system in your company needs to send and receive EDI documents?
- Trading partners: last but definitely not least, who do you exchange EDI documents with?
By translating the internal data files into the same EDI files using an agreed format (e.g. EDIFACT), both trading parties speak and understand the same language.
Types of EDI integration
Direct EDI integration, Indirect EDI integration, and Hybrid EDI integration are the three types common types of this technology.
Direct EDI integration
Also known as point-to-point EDI, direct EDI integration refers to the direct connection to your trading partners – which can be your service providers, customers, or suppliers – via an EDI communication protocol, e.g. AS, AS2 or HTTP.
Do note that this type of EDI integration can lead to thousands of separate partner connections – with each connection using different protocols, adding layers of complexity to the already complicated EDI system. This is especially common when your business does not have a standardized communication protocol in place.
All in all, this type is suitable on a large scale, where a huge volume of data needs to be exchanged between parties.
Indirect EDI integration
Indirect EDI integration refers to communication with your customers, suppliers, and 3PLs (third-party logistics providers) using a VAN (Value Added Network) or other types of brokers. Simply put, VAN or the broker acts as a middleman.
The data from the sender is sent to the VAN or broker, where it is broken down and transformed into the preferred data format by the receiver, which then sends the information to them.
Hybrid EDI integration
There are companies that prefer a mix of the two aforementioned types of EDI integration. There are two sub-types in this category.
Hybrid EDI integration for EDI-capable partners
Flexibility, along with the right knowledge and tools, is required when it comes to this type of EDI integration.
Hybrid EDI integration for non-EDI customers
This sub-type of EDI integration makes use of the fact that customers do not use EDI communication. Some VAN or brokers have the ability to translate data into standardized EDI formats from other types of files, like PDFs or spreadsheets, or emails. Therefore, your ERP has the ability to exchange data files using only one channel, with the ability to translate non-EDI file types.
Is EDI integration truly beneficial?
Convenient for the users
First of all, it is the business users and IT team that benefit from EDI integration the most.
- As for business users – your sales team, operation team, purchase, or helpdesk team – enjoy data that is easy to access and maintain. EDI allows your teams to make faster and more confident decisions.
- Regarding IT teams, EDI is a multi-purpose, flexible and standardized tool that allows for efficient business management. Besides that, they would be happy if business users are enabled to work on problems on their own, freeing up their time and space to focus on more important, urgent tasks.
Therefore, an EDI solution is considered flexible when it can be set up and modified to fit the needs of different groups of people.
Streamlines your operation
EDI integration streamlines business operations with your partners. Let’s compare it to a stand-alone EDI solution: when put together with other stand-alone solutions, will result in a number of applications that are separate and not compatible with one another. An integrated EDI solution maximizes the benefits of the solution itself and centers all the data for you to easily trace and track.
Save money and time
One clear advantage EDI integration has over on-premises is its scalability, meaning the solution “grows”, or handles more transactions, as your business grows. This saves your business a significant amount of money, as in-house EDI software is not as flexible and costs a lot of money to actually scale up. The cost spent on paper, printing, shipping, and storage is also removed.
Process automation means less manpower is needed, saving your company budget spent on hiring staff to manually enter data. Automation speeds up the process dramatically, leading to enhanced productivity and fewer errors, which then leads to less back-and-forth correction – saving a lot of precious time. With all the time freed up, you and your team have more time to focus on the more crucial, strategic tasks.
Mitigate risk
A true EDI integration minimizes human errors due to the automation of numerous processes. However, it will also flag errors before sending the business document to your trading partner, and resolve them. Most EDI providers have a cushion, too, to help prevent serious data losses.
Oftentimes, EDI providers update the solution with the newest technology available to ensure the solution is operating at an optimum level.
Better visibility
Having EDI integrated into your internal ERP system, you no longer have to switch back and forth between multiple software to gather information regarding the data transaction with your partners. You will gain clear visibility of the end-to-end processes.
This data also allows you to trace and track how each transaction is going, to make sure each and every deadline is met, avoiding expensive fines and chargebacks.
EDI integration myths
Myth #1: EDI integration requires custom coding
It does not require any complex, custom coding, but is instead a low-coding application. Modern EDI is a cloud-based ETL platform. Businesses can easily connect to the database with BI tools with just one click, without complex intervention from an entire team of experts.
Myth #2: EDI integration is high-maintenance
In reality, developers can create, release, and maintain applications using the fully managed, flexible, and scalable cloud platform provided by EDI Integration tools. These platforms and programs are used by both small and large enterprises to test prototypes and roll out crucial business applications.
Myth #3: EDI integration is a rather outdated technology
Faster processing, fewer mistakes, and improved corporate operations are all benefits of modern EDI integration systems. Along with these operational advantages, the integration gives managers real-time visibility into transactions so they may decide more wisely and confidently, even exceeding customer expectations.
EDI integration should be your business’ priority
In the era of smart connectivity, strategic technology applications play an extremely crucial role in keeping your business ahead of the game. In light of EDI’s importance and numerous benefits, it is high time you and your team embark on the journey of EDI integration. Your competitors are probably already upgrading theirs. It should not come as a surprise, however, as it is a modern solution that is cost-efficient, and easy to navigate without any serious investments into costly new hardware or servers. However, there is no need to worry. SCS Solutions is confident that we are the ideal EDI service provider you are looking for. We offer you the latest technology along with our team of experts – who have been working in the industry for over 20 years. SCS Solutions will be more than happy to hear from you! Contact us via our website https://www.scssolutions.io/, Linkedin, or Facebook.