EDI stands for Electronic Data Interchange. Essentially, it’s the electronic exchange of data, such as purchase orders and invoices, between sources in a common format directly from one computer to another.

EDI is utilized by manufacturers, suppliers, and customers in just about every major industry, including automotive, aerospace, retail, finance, and consumer packaged goods. EDI has proven its utility and reliability over several decades, becoming the standard for the electronic exchange of documents from one company to another.

An EDI trading partner is a company with whom you exchange EDI documents or data. It is typical of OEMs to maintain a large network of trading partners. These networks are often referred to as ‘Trading Communities’.

A VAN is a Value-added Network. These private network providers serve as vehicles for the transmission of data between trading partners. It is not uncommon for a VAN to add value through EDI translation, encryption, management reporting, and secure e-mail, along with communication protocols that are not available when exchanging data via the Internet or regular phone lines.

EDI was developed to be rather universal. So, while there are many providers of EDI solutions, it makes more sense for you to focus on using EDI standards that conform to your business needs, rather than a specific EDI solution that your trading partners are using.

Yes, it can be quite difficult. EDI implementation depends largely on the type of solution being implemented as well as the scale of the trading network it is being used to support. If the system is complex and requires purpose-built software to be installed locally, implementation time and difficulty can be increased for deployment, training, and additional activities before the solution is fully functional.

An EDI system is considered to be an evolving solution. EDI has been around for decades as a standard of document exchange across an array of industries. As a result, EDI professionals need to have an intimate knowledge of new standards, tools, and practices that emerge as Industry and EDI evolve alongside one another. Increasingly complex B2B networks, the need for more accountability and transparency, as well as rising costs all contribute to the difficulties surrounding EDI implementations.

EDI delivered over the internet and via VAN achieve the same goal. However, with EDI over the internet, exchange lacks the various added features that come with EDI delivered via Value-added Networks (VANs). VANs add value in a variety of ways, including but not limited to:

• Pre-built Industry-specific solutions
• Communication protocols not available through the Internet or regular phone lines
• Enhanced Data integrity
• Added security
• Visibility tools
• Auditing tools
• Formatting and validation protocols
• Best Practices workflows

Yes. trading partners often use integrations that conform to specific EDI transactions. Some examples include codes or data fields that are unique to a specific trading partner, or fields whose lengths make mapping into a given EDI specification difficult. For these reasons and many more, users often customize or request contractors customize their mappings when these situations between trading partners arise.

The biggest benefit derived from EDI software is that it removes the manual components of EDI processes that internet-based and EDI-as-a-service retain. This means fewer opportunities for errors and more internal resources available to complete value-added and revenue-generating tasks for your business. In any case, EDI will improve your company’s operational capability moving forward. That said, you need to evaluate how much of that undertaking you are able to assume. Taking full ownership from an internal standpoint may not make the most sense or even be feasible.  Outsourcing or bringing on experienced consultants to help or assume ownership of that business component may make more sense and cost you less.

Yes. Because there are multiple ways to approach EDI, you will need either in-house or outsourced professionals who not only specialize in EDI but also the type of EDI solution you select for your business. While internet-based EDI is a simple, hosted way to interact with and manipulate EDI, it offers you less control as a business owner. The software gives you more control, but ownership is squarely on you and may require extensive training from a vendor, which can in itself be costly and ongoing.

Because EDI is a bi-directional technology, you need a standard language used to communicate between your business and trading partners. This way, all documents exchanged, both inbound and outbound, are interpreted, filed, and archived correctly.

An EDI platform makes for a world of difference when managing your inbound and outbound documents. New document creation, document access, and archiving all benefit from having an EDI platform built to address your industry’s unique needs. Auditing capabilities are also important to consider. Trading partners may require a standardized platform for traceability and security, not to mention the need to address electronic data exchange laws that may be present in your region.

Secure communications networks are a must when enacting EDI communications. This often takes the form of a VAN, which acts as a sort of secure mailbox for data exchanged via EDI platforms. Security is key to peace of mind, not just for your business but for your trading partners, too.

Yes. Outsourcing EDI is no different than outsourcing any other IT-related task for your business. It is important to evaluate firms that specialize in EDI outsourcing and ensure they have a relevant skill set based on your industry. EDI Advanced Support Services are another component of the outsourced EDI offerings you can leverage to unburden your internal teams.

The list of benefits EDI provides businesses is quite extensive. However, the biggest benefits any business will find with EDI are cost savings, speed, and accuracy.

Cost savings resulting from the elimination of paper, printing, reproduction, storage, filing, postage, and document retrieval help businesses capture revenue slipping through the cracks. It is not uncommon for companies to realize savings of 30% or more after implementing EDI. Speed factors in the cost savings component of EDI when you consider it takes processing orders down to a fraction of the time. Imagine a PO that takes an hour and a half to process reduced to a minute and a half. That’s the cost-saving power of EDI.

Speed provided by EDI can improve business cycle times by more than 50% when transactions take minutes, rather than days or weeks. when relying on postal services to get the message out. Dirty data resulting from handwritten and manually entered values cost time to correct, as well. The automated and electronic aspects of EDI also help reduce the number of errors that appear when data is entered manually.

Accuracy ensures that transactions don’t need to be audited nearly as often and trading partner relationships thrive on the peace of mind that comes with partners getting it right on the first go.