Businesses large and small can benefit from implementing Electronic Data Interchange (EDI). But there are many myths or misunderstandings regarding EDI that may keep companies from wanting to take advantage of the many benefits that EDI can bring to the table.
Myth 1: EDI is Going Away
EDI has been around since the early 1960’s and is deeply entrenched in companies and supply chains. EDI has worked for decades and proven to be a reliable form of electronically sharing data across various platforms using X12 or EDIFACT standards. Although other technologies have come and gone, EDI has remained the most common form of electronic data exchange because of its universality and ease of use. The use of EDI continues to increase with demands for using EDI, especially if you want to do business with the Amazons, Walmarts, and Targets of the world. Most large companies, particularly in the retail and manufacturing realms, require EDI as a basic business requirement. To support this growth, many of the large EDI and ERP Platforms such as IBM Sterling, Cleo, Oracle, and others are offering cloud-based options, which has opened-up new EDI opportunities. The internet continues to be the communications backbone of choice for most current EDI integration systems and has also spurred growth in EDI users, making it more accessible to more organizations.
Myth 2: EDI is Risky
If implemented correctly, EDI is a “tried and true” process that offers several benefits such as:
- High degree of process automation
- No more need for manual entry, resulting in less errors
- Shorter reaction time for client orders
- Better planning and forecasting
- More time for value-added work
What is vital to any EDI implementation is the testing and approval process. Your trading partner must also recognize that testing is critical to keeping your relationships stable and solid. Once your EDI integration is mapped, tested and approved, your system is ready for all future orders and shouldn’t require any significant updates or support.
Myth 3: EDI is Complicated
This myth has dissuaded many companies from utilizing an EDI system. But the truth is EDI simplifies your business practices and that translates to better overall communication between you and your trading partner or 3PL carriers. EDI integration takes time to implement but the payoff is near-immediate. EDI decreases manpower and makes your transactions flow faster, enabling you to redirect those hours to more critical business processes. And in the hands of an experienced EDI developer, the process is generally straightforward and smooth.
Myth 4: EDI is Too Expensive
Many believe that an EDI integration is too costly an endeavor with little return-on-investment. While there is an upfront cost associated with EDI (whether you do it on-premise, in the cloud or through a third party), the ROI is significant and most companies recoup the implementation cost within a short time. Many big box retailers refuse to do business with retail and shipper fulfillment companies that do not have EDI integration, so it can actually be more expensive not to have EDI because without it you close off from potential sources of additional business. For that reason alone, EDI integration is well work its initial implementation cost. (Check out this list compiled of businesses using EDI.)
While programming interfaces, creating maps, and other tasks can be more than an organization new to EDI expects when first going down the path of implementing EDI, it doesn’t mean that the ROI is difficult to achieve. Automating transactions such as PO’s and invoices that are done manually provides significant savings on each transaction. For example, according to a study done by the Aberdeen Group, the average cost to process a purchase order manually can range between $14-$17 per transaction, while if automated, costs are reduced to $4-$7 per transaction. That’s a significant cost savings when you multiply that savings by the number of manual documents that can be automated.
In addition to automating manual processes, EDI also reduces the risk of falling into non-compliance with certain regulations, resulting in financial penalties. These chargebacks can dramatically reflect your bottom line.
There are many ways to get started with EDI, and although there may be some upfront costs associated with EDI, the ROI is quick and measurable. Don’t get tangled up in the myths associated with EDI. Contact DCS and we’ll help you figure out the truth.
Data Communication Solutions (DCS) has been helping business grow with their EDI since 1991 and can help you decide what path you need to take with implementing or expanding your EDI based on your business growth plans so that your success is properly mapped, tested and approved.
Data Communication Solutions
If you’re looking for an EDI partner with a decades-long record of helping businesses succeed, look no further than Data Communication Solutions. Since 1991, our team of experienced and knowledgeable EDI specialists has been providing services such as development, managed services, support and training for a variety of EDI systems and industries.. Check out our list of clients to see the hundreds of companies we’ve worked with and consider reading some of our case studies to learn how we help organizations find the best EDI solutions. To learn more about how we can help your business, contact us today!