What is EDI and What are the Benefits?
Companies have been trying to find a way to eliminate the inherent problems associated with their paper-intensive commercial transactions for decades. From profit-killing delays to budget inflating inaccuracies and soaring labor costs, paper transactions are too sluggish and not adaptable enough to keep up with the needs of the rapid-fire succession of the digital age. Today, consumers and business partners demand that things to be done instantly and securely. If a business doesn’t comply or respond quickly enough, their competitors can leave them in a cloud of dust. This is where Electronic Data Interchange comes into play.
What is EDI?
Electronic Data Interchange (EDI) is software that allows the structured interchange of business documents and data between trading partners. The interchange happens between computers via platforms and programs. Its onboarding goal is to facilitate the exchange of documents and information amid businesses and business partners such as customers or suppliers.
EDI allows companies to send and receive information from one another electronically and in a standardized format, thereby permitting paperless communication. The process replaces email, postal mail and fax, to connect directly to the systems of the business.
Businesses Require EDI
Almost anything from what you buy to any government document you report, to any insurance document you file – down to even the text messages you send – all require EDI in some form to work.
Electronic Data Interchange plays a vital role in the integration between of external B2B systems and their partners for the purpose of going paperless and automating and streamlining business communication.
This enhanced form of communication is typically encountered in industries that experience highly automated exchanges of standardized business documents or management of a business’ supply chain management. The B2B exchange of messages occurs along the standardized business document that is typical for a geography or certain industry.
How Does it Work?
EDI works by translating common file types into unified formats and providing templates for the standard format utilized in transfers. Typically, IT teams will implement the networks that streamline and simplify daily communications and document transfers.
How is it Used?
EDI is used for the rapid transfer of business documents. Manual tasks to facilitate communication between businesses selling or ordering products (phone calls, face-to-face interaction, faxes, or paper etc.) can now be accomplished through EDI. It unites manufacturers, distributors, and retailers, through their IT systems, in a global B2B network. These programs are often used in tandem with a data integration platform that gathers data from multiple sources on-site, remotely or in the cloud.
However, it’s the hundreds of standardized EDI transaction codes that bring the business language together and make the system take off.
What is EDI Transaction?
An EDI transaction is simply another term for the standardized business documents the software generates. Companies and their partners exchange these business documents using EDI standards to automate and streamline documents such as acknowledgments, invoices, payments, purchase orders, tracking and other reports.
For an EDI transaction document to work, it must contain a minimum amount of essential data. Without these requirements, it is pretty much useless. Adhering to strict EDI feed formatting guidelines assists in defining precisely how and where each part of the data on the transaction document are found and utilized.
Each transaction document is assigned transaction numbers from the EDI public format. For instance, an invoice is given the EDI transaction number 810, and a purchase order is given the EDI transaction number 850. So, when an EDI translator gets a request for an 850 Purchase Order document, it promptly recognizes the order number, items per order, business name of the buyer and price per item. An EDI 810 Invoice transaction set is typically sent in response to the EDI 850 receipt.
What Types of Businesses Utilize EDI?
Automotive and retail businesses primarily used EDI in the past. Today, it’s estimated that 80-90 % of B2B traffic is conducted through EDI, and this number is increasing to 3 to 5% a year. The format is now more widely adopted by manufacturing, healthcare, pharmaceutical, utility and construction companies. A few specific examples of companies that have been regular users of EDI include Hallmark Cards, Wal-Mart, JCPenney and Supervalu. N41’s apparel ERP software and solution utilizes EDI, and it is EDI Capable.
What is EDI Capable?
Some of the biggest corporations in the world now mandate the use of some form of EDI format, meaning companies must be EDI capable if they want a piece of the pie. That means you must provide a very easy and smooth exchange of digital business documents in an agreed electronic business formats with your EDI trading partners.
