Electronic data interchange (EDI) is a communications technology that’s used to exchange business-related documents between parties via computers. An EDI system can translate documents from one company into universal standards and then send them to other parties. It can map them into documents that are usable for those parties, in their own technology systems.
EDI is a powerful and effective communications tool when it comes to business-to-business relationships. In order to implement EDI into your own business practices, you’ll first have to initiate EDI integration.
Interested in learning more? If so, then continue reading and we’ll walk you through what EDI integration is and how to use it for your business.
What Is EDI Integration?
EDI integration is the process of implementing a full EDI workflow between business partners. It covers several important aspects, such as:
- Trading partners – the people and organisations who you are exchanging business documents with
- Endpoints – the IT systems that have to process, send, and receive EDI data
- EDI documents and transactions – the documents that you have to exchange with your trading partners
- EDI standards – the EDI formats that your messages have to follow
- EDI protocols – the technologies that you’re using in order to send your messages
In order to initiate the EDI workflow, you’re going to have to first know what all of these aspects listed above are, with regard to your specific business. Then, you’ll want to set up your system by using the best EDI technology for your situation. You can set this up in a few different ways.
First off, you can have EDI software that translates directly. It maps and sends EDI data to and from the IT systems that you and your trading partners use. You can also use an intermediary service that will handle all of the actual EDI transactions for you.
There are two different ways that you can take this project on. Either you can have your own EDI team in-house, or you can work with a systems integration partner. This partner will already have experience with EDI integration and software.
Depending on the specifics of each trading relationship, you can sometimes combine different methods.
Direct EDI vs. VANs
When you’re designing your EDI setup, you’ll have to decide if you want to use direct EDI with your trading partners or go through a Value Added Network (VAN). With direct EDI, you create a specific connection with each trading partner by using a protocol that you both agree upon.
A VAN acts as a middleman. It translates the EDI messages between protocols and partners. This allows you to use your own protocol, regardless of what protocols are used by your partners.
Originally, VANS were the only option for sending EDI messages securely. But as the technology advanced, more companies started to use direct EDI. A big reason for this is that using direct EDI tends to be more affordable.
With a VAN, you usually get a lower setup cost. But you’ll have to pay a fee for every document that the VAN has to process. Depending on how much you intend to transmit, you could end up saving more money with a direct EDI setup.
In-House vs. Outsourcing
EDI outsourcing is an increasingly popular choice in which an organisation uses external specialists to manage their EDI environment. This is ideal for businesses that:
- Don’t have an in-house EDI specialist staff
- Have a staff but are too busy
- Don’t want to manage software internally
Integrating and managing an EDI platform can become overwhelming for any company. In order to do it correctly, you need access to a variety of skills and capital investment in software and hardware. There are many organisations that don’t have the resources necessary for ongoing EDI maintenance.
Managed services is when an EDI program is outsourced to a third-party provider. This is provided by a B2B systems integrator. The main reasons why companies would choose to outsource is that they get access to specialised skills and can save on EDI infrastructure costs.
Another reason for outsourcing is that you get constant access to the latest EDI technology. By utilising managed services, the EDI software will be hosted and operated at the provider’s own data centers.
There are a variety of EDI software solutions out there. You want to use the one that’s going to address the problems that your company is facing and will fit in with your infrastructure.
EDI software solutions can help with several key functions. One of these is EDI translation. This is the process of turning non-EDI documents into EDI documents.
There is also EDI transmission software. This kind of software is used to send and receive EDI documents between trading partners. It’s where protocols, solutions, and services like VANs are utilised.
EDI mapping software is used to translate the EDI information into other formats. It essentially takes the EDI messages and turns it into data that your other IT systems can use.
The Importance of EDI Integration
When you employ EDI integration into your business practices, you’ll be able to get more done, eliminate manual errors, and speed up your logistics timeline. But in order to optimise your EDI, you first have to evaluate the current state of your organisation and recognise the areas that need the most improvement.
Of course, EDI integration is easier said than done. That’s where we come in. At AFT, we can write all of the maps to transform your documents and assist with managing your entire EDI implementation.
Are you looking to start integrating EDI at your organisation? If so, then contact us today and see what we can do for you!