Electronic Data Interchange (EDI) is a standard format that allows business users to drive automatic information exchange across partner ecosystems. In other words, it allows users to facilitate computer-to-computer exchange of business information like documents and records in a standard electronic format between partner ecosystems. EDI enables organizations to:

  • Cut down costs
  • Automate workflows and transactions
  • Speed up processing of documents
  • Eliminate errors
  • Foster smoother relationships with the partner or customer network
  • EDI transactions comprise crucial information that enables organizations to facilitate improved business exchanges. A highly popular example of this is that of order processing. 

    But the question we need to address here is how does EDI work?

    In a normal order processing scenario, a buyer sends a purchase order for a product from a significant supplier. After that, the supplier sends an invoice, and finally, both parties exchange acknowledgment receipts. To ensure the success of this step, a common EDI transaction set is used called Advanced Shipping Notice (ASN). The goal of ASN is to track and pack data before the delivery process is complete. The moment the ASN with billing information is validated in the receiving open interface and imported into purchasing, a specific invoice for the shipment is created automatically. 

    Why is EDI Integration Important for Your Business?

    Organizations need EDI integration software to create the workflow between multiple trading partners. This is done by:

  • Establish the EDI documents, transactions, protocols as well as endpoints that will help business users drive data exchange across the partner ecosystem. 
  • Translating EDI data into a format that can be used to support back-end technical environments, such as ERP system or accounting solution. When that’s done, the partners involved can speak in a common language and hence build a strong communication flow. 
  • After those two steps, users can convert the files into a proprietary file format such as iDoc or JSON, which can be easily ingested into back-end systems. Once the data is ingested, it can be easily used for extracting actionable insights that help businesses make the right decisions. Not only can that streamline value generation but also create valuable experiences. 

    EDI integration software enables a business user to drive decision-making and deliver the promised value to end customers. It has a lot of benefits to offer, some of them are:

    Increased Data Accuracy: When important business functions such as document processing and transmission are being automated, along with ingestion and transformation into ERPs, the need for manual intervention gets eliminated. Manual methods apparently comprise errors and introduce delays, which leads to lost opportunities and lost revenue. By automating processes, companies can get rid of these risks and ultimately turn EDI compliant. 

    Faster Business Cycle: EDI software allows organizations to cut down processing time. Consequently, the time of completion of cycles of processes like order-to-shipment can be reduced by as much as 50% to 60%. 

    Improved Trading Partner Visibility: EDI integration promises better visibility into important business processes. This enables users to build connections and integrate new customers, improving companies’ ease of doing business. 

    Driving Business Forward with Modern EDI Integration Solutions 

    Undoubtedly, EDI remains the most common and widely used standard for B2B transactions. But if your organization still rely on legacy tools, handling them become difficult. 

    Take a look at some indicators that prove that your integration system is broken: 

    EDI does not connect to your back-end systems.

  • EDI documents fail to get integrated into back-office applications. 
  • Custom coding and complex EDI mapping are required and that’s tedious and time-consuming. 

  • There is a need to update in-house scripts on a constant basis. 
  • Manual intervention is required. 

  • Manual processes turn system more error-prone and highly fragile. 
  • When you detect any of the signs mentioned above, you need to address them by revamping your existing data integration strategy.

    What it can do for you is improve your ability to build data connections and integrate new customers at the speed of business. These solutions offer improved EDI integration capabilities that help businesses speed up transactions and deliver faster value. With self-service and AI-data mapping capabilities, these solutions help companies quickly transact and do business with their partners and customers – without weeks of coding. So, embracing a modern integration solution is crucial, and the sooner it is done the better the results will be.

    Author's Bio: 

    Chandra Shekhar is a product marketing enthusiast who likes to talk about business integration and how enterprises can gain a competitive edge by better customer data exchange. He has 8 years of experience in product marketing for SaaS companies.