What is Electronic Data Interchange?
A paper based exchange of business documents has represented the way business has been run for many years. But, it also comes with significant limitations, postal mail takes several days, faxes several minutes and this paper approach is error prone. Electronic data interchange is the computer to computer exchange of business documents in a standard electronic format between internal or partner resources. This electronic approach enables increased flexibility, reduced cost, increased speed and improved communication between operators. This might seem like a lot of jargon, but EDI is essentially a succinct backend process that provides for the seamless relationship between systems.
Why Does EDI Matter For Retailers?
How many retailers want to continue to use manual processes? Or physically track orders? Or keep track of relationships with suppliers?
For retailers EDI can make a significant difference, eliminating the need for basic procedural elements in the retail transaction process. Transactions can be completed with greater speed & accuracy, vital for today’s fast-moving retail landscape. EDI also ensures that systems can work together, allowing systems to communicate effectively.
EDI assisted retailers, whenever you place an order with a supplier an electronic purchase order is created within your system, with an EDI solution behind the scenes an EDI purchase order is created and sent to the supplier. Even though the supplier uses a different system their order system will be able to translate and receive the information automatically, ensuring that systems are synchronized even as requirements or information are tweaked.
After the order is ready to ship, the supplier sends an advanced shipping notice & an invoice which matches the original order. The process is reconciled within a few keystrokes, the process is automated and orders are quickly matched to ensure accuracy, consistency and timeliness within the order.
Improving The Workflow
EDI is a foundational tool for automated order processing and backend workflows. The goal of this software is to streamline and improve the workflow while enhancing supply chain predictability. But, EDI also helps to reduce friction in the operations process:
Data Entry Errors
- Each additional keystroke adds time to your business operations, requiring additional resources and the risk of critical errors. EDI eliminates manual data needs.
- A paper-based order can cost $70 or more per transaction. This cost multiplies if a decimal was put in the wrong place. EDI transactions can cost less with the additional benefit of error reduction.
- With increased accuracy, comes increased forecasting. Inventory and management decisions can be made to more closely resemble reality.
- EDI gives you more control over on-hand inventory. It allows for an automated inventory inquiry process to keep you updated on availability across vendors, disruptions are quickly visible allowing for more visibility.
Implementing Electronic Data Interchange
EDI can be outsourced or retailers can choose to invest in their own on premise systems. Both options have their benefits, but, for most retailers outsourced cloud-based EDI is more proficient.
Internal EDI has a high level of initial investment, requiring: Software installation, hardware installation, maintenance support, map development… with outsourced EDI all of these elements are managed externally with the benefits provided to retailers & customers at the endpoint. While creating an external system might seem like creating a silo, it actually helps to break down the walls between existing silos. Cloud based EDI tools allow intercommunication between e-commerce, ERP, WMS, accounting and Point of sale. This inter-communication of tools and software allows for complete visibility of business management and assists retailers in managing the complexities of operations.
A Flexible Solution: Teamwork Commerce + SPS Commerce
SPS commerce can help retailers to integrate with most retail software’s, allowing businesses to achieve multi-system integration through EDI producing a seamless exchange of data across systems. SPS works to connect all retail systems, from legacy to eCommerce their EDI solution can help businesses to create a focused, and efficient backend process that supports retail operations.