The need to use an EDI integration technology has increased with businesses embarking on a digital transformation journey. EDI helps companies to ride the wave of change by automating B2B data exchange processes, ensuring seamless electronic trading between business ecosystem’s entities such as buyers and suppliers.
Here are some frequently answered questions about EDI.
1. How can you Define Electronic Data Exchange?
Electronic Data Exchange (EDI) is a computer-to-computer exchange of information between myriad business partners in a standard electronic format. EDI can help enterprises foster smoother, stronger relationships with customers and partners, empowering their business ecosystem. Businesses can also benefit from this technology in the form of automated workflows, alleviated overhead costs, higher efficiency, improved productivity, fewer errors, and more.
EDI documents comprise important information about business transactions. One of the most sought-after examples of EDI transaction includes a retailer submitting a purchase order, manufacturer sending an invoice, and finally retailer and manufacturer exchanging receipts.
One more popular EDI transaction includes an advanced shipping notice (ASN), a notification sent when the delivery is pending. ASN’s main objective is to offer information regarding tracking and packing prior to the delivery.
2. How can you Define EDI Standards?
EDI standards have been established to define a structured data that resides within a record along with rules for business document creation. Such standards enable businesses to eliminate the need for investing an additional amount of time and resources, thereby reducing electronic document integration costs and streamlining processes.
One of the most common EDI standards is the North American standard, ANSI X12 or X12 that comprises standards for departments like finance, transportation, supply chain, and insurance in North America. Another common standard is the European standard called EDIFACT. RosettaNet, based on XML, GS1 EDI, TRADACOMS or GS1 UK, ODETTE, HL7 etc. are some of the other commonly used EDI standards.
3. How does EDI Integration function?
A majority of companies are seeking solutions for EDI modernization initiatives that offer automation and B2B integration capabilities to support emerging requirements. Essentially, organizations need to have access to EDI integration software for allowing workflow automation, improve customer experiences, and increase operational efficiency & productivity, irrespective of the industry.
For instance, a sender transfers a business document from an application, in-house systems. EDI integration can be executed in the following steps:
- The purchase order is first converted into an EDI format with the help of a data transformation mapping solution or using various EDI translators.
- Next, the document is run through a validation software to ensure structural accuracy.
- The data gathered from the EDI document, purchase order, in this case, is transmitted to a VAN with the help of important communication protocols such as AS2, SFTP, etc. Following this, data is transmitted straight to the client or built into validation software.
- Finally, EDI over AS2 that connects companies to their trading partners. The receiver gets the document, verifies, authenticates, and decrypts file.
4. What are its Benefits?
EDI offers a wide range of benefits, from allowing companies to cut down costs to improving speed and accuracy.
- Gone are the days when business documents were exchanged manually such as a paper-based exchange. Now, companies employ EDI to transfer information that fastens processing speeds and alleviates overhead costs. Enterprises can evade SLA violations, delays, etc. by complying with EDI standards.
- EDI technology helps enterprises to reduce processing time and speed up business cycles through automation. Also, order-to-shipment cycles shorten up to 60% and transaction speed rise up to 80%.
- The level of efficiency increases with EDI. Enterprises need not indulge in manual processing methods to foster robust customer relationships. This also helps to improve customer experiences and satisfaction.
- EDI allows companies to exchange data without almost no errors. Earlier companies were compelled to enter data through manual methods into the ERP system, which increased the risks of mistakes. Presently, companies can do away with this cumbersome process with EDI solutions.
- EDI solutions with archive tracking as well as audit features provide safety and security to companies. As a matter of fact, EDI technology enables organizations to restrict access to only authenticated users. Additionally, enterprises can share information or documents across various communication protocols and security standards, thus ensuring compliance with mandates in global business.