What is EDI? Electronic Data Interchange (EDI) is the computer-to-computer exchange of business documents in a standard electronic format between business partners.
By moving from a paper-based exchange of business document to one that is electronic, businesses enjoy major benefits such as reduced cost, increased processing speed, reduced errors and improved relationships with business partners.
Electronic Data Interchange has already replaced the need for faxes, emails and mailing. Even though email is an electronic action, it still has to be handled by people. With electronic data interchange, people are not involved, just your computers.
Before this technology, the buyer would have to generate a purchase order. They had to do this manually, the buyer would then fax or mail that PO to the supplier. The supplier then enters that purchase order in their system and creates an invoice. That invoice would then be mailed or faxed back to the buyer. Lastly, the buyer enters that invoice for processing.
Once that is done, the purchase order is created, sent to the supplier and an invoice is sent back to the buyer automatically, all thanks to electronic data interchange.
Why Your Business Needs EDI?
It doesn’t matter how big your company is, if you want to stay competitive in your industry, you need EDI. EDI is key to inventory management. EDI allows you to be super accurate and accelerates your data exchanges.
More so, EDI can help you reduce cost and reduce errors. On top of that, customers that use EDI prefer to work with vendors that have EDI systems already in place.
Benefits Of Using EDI
While there’s a number of different benefits a company gets using EDI technology, there’s only a few key ones we want to point out.
- Reduces data entry errors
- Increases productivity without having to increase staff
- Accelerates transaction processing
- Foundation for automated inventory management and order processing
- Quick response time for disruptions
- Cheaper and more cost-effective
Electronic Data Interchange Made Easy
While you may think you need to be a big EDI expert to take advantage of such technology, that’s not true at all. We know EDI implementation may appear like a daunting task, but it doesn’t have to be.
Accurate data entry is key for all your business processes. You no longer have to focus on data entry with our EDI solutions, it makes purchase orders, invoicing and order processing a walk in the park.
Sending business documents to vendors and partners shouldn’t be a difficult or time consuming process, EDI software makes it simple, accurate and easy.
How EDI Works In Retail?
As we touched on earlier, this technology replaces communications, transactions and order processes. It has streamlined how retailers perform every day business task.
When a buyer wants to place an order to a supplier, a digital purchase order is created. EDI software will create a EDI 850, which is the standard version of this type of purchase order, which is eventually sent to the supplier.
The supplier will send back an acknowledgement that the order was received (Called an EDI 997). Once the order is ready, the supplier will send another electronic communication, the invoice (EDI 810) which requests payment for items that were purchased.
Why Do Retailers Require It?
By using a standard data format for order communications, companies can electronically exchange order information without human intervention.
In this case, electronic data interchange becomes a technical foundation for your automation.
From an operational standpoint, it makes sense because it reduces human errors while also streamlining the order process.
It allows retail companies to fulfill orders faster, cheaper and with less mistakes. For any ecommerce business, this role is vital to your success.