If you have an ecommerce site, EDI should be on your radar. EDI is proven to streamline and improve workflow, while improving supply chain predictability. This can be of particular importance when shipping orders directly to your consumers.
EDI stands for Electronic Data Interchange. EDI is a process by which business information can be exchanged between trading partners “electronically” in standardized formats, instead of “physically” with paper. For example, EDI enables a retailer to send a purchase order to a vendor digitally – and almost instantly – rather than through traditional paper documentation. Think email vs. snail mail.
A multitude of business documents can be standardized and exchanged through EDI. You can process invoices, purchase order acknowledgements, advanced ship notices, credit adjustments and more, all without human intervention. With EDI much of the manual preparation, handling and mailing associated with traditional business communications is eliminated all while simultaneously reducing errors, stocking issues, improper documentation and lost forms.
How can EDI help me?
EDI helps retailers deliver on consumer expectations. Ecommerce orders are quickly routed to the fulfillment queue, speeding time-to-delivery. All participants in the supply chain engage in fast, reliable and accurate communications. Businesses reduce late deliveries, stock outs and backorders that drive customers away.
EDI contributes to end-to-end inventory visibility. Retailers can quickly determine product availability before placing an order for their warehouse. If the distributor is out of stock, the order can be delivered directly to the manufacturer, with the distributor getting the credit for the sale.
EDI also encourages sales. How? Good question.
- Powered by EDI, the retailer to displays inventory information directly on the ecommerce site.
- Consumers know the item is in stock and are comfortable purchasing. (Even if the product is warehoused by the vendor or 3PL and the retailer doesn’t have physical custody of the item.)
- Finally, EDI relays shipment tracking information to the consumer. Voila!
Can EDI integrate with other systems?
Yes! The right EDI solution can be integrated to work with existing ERPs, accounting software, content management systems and more. EDI is also adaptable, so don’t worry about upgrading to new ERPs, software or other systems.
Keep in mind, not all EDI solutions are created equal.
1. Traditional in-house EDI systems:
These systems live onsite at your company and may cost more upfront. As your business grows, in-house solutions tend to be more expensive – think software, hardware or system upgrades.
2. Online EDI solutions:
These can eliminate some expenses when compared to packaged EDI software, but may require considerable onsite resources.
3. Cloud-based EDI solutions:
Hosted in the cloud with no on-premise implementation required. Drastically cut both upfront costs and long-term expenses, with minimal resource requirements.
EDI increases efficiency, strengthens your supply chain and provides seamless communication between you and your retail trading partners. These improvements help you execute online orders effectively and better satisfy consumer expectations. At the end of the day, EDI can be a game changer.
By: Scott Bolduc Director of Supply Chain Strategy at SPS Commerce