If you have not used Electronic Data Interchange (EDI) in the past, it can be difficult to document the advantages of EDI and justify the start-up costs of EDI. For many people just explaining what is EDI is a challenge in itself.
EDI Definition. EDI in its simplest form is defined as an electronic data interface to exchange electronic documents between two or more businesses.
Why Do EDI? EDI is an enabler that allows two or more businesses to automate a shared business process. Common Business-To-Business (B2B) processes include the purchasing process and the shipping process.
Advantages of EDI
Reduces Business Cycles Significantly. Any business cycle involving two or more businesses can be reduced to seconds if fully automated using EDI. For example, a business can send an electronic purchase order to a supplier, and the supplier can provide an advance ship notice in seconds using EDI.
Reduce Administrative Labor. Another advantage of EDI is that it reduces administrative labor. There is no need for data entry clerks as the EDI data can be automatically imported into one or more of a company’s business systems.
Reduce Data Errors. Even the best us make mistakes entering data. With EDI, data errors are greatly reduced as the data is only entered or scanned once at the original source versus having to be keyed in or handled multiple times.
Concurrent Data Exchange. Another advantage of EDI is that electronic business documents can be sent to multiple businesses and suppliers at the same time. This can reduce paper and mailing fees as well as better synchronize the work of multiple suppliers in complex supply chains or keep multiple customers aware of things like inventory levels and service status.
Bottomline is that EDI improves the accuracy, timeliness, and completeness of business documents and data used to support key B2B relationships as well as increase the operational efficiencies of all businesses involved in the EDI exchange.
Tags: EDI