Overview of Integrated EDI vs Non-Integrated EDI

Electronic Data Interchange (EDI) has revolutionized how businesses process their data/information like purchase orders, invoices and other business related documents with their trading partners. Though EDI is an old school technology, the last two decades have seen tremendous growth in the use of EDI and have got its fruits. The automated technology has also evolved by leaps and bounds in order to minimize the manual processes and optimize the utilization.

Before moving further and looking at the difference between Integrated EDI & Non-Integrated EDI, let us look at the very basics of EDI.

EDI is a technology that facilitates the electronic exchange of data/information between two companies or between a business and its trading partners, in a standard format. Generally, this software is used to process all the business related documents very accurately and efficiently and that too in a secured way.

What is EDI Integration?

EDI integration means the integration of your EDI software with your ERP system in order to keep it synced for further activities. However, EDI integration, also means the integration of EDI with other Internal enterprise software/systems. Introduction to Non-Integrated/Stand-alone EDI

Non-Integrated or stand-alone EDI is nothing but an isolated or rather a stand-alone portal which is not connected to the ERP or other software/systems in the organization. In other words, without EDI Integration, one is left with individual chunks of different technology that are not connected.

Let us walk through to know the difference between an Integrated EDI and Non-Integrated EDI.

Integrated EDI vs Non-Integrated EDI

Process cycle Pace

The manual processing of purchase order is lengthy, tedious, and involves various departments of your organization. The pace of the process cycle will, in return, determine the time of your supplier payments and delivery of goods. Hence, companies need to aim to shorten their processing of purchase order cycles to make vendor payments and other related activities on time.

A Non-Integrated or Stand-alone EDI doesn’t operate in sync with the ERP system or any other internal systems. Hence, it would involve more manual handling and lengthy process time in comparison with Integrated EDI, which eventually will extend the work cycle on purchase orders. Integrated EDI helps you effectively connect with internal ERP systems and other internal systems and helps to automate the end-to-end purchase order process cycle.

Responsiveness of the system

Ever-evolving technology has connected or rather say linked multiple internal and external business partners to channelize trade & commerce. Because of this inter-linking, the communication and processes have become transparent. But it has, in turn, increased the complexity of the whole process. An efficient and accurate EDI solution can adapt to your fast-paced business growth and help to excel efficiently.

A Stand-alone EDI does not collaborate and work well with other Internal systems, which makes it challenging for it to cope up with the speed of commerce and respond actively and quickly. On the other hand, Integrated ERP enables responsiveness as it can easily handle numerous trading partners and payment at the same time with very little human intervention and very less or no errors.

Accuracy of the Process

An error in processing a purchase order or exchange of any other important documents can cost a company lots of money. Moreover, the error may have a negative effect on other business processes as well and in turn, spoil vendor relationship and tarnish the reputation of your company.

As it still involves considerable manual processing, a Non-Integrated EDI is error-prone. It may not communicate properly with other applications and might lead to loss of crucial data. Integrated EDI enhances the accuracy of the process. It manages the data efficiently as it can communicate with other ERP processes and systems without any hindrance.

Productivity of staff and the process itself

The productivity of your staff and the process will directly impact the profitability of your business. Any organization would surely want its EDI software to improve the productivity of the process and team.

Stand-alone EDI would need staff to monitor few aspects of the purchase order and all other processes. As the Integrated EDI can automate the process to a great extent, your team can focus on other essential tasks and eventually increasing the productivity. Also, for a given amount of time, the volume of purchase orders a non-integrated EDI can process is very less compared to the Integrated EDI.

Processing Costs

Processing of purchase order and other activities involves a lot of expenses. While few of those expenses cannot be eliminated or reduced as they are mandatory, other costs can be decreased through process improvements, efficiency and adaption of technology.

Integrated EDI minimizes manual efforts. Hence, one can save a lot of money on labor costs. By cutting short the payment cycles, Integrated EDI can help you make the vendor payments on time. With this, you can not only save your business from chargebacks but can also avail vendor discounts for early payments.

Implementation

Cost of your EDI implementation depends on the time taken for the implementation process and the complexity of the procedure. This process would also need you to do some legwork on all the prerequisites for the implementation.

Integrated EDI is ideally connected to various internal and external applications/system. It would need a lot of prerequisite software applications beforehand, for successful implementation. Thus, it might take more time as well as money to implement in comparison to the non-integrated EDI application.

Conclusion

Though Integrated EDI may initially cost huge and take long time for the implementation, it has long-term benefits. Such benefits cannot be matched by Non-Integrated EDI. Integrated EDI would be more appropriate for an organization’s growth.