Perhaps it is EDI’s name—Electronic Data Interchange—that makes it sound more like a data format and less like a business process, but it is a simple truth that technology is used to automate business processes, and when done correctly, significantly improve them!
EDI is no exception and there has never been a better time to consider its use. It has helped simplify and improve commerce between business partners since the late 1960s and its benefits continue to expand as it improves business processes like e-procurement, e-invoicing, automated receiving and e-payment.
By automating the exchange of data between business partner’s applications across a supply chain, EDI can ensure that business-critical data is sent on time and securely every time. In addition, the transactions can be tracked in real-time and audited afterward.
While most large companies use EDI, only a few have optimized its use, and while EDI saves transaction costs, some companies use it with only a fraction of their trading partners. However, there has been a growing interest in its use from supply chain and IT professionals.
These business executives ask key questions, like:
- How much additional benefit can be gained by connecting to the 50% of my trading partners who are not using EDI today?
- How can EDI be effectively deployed globally for both emerging and established markets?
- How much additional savings can be realized if our EDI is extended to non-automated business processes?
Executives leading the move toward EDI will not be disappointed. Research analysts have published the results of annual benchmark studies conducted over many years that repeatedly demonstrate that EDI:
- Lowers transaction costs by at least 35% – since paper documents are replaced by EDI transactions, expenses associated with paper, printing, reproduction, storage, filing, postage, document retrieval are all reduced or eliminated.
- Improves data quality, delivering at least at 30% – 40% reduction in transactions with errors – EDI eliminates errors resulting from illegible handwriting, lost faxes/mail and keying and re-keying errors.
- Speeds up business cycles by 61% – EDI transactions are exchanged in minutes instead of the days or weeks associated with postal mail. Furthermore, there is significant time saved from the elimination of data re-keying and its high error rate, which results in time-consuming corrective actions.
Continue to read this series of blog posts as we investigate why there has never been a better time to revisit EDI. We will focus on the business processes of Procurement, Receiving, and Invoicing & Payments.
For more information on EDI visit EDI Basics.