EDI can help your business send important documents to partner organizations in a standardized format. This helps ensure that information is relayed correctly and efficiently while also reducing the transmission of errors.
Some of the commonly used EDI standards include:
- ANSI ASC X12
Connect with business partners
EDI transfer is obsolete if it doesn’t effectively send a message from one company to another. The key to this process is making sure that information is communicated accurately, securely and to the appropriate location. Often, sending documents such as purchase orders to a business partner can get dicey because emails bounce back and files are sent in incorrect formats. The goal of EDI is to reduce these hindrances by creating an information highway that connects organizations.
Receive and send information securely
EDI ensures secure transmissions. EDI tools enable organizations to connect with business partners directly either through a point-to-point or outsourced implementation. This ensures that important documents such as invoices are sent to the correct locations and don’t get into the wrong hands. This also alleviates the need to email sensitive information to business partners or to give collaborators access to an internal repository, therefore reducing the potential for security breaches or for others to access information that isn’t relevant to them.
Increase the speed of data exchange
EDI programs can make the process of getting information from one company to another faster. It can help reduce transmission errors and bounce-back emails that notify you when a message can’t be delivered. Some reports estimate that EDI can increase the speed of business processes by 61%, largely because transfers can be done in minutes instead of the hours, days, or weeks associated with other delivery methods such as email and traditional mailing services.
What Is EDI?
EDI (also known as electronic data interchange) is a method of sending and receiving information among different organizations. The internal transfer of information is typically a lot easier than sending documents externally, which is why EDI was created to alleviate issues with document formats and inefficient transmissions. The sharing of data among business partners can be essential in developing effective and mutually beneficial partnerships.
How Do I Implement EDI?
There are two main methods of implementing EDI — through point-to-point or outsourced integration. Let’s investigate the differences between these two methods.
Point-to-point implementation requires organizations to install the EDI solution within their internal environments. The main benefit of this implementation method is that it gives companies control of their program and more flexibility. However, it does require more of an investment to get started than an outsourced implementation method would entail.
Outsourced implementation leverages third-party businesses known as interconnects to set up connections among partner organizations. The main benefit of using this implementation method is that the third-party establishes and manages your EDI connections, meaning that your business doesn’t have to deal with a high infrastructure investment. However, you will have less visibility of current connections and a slower onboarding time when configuring new communication channels if you go this route.
What Types of Information Can Be Exchanged Through EDI?
EDI connections enable the exchange of a variety of documents. Here are some of the commonly shared forms communicated through EDI programs:
- Purchase orders
- Purchase order acknowledgments
- Inventory inquiries
- Shipping notices
- Warehouse shipping orders
- Product activity reports
How Does EDI Work?
Electronic data interchange works through the development of secure pathways for the flow of data and information from location to another. This is especially helpful when companies are doing business with other organizations and need to send sensitive information to an external area. The way the actual pathway is constructed depends on whether a business opts for point-to-point implementation or an outsourced implementation model. The core of EDI is that documents can be sent digitally and in an appropriate format to another location.
Which Industries Use EDI?
Companies in a variety of industries use EDI to more securely and efficiently share sensitive documents and information with business partners. Here is just a sampling of some of the industries that leverage this technological solution:
- Financial services
What Is EDI Compliance?
EDI compliance is a method of ensuring that your system will work effectively. This includes factors such as developing your EDI infrastructure, assuring that it aligns with the needs of your business partners and putting in place the standards that you will use in your system. For example, you will need to determine the document standards that your partners support in their platforms, the types of information that will be sent and received through the program, how you will implement the solution, and the hardware and security protocols that are necessary for efficient use.
How Do I Select EDI Software?
When it’s time to select the right EDI software for your business, there are a few factors that you’ll want to consider. For example, elements such as implementation method, business partner standards, industry and company size will all be important components to keep at top of mind when selecting between different vendors.
The process of choosing the right EDI system for your business and its partners can be tedious, which is why at SelectHub we’ve created an easy-to-navigate requirements list that will help you narrow down the vendors that best fit your needs. Check out our EDI Requirements Checklist to make the vendor selection process easier or our EDI Software Trends article to learn more about electronic data interchange options.