Data exchange underpins all business communications and transactions. And technologies, such as modern Electronic Data Interchange (EDI), enable companies to exchange business documents in a standard electronic format across partner ecosystems. By substituting paper-based documents or data, including purchase orders and invoices, EDI enables business users to transact and do business with partner ecosystems. In addition, by facilitating automation, EDI minimizes the occurrence of errors or inaccuracies, thus enabling companies to save time and ultimately costly errors.

What Does EDI Encompass?

When EDI technology is implemented, large-sized customer data streams move from one application to another. The EDI standards identify the order and location of information in a specific document format. Through automation, data can be exchanged and shared instantly instead of over days or weeks required when leveraging paper documents or other legacy data exchange approaches.

In the current digital era, companies can rely on EDI software solutions to drive document exchange and business transactions. In these mechanisms, the need for IT to create long custom codes and complex mappings is entirely eliminated. In turn, IT can focus on high-productive tasks and take up the governance role instead.

Moreso, automating data exchange processes reduce the occurence of errors and delays, minimizing costs to a minimum. By facilitating faster data exchange and transactions, companies can easily create better relationships with customers and deliver the value they’ve been promised sooner.

In short, EDI integration solutions enable companies to:

  • Cut down business costs
  • Automate workflows and accelerate transactions
  • Kickstart document processing
  • Reduce occurrence of errors and inaccuracies
  • Create smoother relationships with trading partners
  • How Does It Work?

    EDI transactions are defined by the EDI message standards used. It is crucial to have proper governance processes for data quality. When either data is in the wrong place or goes missing, chances are high that the EDI document might not be processed correctly.

    A lot of EDI message standards are used, including TRADACOMS, GS1, ODETTE, and the Accredited Standard Committee X12 (ASC X12).

    In general, there are two types of EDI transmission:

    Point-to-point or direct connections: In this type of EDI transmission, the transfer occurs through two systems or computers with no intermediary over the internet, generally with secure protocols.

    Value-added Network (VAN): In this particular type of EDI transmission, a third-party network manages the transmission, generally with a mail boxing paradigm.

    How Does It Drive Workflows and Transactions Across Partner Ecosystems?

    Organizations require EDI software solutions to automate workflows among multiple trading partners. In doing so, two steps are used:

    Companies need to establish protocols, documents, and endpoints that will enable data exchange among trading partners.

    Then, EDI data needs to be converted into a format to facilitate back-end technical environments. After that, both trading partners use the same standard that simplifies communication. Finally, the data is converted into proprietary file formats such as JSON or Idoc. This data is then ingested into back-end systems for future use.

    Though EDI impacts workflows and transactions, some other benefits make it desirable still, such as:

    Better Data Accuracy: By automating EDI transmissions with trading partners, even non-technical business users can exchange data faster. Manual methods, by nature, are error-prone and slow. When automated data flows are created, errors can be prevented, thus turning businesses EDI compliant.

    Faster Sales Cycles: EDI integration enables organizations to decrease processing time. As a result, the duration of completion of order-to-shipment business cycles can be slowed by as much as 60 percent.

    Improved Trading partner Visibility: EDI integration software solutions offer visibility into processes. As even non-technical business users can ensure that their data is accurate, automated, and easily accessed by the ERP, the ease of doing business improves dramatically.

    Leverage Modern EDI Solutions to Take Business Forward

    In short, EDI integration technology remains the most common and widely used standard for B2B transactions. But if your organization rely on legacy solutions, it’s hard to manage EDI integrations. Here are some signs that indicate that the system is broken:

  • EDI does not connect to back-end systems
  • EDI docs do not get integrated into back-office applications
  • Manual approaches and in-house scripts are used
  • Once any of the above signs are present, companies need to reimagine their EDI integration software solutions. In doing so, they can implement data connections and accelerate transactions across partner ecosystems - at speed and scale.

    So, a modern EDI integration approach can enable all business users to automate workflows and speed up transactions, while freeing IT to focus on high-productive tasks.

    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.