Beat Supply Chain Issues by Automating Your EDI Systems

Automating electronic data interchange (EDI) can decrease the impact and risk of supply chain disruption. This article discusses what EDI is and how businesses can successfully automate it with technology.

One of the biggest issues to arise from the pandemic-fueled chaos of the last few years is the disruption to the supply chain. Staying afloat amid the mess of scattered orders and costly errors means companies need new ways to deal with current and potential disruptions.

Digital transformation and business process automation can help you address current disruptions head-on while preparing for what could come. Specifically, electronic data exchange can alleviate supply chain issues and set up your company for success as the new normal takes hold.

Electronic Data Interchange

More than 80% of warehouses today have no automation whatsoever. When you handle every process manually, they get delayed. Errors on a faxed PO take time and attention to resolve and if you’re processing dozens or hundreds of POs every day, wasted time accumulates quickly.

Despite the threat of delays, the thought of automating everything is still daunting. Companies need a simple solution to automate their business and overcome institutional concerns around digital transformation.

This is where electronic data interchange (EDI) enters the conversation. EDI is the electronic exchange of documents between business partners.

It was made to replace the slow, paper-based method of exchanging important documents manufacturers regularly use through mail, fax or email.

EDI automation provides clear insight into a supply chain’s back-end processes, lessening the impact of future issues.

Understanding EDI

Although EDI offers several benefits to organizations, it often comes with a few challenges. Businesses tend to take one of two popular approaches when enabling EDI:

  • Direct or point-to-point EDI: Integrating with every trading partner directly and managing all integrations, mapping, monitoring and maintenance
  • Fully managed EDI service: Outsourcing EDI to a third-party provider that manages all integrations, mapping, monitoring and maintenance

These options provide entirely different levels of control and ownership over the integrations. Direct EDI allows full flexibility, but as the number of integrations across applications rises, you’ll have to monitor multiple standalone integrations at once.

Managed EDI offers the necessary technology, skills and expertise, but it doesn’t allow you to see the flow of data, mappings and integrations.

These approaches also increase onboarding times, as you account for trading partners’ different testing requirements and guidelines.

Additionally, software and skills are expensive. Custom EDI integrations require committing significant IT resources and expertise and fully managed options can balloon in price as your business scales.

A high price tag makes it tougher to overcome entrenched institutional concerns.

The need to automate EDI systems

The time to automate is now and the only way to beat the common challenges associated with EDI is to upgrade the technology itself. Modern EDI solutions better manage supply chain issues through an integration platform as a service or iPaaS.

Automating EDI systems through an iPaaS helps alleviate problems related to the supply chain. iPaaS lets users connect their ERP systems with trading partners and manage EDI transactions through application programming interface (API) integration.

APIs enable smoother, more economical integration between ERP systems and address some of the common problems that limit EDI. The highest quality software allows users to build custom integrations between ERP systems and do so at the scale their business needs.

EDI integrates with several supply chain platforms and allows for faster expansion due to faster onboarding. It also gives up-to-date information on inventory and fulfillment, meaning the entire process is easier to monitor and manage.

For example, customers want to know where their packages are located. You might store carrier tracking information in your ERP, but without integrated EDI, communicating that information to the end user becomes a difficult, time-consuming process.

Integrated EDI puts information in your customers’ hands. You can add links to carrier tracking information to shipping confirmation emails so customers can stay updated on the status of their packages. And satisfied customers lead to increased sales.

Supply chain companies benefit from EDI automation in other ways. Through business process automation, EDI reduces processing times, which speeds up business cycles. It also leaves far less room for errors by cutting out manual processes.

When companies don’t have to worry about costly errors associated with manual data entry, they can focus on what is most important and improve a customer’s overall experience.

All in all, integrated EDI systems allow manufacturers to manage processes more efficiently and accurately.

The bottom line: supply chain issues aren’t going anywhere. Companies need to know how to keep up with changing environments and customer expectations and automation is the key to doing just that.

To be successful, your business needs an EDI integration strategy targeted to relieving your supply chain issues.

Having a solid strategy in place helps organizations perform better during times of uncertainty and your company should know how to innovate and change if you want to grow in the new landscape.

Mark Simon is VP of Strategy at Celigo. With over two decades of experience in the tech industry, Simon has spent his time leading teams at a number of different companies, such as Explore Consulting and Evo, where he served as Chief Technology Officer. Mark studied economics and computer science at the University of Washington.

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