An ERP (Enterprise Resource Planning) system does not automatically comprehend the sender’s EDI message standards. Therefore, structured data needs to come from the ERP of the sender in an internal format and be converted from this format to the message standard. Then, it can be sent to the receiver by agreed communication protocol. In much the same way, the processing steps on the side of the receiver is carried out in the reverse order.
Being EDI Capable Means Connecting the ERP
The ERP Connector links the EDI solution with the ERP system so that electronic messages are automatically transferred between the EDI software and the ERP system and the EDI. The EDI solution is required to provide an expansive selection of ERP connectors so that any ERP system encountered can be connected to quickly and without issue.
Why Choose EDI Integration?
In today’s fast-paced-digital environment, most businesses that need to use EDI for their essential B2B transactions are actually doing just that. But the ones that are realizing EDI integration’s fullest potential are obtaining automation rewards that set them apart and elevate them from businesses that don’t. From improved visibility over trading partner transactions to the elimination of manual processes, they have a clear edge.
What are the Benefits of Integrated EDI?
There is a wide array of beneficial reasons business choose to use EDI throughout their enterprise, chief among them being cost savings, improving speed, accuracy, and security. When it comes to a large company, retailer, trading partner or distributor imposing EDI as a requirement on members of its supply chain, another EDI benefit is realized; and that is trading with large entities that require businesses to have an EDI solution for transactions is a “big picture” advantage to implementing EDI software.
Benefits of EDI
While 70% of all business orders are still automated by Portals, EDI/XML and/or Exchanges, an EDI is the system of choice. Still, more than Over 41% of businesses possess no EDI capability, with 21% of them get by with just using Web Portals. This is a shame, because an EDI is an invaluable tool that can transform a complicated and disorganized business into one that it streamlined and efficient.
N41 & EDI: Business Software Solutions That Make EDI Easy
The growth and development of EDI software solutions is not unlike business software systems such as an ERP. Once a luxury common only to larger enterprises, EDI has now found its way into the hands of small to medium companies. If you are a Fashion and Apparel company that is not big enough to have your own IT team for your operations, N41 can help.
N41 is a top apparel ERP software and solution provider with innovative features and services inspired by proven fashion industry expertise. We provide optional IT service exclusively for Leading Fashion and Apparel Enterprises. As an ERP Solution Provider, EDI is integrated into our product and features rich EDI programming.
A Total Embedded Solution for Fashion Stores
Most apparel wholesalers find themselves with the single EDI option of outsourcing when it comes to managing department stores, leaving them with unjustified exorbitant monthly costs to conduct their business.
No longer does this have to be an issue, as the N41 Apparel Software Suite is the only all-in-one software system that we know can offer a total embedded solution for your business; one that can schedule file transfers, transaction mapping, barcode label configurations, and so much more.
This all means that there is no more need to outsource this operation to those who would gouge you on a monthly basis as N41 allows you to eliminate this superfluous monthly expense altogether!
N41’s embedded transaction engine handles everything from 850, 856, 810, 997 and more. It also audits every transaction which allows you to see your trading partner’s acknowledgements and eliminate 99.99% of all chargebacks. And the best thing about it all – N41 simplifies everything so you can keep all your EDI-based operations in-house!
If you are currently outsourcing your EDI business or have done so in the past, calculate how many months or years you have been needlessly paying and how much. You will quickly realize that this saved expenditure could pay for your installation of the entire N41 Apparel Software Suite (and then some).
If you would like to learn more about N41’s all-in-one system, please call (213) 738‐1010 to talk to one of our business technology experts who specialize and drive fashion apparel ERP and EDI integrated solutions. Alternatively, you can fill out our online Demonstration and Product Information Request Form, and a member of our team will contact you.
Resources:
1. https://www.innovativearchitects.com/KnowledgeCenter/business-connectivity/WhatIsEDI.aspx
2. www.seeburger.com/info/what-is-the-meaning-of-being-edi-capable/
3. https://www.theanswerco.com/what-is-edi-how-does-edi-work-what-are-the-benefits-of-edi/
