Now is the time to implement EDI (electronic data interchange) in your business, as it helps organizations to continue their growth. Numerous companies are interested in EDI software as they’ve seen how much value it adds to their operations from its strategic benefits.
EDI has been shown to raise business value by decreasing costs and increasing productivity and accuracy. For example, EDI has reduced costs by 24% for Matson Logistics. However, saving on costs isn’t the only benefit that EDI offers.
What Is EDI in Business?
EDI is a virtual method of exchanging business data or documents between trading partners. Data exchanges typically occur between the buyer and supplier. The process involves wiring invoices, payments, shipping notices, purchase orders, and other documents, eliminating paper trails.
Companies can achieve EDI integration in two steps:
- First step: Creating EDI documents and endpoints to exchange data with the trading partner.
- Second step: Convert EDI data into a format you can use for your back-end technical environments, such as an ERP system or accounting solution.
EDI can enhance virtual exchanges and improve the efficiency of operations with trading associates. Most businesses can use it to void wasting time and estimate actions ahead of time.
If you are thinking of incorporating EDI into your business, here is an overview of why there’s never been a better time to make the investment.
Why Invest in EDI for Your Business?
Applying EDI in your business can add value to your company’s processes and operations. Here are the reasons why.
1. Automates Business Processes
EDI increases the efficiency of your business processes. For instance, it can decrease the time it takes for your employees to make an invoice and handle the purchase manually. Timing is a crucial aspect of business, especially when processing an order.
EDI is proven to reduce the order-to-cash cycle by 20% – often facilitating transactions within minutes and improving transactions overall. Furthermore, records are managed and organized effectively while simultaneously updating data.
2. Enhances Data Exchange
Companies that work with lots of data may also work with numerous other companies in one distribution channel. This makes each company co-dependent, so each has its responsibilities to deliver orders on time.
With EDI, the software will automatically exchange information, meaning processes are carried out more quickly with reduced errors.
3. Improves Planning
Incorporating EDI in your business can help your company plan better. Companies with EDI software can anticipate future business processes through the available information. For example, EDI automates order processing based on the inventory levels when they dip below a certain amount.
4. Increased Protection
EDI increases security levels to protect any transactions – allocating data in a wide variety of communication protocols and safeguards. As a result, companies that work in logistics can reduce their overall supply chain risks.
With EDI software, trading partners can profit from effortless data mobility and accessibility of new business prospects.
5. Boosts Customer Satisfaction
According to research, 90% of customers believe quality service is the most important facet regarding loyalty. EDI benefits businesses and end-users by making deliveries faster.
The software features tracking to provide real-time updates on customer orders. For the consumer, this gives them peace of mind since they know when their order will arrive. In turn, customer satisfaction increases, which improves customer retention and revenues.
What’s Trending in EDI Integration?
Small businesses must continue to modernize their integrated software to remain competitive in a digital environment. Here are some trends that will impact future EDI integration.
EDI technology and service models are evolving with cloud computing. More companies are moving their applications, data, and integrations over to the cloud, including cloud-based EDI. With that in mind, cloud computing requires IT professionals. Therefore, businesses have an increasing need for talent in the IT department.
However, IT departments face a skills shortage, costing businesses millions of dollars in revenue. Outsourcing IT would be the best solution for businesses that face this issue – it reduces costs and overhead and provides 24/7 backup for an understaffed department.
E-commerce Business Growth
E-commerce is the fastest-growing sector of retail. According to Statista, e-commerce sales are expected to grow by 50%, reaching $7.4 trillion by 2025. As the e-commerce market expands, new challenges begin to emerge, such as the increasing complexity and volume of data.
Because e-commerce depends on different technologies – supply chain management, big data, and B2B integrations – the business model becomes increasingly complex.
EDI is practical for the modern B2B infrastructure, as it provides a seamless flow of management data for supply chains, inventory, and more.
Industries across the globe have developed a certain amount of hype around blockchain technology, believing it will be the replacement of EDI.
While blockchain is effective for certain actions, it won’t replace all transactional technologies. Blockchain technology will work side by side with EDI systems. As a result, small enterprises conducting business transactions won’t have to experience drastic changes.
In fact, it will continue to operate in the same way while increasing visibility between parties – making EDI technology even more powerful than before.
Empower Your Business With EDI
For small organizations, it’s all about speed and efficiency, and EDI is the solution to faster business processes. EDI technology revolutionizes the B2B space, streamlining business procedures and building better relationships. If you haven’t explored EDI in business, now is the time to invest to remain competitive in the marketplace.