Some of our wholesale/distribution customers rely on EDI to exchange electronic documents with their large retail customers. EDI (electronic data interchange) allows trading partners to conduct efficient business together by exchanging electronic documents between their respective information systems while minimize human intervention. Large retailers such as Walmart and Sears purchase product from thousands of suppliers. To reduce costs these retailers will require their suppliers to transact with them using only EDI. Failure to comply with EDI standards as dictated by these large retailers often result in expensive penalties levied on suppliers.
EDI from both supplier and customer perspectives has the following benefits:
- Effective human resource management: By automating data interchange between business partners, valuable and expensive human resources can be dedicated to deliver more strategic value to their employers
- Reduced errors and improved accuracy: Without automation, users will have to manually key in purchase orders, sales orders, invoices, etc. This introduces chances of errors and duplication to be introduced into the data stream.
- Better performance: By reducing human involvement in the order processing cycle, data flows smoothly smoothly from the retailer, to the supplier’s accounting system and to the warehouse. Once the shipment is ready, data flows back again with advanced shipping notifications and invoicing.
- Language and technology independent: Trading partners around the world can transact regardless of spoken language or specific computing technology used by each partner.
Implementing EDI for small trading partners has traditonaly been expensive and complex in many ways such as:
- Translating transactions to EDI standards requires mapping software and know-how.
- Transmitting EDI documents requires encryption.
- Prior to the Internet, EDI documents had to be transmitted over value added networks such as those provided by IBM and others which added considerable expense.
These days, small trading partners can rely on third-party vendors to take care of much of this complexity. GXS for instance is a widely accepted Internet-based value added network that provides AS2 encryption. AS2 is fast becoming the standard in EDI encryption, popularized by Walmart. A second type of vendor is the EDI Integrator. Integrators will manage all your EDI documents typically through a web portal and handle all the mappings necessary to convert EDI documents into a format that can integrate with your in-house ERP system. Ebridge Software is an integrator vendor that we use. Their solution consists of a portal that manages all documents and in-house software that pushes and pull documents to and from popular ERP systems such as Sage Accpac ERP.
Even with the expertise and capabilities of third-party vendors, a small trading partner will need an internal project manager or an external consultant to coordinate all the work, communications and testing.
For more information on EDI, discussed in simple language, take a look at http://www.edibasics.co.uk.