Electronic Data Interchange (EDI) is a technology that enables companies to exchange business documents in a standard electronic format between partner ecosystems. By replacing paper-based documents or records such as purchase orders or invoices, EDI allows business users to transact faster, and ultimately transform their ease of doing business. Along with that, it allows businesses to minimize errors, save time and ultimately eliminate costly errors.
In EDI transactions, large streams of data move directly from one computer application to another. The aim of these using solutions is to define the location and order of information in a specific document format. Through this automated approach, information can be shared quickly instead of over the hours, days, or weeks required while leveraging paper-based methods.
Today, industries rely on EDI integration solutions to exchange a wide range of documents types – from invoices to purchase orders. In the majority of instances, these companies are trading partners that exchange goods as well as services frequently as part of their supply chain ecosystems and B2B networks. EDI software solutions enable organizations to:
- Minimize Costs
- Automate workflows and speed up transactions
- Accelerate document or data processing
- Get rid of errors
- Enable smoother relationships with business partners
EDI transactions include mission-critical information that helps organizations facilitate faster data exchange, and a popular example is that of EDI order processing.
How does EDI work?
At the beginning of the process, a buyer sends a purchase order of a product from a particular supplier. Then, the supplier sends an invoice, and ultimately, both parties exchange acknowledgment receipts. Businesses utilize a common EDI transaction in the Advanced Shipping Notice (ASN). The final objective of ASN is to provide tracking and packing data before the delivery is started. Finally, the invoice for the shipment gets created as the ASN with billing information is validated.
How Does an EDI Integration Platform Drive Workflows and Transactions Between Trading Partners?
Organizations require EDI integration software to create a workflow between multiple trading partners. It uses two steps:
- Establish EDI documents, protocols, transactions, and endpoints that will help business users exchange data with their trading partners.
- Convert EDI data into a format to support back-end technical environments. After that, both trading partners speak in a common language and communicate with one another.
Ultimately, the files or data can be converted into proprietary file formats such as JSON or Idoc. The converted data is then easily ingested into back-end systems for future use. EDI integration helps organizations in a number of ways. It allows business users to:
Improve Data Accuracy: By automating EDI transmissions among trading partners along with ingesting and transforming ERP systems, business users can remove the need to intervene manually. Manual methods, by nature, encompass errors or inaccuracies. As automated data flows are created, errors can be prevented, thus making businesses EDI compliant.
Accelerate Business Cycles: EDI integration enables companies to decrease processing time. Consequently, the duration of completion of order-to-shipment business cycles can be reduced by as much as 50 to 60%.
Increase Trading Partner Visibility: EDI integration software offers increased visibility into processes. As business users can make sure that their data is accurate, automated and easily accessed by the ERP, the ease of doing business can be improved dramatically.
Taking Business Forward with Modern EDI
Suffice to say, EDI integration technology remains the most common and widely used standard for B2B transactions. But if your company rely on legacy solutions, managing EDI integrations can be challenging. Here are some signs that show you have a broken system:
- EDI fails to connect to back-end systems.
- EDI docs are not getting integrated into back-office applications.
- Manual intervention is required.
- You are expected to update in-house custom scripts.
Once you see the sign, you must adopt a revamped EDI integration. In doing so, companies can create data connections and streamline transactions across partner ecosystems – without custom coding or manual intervention.
Take a modern EDI integration approach to enable your business users to automate workflows and accelerate transactions, while allowing IT users to drive more high-value tasks.
