Although EDI has been around since the 1980’s, there have been new technologies many thought would replace it. These are technologies such as portals and specialized multi-party trading exchanges that held out the promise to be lower cost, provide for faster partner onboarding, and enable greater participation rates by trading partners (suppliers, customers, logistics providers, financial institutions) than traditional EDI.
But, according to the new study “EDI: Workhorse of the Value Chain” published by industry analyst and founder of Supply Chain Insights, Lora Cecere, “nothing could be further from the truth. It [EDI] is the workhorse of the extended supply chain.”
Here are two of the interesting statistics from the report that back up Lora Cecere’s statement:
1.While 70% of all orders are automated by EDI/XML, Portals, and/or Exchanges, EDI is the method of choice.
This chart shows:
For orders received from customers (Sales Orders), 55% are received via EDI (either totally integrated or requiring minimal manual intervention) while only 10% are received via a portal and 7% are received via exchanges. The rest are sent via other, including manual, methods.
The results are similar for companies that use EDI for sending orders (Purchase Orders) to their suppliers. 62% send them via EDI, while only 7% are sent via a portal and 1% via trading exchanges.
This is expected because EDI provides a universally accepted cross-industry standard format that enjoys significant adoption. When a business offers a portal option to its trading partners, some manual intervention in the process is usually required, causing cycle-time delays and increasing the likelihood of errors. Multi-party exchanges (e.g. Elemica, GHX) are usually industry-specific platforms that target specific markets and require significant investments in specialized technologies and processes that have not yet enjoyed the level of adoption of EDI. Lora Cecere notes: “After a decade of hype, the use of multi-party trading exchanges for purchase order fulfillment is in its infancy in procure-to-pay processes.”
2. EDI users are quite satisfied with how it improves supply chain performance.
Survey participants were asked to rate how effectively the implementation of various EDI documents improved supply chain performance. They used a scale of 1-7, in which a rating of 1 indicated “not at all effective,” while a rating of 7 indicated “very effective.” As you can see in the chart below:
All the EDI documents significantly improved supply chain efficiency for more than half the respondents – they indicated a rating of between 5 and 7.
The documents that appear to have the greatest impact on improving the supply chain were orders and advance ship notices, receiving a rating between 5 and 7 by 84% and 80% of respondents, respectively.
So, EDI is the most commonly used B2B e-commerce technology and its users are quite satisfied with its performance. In fact, for many companies, EDI has become the lifeblood of their business, making them more efficient, driving down costs, and increasing customer satisfaction. It is the means by which they can differentiate themselves from their competition. It provides them visibility into their ordering and delivery processes that enable business success. No wonder EDI is indeed alive and well.
In future blogs, I will discuss additional statistics from Supply Chain Insights’ report.
If you would like to read the report, get your copy here.