EDI is the backbone of the supply chain. Without this technology, trading partners would have to rely on email, phone, or snail mail (gasp) to exchange business-critical documents.
But EDI is complicated. There’s a lot to know, and it’s easy to make mistakes. When you add the complexities of the supply chain, EDI introduces unique questions and challenges, especially in terms of B2B integration.
Here’s everything you need to know.
What is EDI supply chain management?
EDI (electronic data interchange) is the #1 way companies exchange information across the supply chain. EDI supports countless critical documents like purchase orders, invoices, shipment notices, and more. It replaces paper-based processes, introducing standards in document structure, sending/receiving, and processing—all of which make the supply chain more efficient and reliable.
Why use EDI instead of email or paper?
In a nutshell… you use EDI because you have to.
The technology is so powerful, many companies require their trading partners to be EDI capable. This is the biggest reason companies come to us to launch EDI—because their trading partners insist.
That’s a huge reason to use EDI, but the technology offers benefits beyond checking off that box. EDI provides standardized supply chain processes that increase efficiency. In fact, EDI empowers companies to automate processes surrounding the creation of documents, sending/receiving, and posting to backend systems. This removes the human element from document handling, reducing waste and data entry errors.
In other words, our EDI clients don’t just make their trading partners happy. They actually run better because they’re using EDI.
But is EDI really the best way to transmit business documents?
Email might seem like a better option since it doesn’t require specialized technology. However, email comes with its own challenges. It still requires human processing, which is inefficient and error-prone. Keep in mind that many corporate email filters will block attachments, which reduces the certainty that a document will reach its destination.
Efficiency and data integrity are great reasons to use EDI in the supply chain. But there’s more. EDI provides several specific benefits that you can’t get with other technologies.
- EDI empowers you to process documents faster. Since EDI transactions are entirely digital, they move at the speed of light. The recipient can receive and process a supply chain document within seconds after it’s been generated.
- EDI makes you easier to do business with. Simply put, EDI is the de facto standard for exchanging information in the supply chain. Our clients find that once they start using EDI, their trading partners love the fact that they’ve become easier to do business with.
- EDI reduces order errors, shipment errors, and other supply chain problems. It helps to ensure that all trading partners involved in a process are on the same page.
- EDI helps you manage resources better. Faster processing times create more accurate information. This gives our clients greater visibility into the supply chain so they can allocate warehouse space, manufacturing IT support, shipping resources, and more.
- EDI can provide greater security. When you follow cybersecurity best practices for EDI, you introduce greater security into the supply chain with controlled access, monitoring, and more. Our clients get these benefits because our team also handles cybersecurity services, so we bring a unique “security first” approach to EDI. This is critical, since the supply chain is vulnerable to unique types of attacks.
Common EDI supply chain documents
Whatever your supply chain requires, you can rest assured that EDI data standards support your needs. The standards and document types are incredibly comprehensive.
Here are some of the most common EDI documents in the supply chain, plus the relevant document code in ANSI X12 and EDIFACT, two of the standards that our clients use the most.
This is just the tip of the iceberg. Read more here: How To Nail Your EDI Transactions.
EDI challenges that can disrupt the supply chain
Like any other technology, EDI can create challenges. Some of these are just par for the course, requiring an expert team who knows how to handle them. Others come up due to poor planning.
Here are some common issues we see when clients come to us with EDI supply chain problems.
- A point-to-point EDI solution may become too difficult to support as you add multiple trading partners. Under a point-to-point architecture, every new trading partner requires their own unique connection, which means there are no economies of scale in your EDI support. Point-to-point is entirely justified in the right scenario, but in the wrong scenario, it can create a large support burden. As support requests pile up and errors go unfixed, you can experience supply chain disruption.
- A VAN solution may create a ballooning cost per document as you add more and more trading partners. This can affect your margins, eating into supply chain efficiency.
- A self-service EDI solution may offer an easy entry point, but it may not be robust enough to handle complex supply chain interactions as your company grows. In fact, our clients often find that they need to replace a self-service solution with something more powerful.
Read more here: 7 Common EDI Issues.
How to optimize the supply chain with EDI
EDI is a complex technology. Unless you have EDI experts on staff, you’ll need to work with an EDI service provider (like Corsica Technologies). The right partner can guide you through the process of scoping and launching EDI, replacing an existing solution, or optimizing an existing solution.
Here’s what we do at Corsica to help our clients optimize their supply chains with EDI.
- Assess your current capabilities. Are you processing EDI documents today? If so, what’s working, and what isn’t?
- Develop a long-term strategic plan. It’s one thing to scope your EDI solution to meet your current needs. But where are you going long-term? Do you have an untapped opportunity to interact with additional trading partners who can grow your revenue and market share? What will it take to get you there?
- Choose, implement, and integrate the right EDI solution. The more complex the supply chain, the greater the risk of choosing a solution that doesn’t actually meet all your needs. The right partner will align your requirements with the best offerings on the market—then implement your solution and integrate it fully to your ERP or other backend systems.
- Maintain the solution with EDI services. The supply chain never quits, and the relevant systems are always evolving. Whenever a connected system changes—whether that’s on your end, the trading partner’s end, or somewhere in the middle—your EDI integration can break down. You need expert services to test new releases, update data mapping, and ensure everything runs smoothly. Without this type of support, EDI issues can lead to operational roadblocks, lost revenue, and damaged customer relationships.
Special note on billing
It’s rare to find an EDI provider who offers unlimited services for one predictable monthly price. Instead, most providers bill for every little interaction with a client. Things like updating a field, creating a new map, or adding a trading partner typically require a scoped engagement. Global enterprises can absorb these fluctuating costs, but for the rest of us, it’s pretty hard on the budget.
If you want to stay friends with your CFO, you have to find another way.
That’s why Corsica Technologies is different. We offer unlimited, unmetered EDI services for one predictable monthly price. And our plans really are all-inclusive. They cover:
- Adding new fields
- Mapping data
- Handling exceptions
- Adding a new trading partner
EDI is so essential to the supply chain, it should just work. It shouldn’t become an unpredictable cost center. That’s what we’re all about here at Corsica Technologies.
Need to become EDI capable?
Download our guide to get started.
