Are Your Business Partners Using EDI?
Are your trading partners requiring you to implement electronic data interchange? You're not alone, as millions of businesses use EDI, including all Fortune 1000 companies. You may be wondering why it's so popular, and why your business partners are expecting you to get on board. We'll learn a little more about EDI and it's many benefits to the supply chain.
How it All Started
Believe it or not, businesses have been using EDI since the 1960s. Companies used secure phone lines to share information and process orders as part of the supply chain. It initially became very popular in the retail space, but today it's used in virtually every industry, including transportation, technology, healthcare, manufacturing and financial services.
In the 1980s, EDI standards were introduced. These standards provided a set of guidelines for EDI users to follow. The established formats and numbers made it easier for vendors to connect with new partners and establish streamlined business relationships.
Although it's a mature technology, EDI is with the times. The advent of Internet technology came along and allowed connected computers to share data with one another instantly, speeding up purchase orders and other processes. More recently, cloud computing has allowed EDI users to enjoy increased scalability with minimal hardware investment, while mobile technology has allowed users to access EDI forms and exchange information wherever they are.
"If your partners are asking you to implement EDI, it's because they value you."
The benefits of EDI are plenty. On the strategic side, you can decrease operating costs, improve inventory cycles, promote sustainability and streamline trading partner integration. At the operational level, purchase orders and other forms that used to take days to complete can now be submitted in minutes. You and your partners can move inventory faster, reduce order errors and enter new territories seamlessly.
If your partners are asking you to implement EDI, it's because they value you and they want to continue working with you. Now, let's talk about some of the options that you have when choosing an EDI strategy.
When it comes to using EDI, it's not a one-size-fits-all scenario. Larger companies may implement their own EDI software and host on-premise. While this requires more work, it also allows more control and customization.
Another option is cloud-based EDI. Organizations can use EDI programs that are hosted offsite, and take advantage of cloud computing such as increased scalability and lower infrastructure requirements. Cloud EDI can be a great option for smaller businesses because they don't have to invest in all the hardware and new employees.
Your partners may be part of value added networks. Essentially, a VAN is a network just for EDI usage. It's a secure place for quick document exchange, and it provides a mailbox for each organization. These mailboxes notify the organization when a new order is received.
While all EDI programs are secure, a VAN can provide more robust security features, making it a good choice for industries that deal with a lot of personal or sensitive data. There are different VANs to choose from, but if you have multiple partners on different VANs it should not be an issue as most of these networks can communicate with one another.
One of the many ways that EDI improves partner relations is through the standardization of its forms. As mentioned above, these standards were established in the 1980s. By establishing a set group of formats and guidelines, these universal EDI standards make it easier for new organizations to get involved with EDI transactions. The standards also simplify exchanges for companies who may be using different EDI providers