How to Improve Business Efficiency with EDI integration?

Introduction

Electronic Data Interchange (EDI) is nothing but the exchange or rather sharing of business documents and data such as purchase orders, inventory, invoices, orders, shopping level invoices, billing documents, order responses, dispatching, and receiving advice documents, etc across a variety of platforms in the automated way and in form of electronic messages between the IT systems of the trading business partners. The key important factors of transiting from a paper-based manual exchange of documents to automated EDI services include reduced errors, quicker document processing, efficient and secured way of transitions, automated workflows, and improved business-partners relationships.

Business Process without EDI

Traditional paper-based manual process has a lot of tiresome process format and is time and energy consuming task.

For instance, if we talk about an Order processing, the whole process is a lengthy one and time consuming. At buyer end, a person generates the purchase order, via postal services he/she sends it to the supplier, upon receiving the order the supplier enters the invoice information into their system manually and thereafter the invoice is generated in the format wherein the buyer will understand it and again via postal services the invoice is sent to the buyer and the buyer thereafter enters the invoice information into his/her system.

This whole process demands lot of time and it also has loopholes in terms of the redundancy of data, data entry errors, decoding the requirements, more time been taken and increases the overall costs. So, Business process without EDI is not at all efficient and secure in the fast growing modern age.

Business Process with EDI

Unlike business process without EDI; if we look at the side of business process with EDI integration there is lot of positive and beneficiary factors and even the process is easy and robust along-with being secure and accurate.

For instance, taking the same example of Order processing, the two systems involved in the business communicates via EDI. Buyer will generate the purchase order and share it with the supplier via EDI channels and get the invoice in return from the supplier.

The whole process reduces costs, errors, and manual intervention and increases the speed and efficiency as well as the accuracy of the process.

Key Benefits of EDI Integration

Adapting EDI integration for one’s business can be extremely beneficial in multiple ways. Below mentioned are few of the major benefits of adapting B2B EDI integration:

• Reduced Overhead Costs: Adapting EDI integration services can affect the cost factor up-to a great extent. EDI transactions reduce many expenses such as that of paper, printing, storage, filing, postage and document retrieval. Secondly, reports suggest that EDI lowers the dealing prices, to both the parties dealing, by a minimum of 30% collectively. That’s definitely a very good parameter indeed!
  
  EDI integration adaption saves the valuable time and energy of employees by reducing errors caused due to data redundancy, unreadable faxes, lost or outdated orders, decoding unstandardized document formats or incorrectly taken orders.
  
  
• Speed up processing with Accuracy: EDI integration services upscales the business process in terms of speed by more than 50%. Data exchange transactions takes place in minutes unlike traditional paper-based approach that use to take more time or weeks of wait time in accordance to the postal service. 
  
  EDI integration improves the data quality, delivering with minimum of a 30% reduction in transactions with errors by eliminating human and generic errors caused majorly from marked-up handwriting or lost faxes/mail and the keying & re-keying errors. Using EDI will scale back the order-to-cash cycle time and hence rising the business partner transactions and relationships.
  
  
• Increased Efficiency: Automating the traditional paper-based tasks enables the business executives to invest the saved time in other tasks. Faster processing and accuracy of processing of business documents results in less re-working on orders. It also results in fewer stock-outs and reduced off orders.
  
  Adapting EDI integration services ensures that all the business related data is exchanged/shared on time and hence helping organisations to cut back their inventory levels.
  
  
• Business strategy improvement: EDI integration enables period visibility into all sort of transaction status. This successively allows quicker decision-making into the business and upscales responsiveness to dynamic clients and all the market demands. IT eventually takes the businesses to be a demand-driven business model instead of the supply-driven one. 
  
  EDI streamlines the business’s ability to enter new territories and markets despite of the language, geographical and other differences. IT also promotes company social responsibility and sustainability by substituting the traditional paper-based processes with modern age electronic alternatives.

Technical Architecture of Electronic Data Interchange
In Electronic Data Interchange (EDI), three types of protocols are used for receiving and sending files from one place to another.

• File Transfer Protocol (FTP)

  FTP is a robust, reliable, efficient file transfer protocol which is utilized by several businesses for file exchange purpose inside a corporation. However, only FTP doesn’t give the security grounds required for document/data exchange with or within different corporations over the web. Due to this flaw, most of the businesses use FTP in conjunction with VPN computer code that provides the required protection layer.

• Value-Added Network (VAN)

  VAN is a non-public but value-added network provider wherein documents are exchanged or rather interchanged via EDI. In other words, it’s a channel of communication to exchange data from one business peer point to another.

• AS2:
  AS2 is one of the most popular and highly recommendable ways of transporting data, specially EDI data, over the web in a secured and reliable manner. AS2 creates an “envelope” for the exchange of EDI data which eventually permits the data to be sent, over the web, in secured way with the help of digital certificates and encryption.

Conclusion

With all the above-mentioned benefits and positive edges to the adaption of EDI, the business efficiency and flow upscales to a very good level with EDI integration adaption into the business.

Electronic Data Interchange (EDI) is the real booster for efficient business!!