What is EDI? The Ultimate Guide to EDI

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EDI - Electronic Data Interchange

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What is EDI? The Ultimate Guide to EDI

Throughout the years, businesses have been utilising new technologies to give themselves the competitive edge in their markets. Technology is an increasingly useful tool in automating complex processes and saving businesses time and money. EDI is one of those technologies.

EDI (Electronic Data Interchange) can be incredibly complex to integrate into your business if you do not have the understanding necessary to make it a success. With so many types of EDI out there, it can be difficult to understand not only what it is, but which is right for your business. Our ultimate guide to EDI breaks it down for you.

What is Electronic Data Interchange?

EDI stands for Electronic Data Interchange. In its simplest form, it relates to the computer-to-computer exchange of business documents in a standard electronic format, typically between business partners. The transition from paper documents to electronic document formats has been in place since the 1960s, with more businesses turning to EDI solutions to solve their business problems.

Automating business-to-business (B2B) communications saves businesses a lot of time, allowing them to focus on other areas of the business while their systems exchange emails, documents, and notes with business partners. This information may include invoices, purchase orders, and booking requests sent over B2B networks.

How Does EDI Work?

The right EDI system will eliminate the need for multiple people and paper processes by automating computer-to-computer communication. Often, your business and customers will need to go through numerous steps in order to complete the journey, from creating the order and receiving the order to processing the invoice.

EDI simplifies the process through automation, transferring the information and documents between your internal systems and your partners’ computers. It cuts out a lot of the steps that require the human element, putting all data into standard formats and allowing you to focus your attention on other areas.

Why Should Businesses Use EDI?

Many businesses are opting to use EDI in order to speed up timelines and help to eliminate errors that can be caused by manually inputting data. Thousands of standard business transaction documents can be sent through EDI automatically, eliminating variations between companies by standardising information and ensuring the information translates easily between computer systems.

Traditional transaction processing can take a considerable amount of time, especially when relying on postal mail. However, EDI takes only a few minutes to complete, saving you valuable time. It enables your staff to focus on higher-value tasks and increasing productivity. As a business, you can then focus on building relationships with suppliers and partners.

A key factor for businesses looking to utilise EDI successfully is cost reduction. For many organisations, they will save money on paper, printing, storage, and postage costs, which all add up to significant business expenses. The cost of implementing a solution or working with an EDI company allows you to cut costs in the long-run and focus on the areas of business you need to focus on.

Which Industries Can EDI Help?

EDI is extremely diverse and adaptable to your business needs, making it perfect for a wide range of industries to use. In fact, every industry is able to use EDI to automate processes in different ways. It can help the following industries:

  • Automotive & Aviation
  • Manufacturing
  • Financial Services
  • Retail
  • Food Service
  • Technology
  • Healthcare
  • Supply Chain
  • Logistics

The high adaptability of Electronic Data Interchange means that it is easy to integrate into your business and get the most from it. We have an in-depth guide to how EDI works across industries for you to read, which will offer further insight.

Internal EDI vs. EDI Outsourcing

It can be extremely costly and time consuming to set up an internal EDI solution. To make the best use of it, you need a dedicated internal team to manage EDI. Their function is often separate from IT, keeping their focus on ensuring that your EDI system is working as expected. Often, businesses do not have the budget or the ability to train individuals to fulfil this function.

Outsourcing EDI is the best strategy for many businesses. Instead of training up and hiring for an internal team, you trust an EDI company to handle the solution for you. They will discuss your business needs, so whether you have the technology to support a more intricate EDI solution or you need web based EDI services instead, they can help.

Often, EDI outsourcing is perfect for businesses wanting to leave the complex integration and automation to the professionals. Organisations can focus on their areas of expertise while leaving the rest to the EDI experts.

Is EDI Right for Your Business?

The variety of EDI services available mean that you can find the right one for your business with ease. The best EDI software companies will discuss your needs with you to create the ideal solution. Using EDI gives you advantages over paper systems, not only because it cuts the costs of paper-based invoicing and ordering, but because your teams can focus on priority and additional services as needed.

Statistics vary widely across studies, but research agrees that between 59 and 85 percent of companies are integrating EDI solutions into their operations. With between 15 and 41 percent of businesses continuing to rely on manual processes, it is easy to see why many are making the change to gain a competitive advantage.

Want to discuss the right EDI solution for your organisation? Contact us now to learn more about our services and what we can do for you.

Call 01932 230 024 to find out how we can help you with your in-house EDI management needs as well as our proven professional service solutions to upscale onboarding your business partners.

AdvanceFirst Technologies

AdvanceFirst Technologies

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About AdvanceFirst

Since 2003 AdvanceFirst Technologies has rapidly become one of the most successful specialist EDI companies in the UK with hundreds of clients and connections around the world.

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