The advantages of EDI
EDI can help your business reduce inefficiencies in business processes and increase your competitiveness.
By digitizing and automating work tasks related to invoices, purchasing and order management, you can save both time and money. Even small adjustments in repetitive tasks can result in significant benefits.
In this article we provide an overview of some of the advantages EDI can provide your business if implemented correctly.
What is EDI?
EDI (Electronic Data Interchange) is a solution for digital communication between business partners that enables you to communicate electronically regardless of the systems and formats each side uses. Most EDI providers will be able to help you with the distribution and receipt of electronic invoices, whereas only the more dedicated and advanced EDI providers can help you exchange all kinds of EDI business documents globally.
EDI will help you support requirements from your customers
The use of EDI is continuously growing, and professional buyers are requiring their suppliers to support EDI to buy and receive updates electronically from them. By implementing support for EDI in your order management and logistics processes, in addition to your invoicing systems, you will be able to support the requirements from current and future customers.
EDI will speed up your purchasing- and order management processes
For many businesses, the purchasing- and order management processes are time critical. When documents are handled manually and information shall be transferred between two parties, there are risks of errors or misunderstandings. Different parties use different terms, document layouts, date formats, units, and more. Manually interpreting and registering such documents into your own systems is time consuming and error prone.
By automating such processes with EDI, the process is standardized and the time to receive and send the information is drastically reduced.
Strengthen your business relationships
EDI can result in stronger business relationships with your suppliers and customers as the supply chain and logistics processes are improved. Your customers will receive faster updates on the status of their orders, and your suppliers will be able to communicate with you in a streamlined and efficient manner.
Reduce errors and increase efficiency
Manual processes are often associated with human errors and misunderstandings.
Deviances in the layout of documents, differing formats, punching mistakes, and erroneous document handling are common sources of errors, and the possibilities for mistakes increase as the network of buyers or suppliers grows.
To tackle these problems, many companies choose to increase the manual effort to find and remove errors, but this is a time-consuming and laborious task.
With the use of EDI, the probability of human errors is reduced. The automation of the document flow will also lead to improvements in the overall process. The result is that employees can focus on more value-creating tasks than the repetitive and tiresome process of manually sending and receiving documents.
Improve the information flow and avoid delays
EDI secures a fast and smooth transfer of information between business partners and will reduce the probability of delayed deliveries.
By enabling your internal systems to send- and receive information through EDI, your company can access information about what is happening in your supply- and distribution channels. Easy access to this information is time- and cost saving and enables better decision making based on reliant data.
Reduce operating costs
EDI can reduce the operating costs of your business significantly by reducing the administrative costs of paper, printing, storage of documents, mailing, archiving, and laborious manual processes.
Reduce inventory costs
Improved visibility in the supply chain will reduce unknown factors and sources of error. EDI will contribute to streamlining your purchasing process, provide a status of where in the order process your goods are, and reduce the needs of buffer inventory. As a result, unnecessary inventory costs due to excess products are reduced. In addition, the systems for sending and receiving documents are working continuously 24/7, removing delays in ordering processes that come from working hours.
EDI ensures increased security in the document transfer between companies. The transfer follows strict security standards and secure communication protocols, which is becoming more and more important for any business.
Paperless and environmentally friendly
A lot of communication between trading partners still takes place by e-mail or by phone, and a large amount of trade documents are also still sent on paper.
By investing in EDI, you work for a world with less use of paper and lower CO2 emissions - an important CSR task that should not be neglected.