What is EDI?

EDI stands for "Electronic Data Interchange" and is a method for exchanging business information between trading partners using a standardised electronic format. It replaces the paper form of documents such as orders, invoices, delivery notes, receipts and many others.

There are many established sets of EDI standards that specify the structure of the document to be exchanged electronically. These are detailed here.

A common challenge for trading partners wishing to exchange documents electronically is that often they do not use the same “standard”. In fact, some systems only use non-EDI standards such a CSV or one of several XML variants.

To maximize the benefits (and reach) of electronic trading, flexibility has become essential. The most effective EDI solutions don’t just work with one or two standard EDI formats but offer the ability to connect using any format and even accommodate non-EDI enabled trading partners.

Integrated EDI

A robust EDI solution should be flexible enough to enable integrated EDI exchange between any two trading partners (in any message format) without either party needing to change their system. Documents (e.g. orders) are generated from one partner’s ERP system and received in an understandable format by the partner’s system, with a seamless flow of data.

The benefits of Integrated EDI

Trading electronically via EDI provides many significant benefits to both the customer and supplier.

Benefits for the customer

Improved ordering process

• It’s a more efficient method for sending orders to your suppliers.
• Orders no longer need to be manually faxed (and re-faxed following failure) or phoned through.
• Once an order is raised, it is immediately sent to your supplier.
• Re-keying errors and order processing delays are reduced.
• Orders are received by suppliers and loaded into their system within minutes of the order being raised.

Improved delivery process

• Any changes made to the order by your supplier can be notified to you with an order acknowledgement message.
• At the point of despatch the details of the shipment are confirmed and automatically sent to you in an Advanced Shipment Notification (ASN) message.

Improved receipting process

• Manual entry of the delivery can be avoided as this is loaded automatically from the supplier’s ASN.
• Re-keying errors are reduced.
• Booking-in processes become more efficient (no more delays).
• Once a delivery is booked in, a confirmation receipt message can be sent back to the supplier.
• Invoice match rates are improved.

Benefits for the supplier

Improved ordering process

• Automatic and seamless order entry
• No more illegible faxes
• Reduced re-keying errors
• Increased efficiency

Improved delivery process

• Ability to inform your customer of any changes made to the order using an order acknowledgement message.
• At the point of despatch the shipment details are confirmed and automatically sent to your customer in an Advanced Shipment Notification (ASN) message.

Improved invoicing process

• Changes at the acknowledgement and shipment stage cleanse the order.
• Changes made at the receipting stage by the customer can be notified to you.
• You can check what has been booked in, and at what price, before submitting the invoice.
• Invoice match rates are improved and invoice match discrepancies reduced.
• Invoices can be paid faster.

If, having looked at EDI, you are thinking "there must be a simpler way", then contact us. Our EDI PLUS solution can meet all the EDI requirements of your customers or suppliers without the need for specialist EDI software to be installed in your offices.

In-house vs Outsourced EDI

Because there is no single message format that everyone will use, you need to decide your strategy for getting the maximum number of trading parties to integrate with you.

If you are in a position that you can dictate the format that your partners must use to trade electronically with you, you may be able to put the onus on them to accommodate the format that your system will support. However, that is seldom the case. You will usually have to provide more flexibility than that. That flexibility can be achieved on your side of the interface in one of two ways:

1. In-house EDI: You can buy, license or develop in-house software and communications capabilities. This can require considerable investment in facilities and skilled resources. It also means that you must manage the changes over time to software, computer operating systems, and integration details.
2. Outsourced EDI: You can outsource to an EDI managed service provider. You then only need to deal with one format and data communications method (of your choice) with your EDI provider, and they deal with the complexity of integrating with your trading partners on your behalf. You can choose a solution that best meets your requirements and budget. An outsourced EDI platform will be hosted and maintained by your provider, leaving you free to concentrate on your business.

Diagram of outsourced EDI model

If you only need one straightforward format and communications method, and you do not need any extra hardware or software, it may be cost-effective to do it in house.

However, for most organisations (especially those with many trading partners who have a variety of preferences for data formats and communication methods) a good outsourced EDI solution will be significantly more cost-effective. This is because of the economies of scale for the provider in delivering these services to many clients. When you calculate all the costs of providing internal solutions ‒ including hardware, software, time required for development, configuration, partner support, data backups, management and system maintenance, and taking into account the need to keep skill levels, software and hardware up to date ‒ the costs of an in-house approach can be quite high.

The right agreement with a good EDI service provider should not only be more cost-effective than doing it yourself, it should also achieve a greater number of integrations, because the provider can offer richer functionality, greater flexibility and project roll-out expertise

EDI simplified

If, having looked at EDI, you are thinking "there must be a simpler way", then contact us. Our outsourced EDI PLUS solution can meet all the EDI requirements of your customers or suppliers without the need for specialist EDI software to be installed in your offices. We can take care of all aspects of the service from supplier onboarding to proactive monitoring of non-conformance issues.

>> Learn how we can help you integrate with your suppliers

>> Read more about our Fully Managed EDI Service

>> Browse our customer testimonials for feedback on our services.