EDI Software

When researching enterprise, supply chain, warehouse or any other business software, you've probably come across the acronym EDI once or twice. It stands for electronic data interchange, and it's a pretty valuable piece of stand-alone or integrated technology for businesses that require a lot of document sharing between outside organizations.

In this Buyer's Guide, we'll go over exactly what this technology can do for you in the following sections:

What Is Electronic Data Interchange?
Common Functionality of EDI Systems
Top Benefits of EDI Software
Key Takeaways for Buyers

What Is Electronic Data Interchange?

Electronic data interchange (EDI) is a process by which businesses can transfer or trade documents in specific, standardized formats, from computer to computer. It's most often used by business partners, but the specialized formats enable companies to transfer data safely to and from outside sources as well.

The kind of documents typically shared via EDI software include things such as:

• Purchase orders
• Invoices
• Payment documents
• Shipment notifications
• Bills of lading
• Inventory

Essentially, any document containing information pertinent to the business transaction at hand can be shared through electronic data interchange systems from one computer to another. This technology eliminates the need for other, less reliable document transfer services such as postal mail, fax or even email. EDI systems completely automate the process of sharing documents to reduce human error and speed up business processes dramatically.

What makes EDI reliable is the standardization of document formatting. That is, all information must be input in universal ways to ensure computers can understand and interpret the data. For example, dates must all appear as mm/dd/yy, and percentages must all be written out to the .01 decimal.

There are a number of different EDI standards available to businesses today, so it's imperative that any companies attempting to exchange documents this way agree on which version to use beforehand to prevent confusion. Businesses also have the option to use in-house EDI translators, a feature of EDI software we'll cover in the next section.

Common Functionality of EDI Systems

On the surface, it may not seem like EDI software does very much, but, while it's true that the focus of this technology is fairly narrow, the amount of work that goes into transferring documents this way is not small. Here are a few of the functions EDI systems typically perform:

Top Benefits of EDI Software

EDI is already a widely adopted and integrated technology in most distribution organizations, and the benefits are numerous. They include:

Saving money. EDI software can reduce the required budget for physical document transfer and storage, such as paper, ink, envelopes, stamps and filing space, as well as the cost of manually completing these document transfers and business processes.

Increasing speed. By automating document transfers, users no longer have to wait for humans to find time to format and mail anything. Additionally, computer to computer data sharing takes place on a much faster timeline than the postal service, so information can be made available to business partners almost immediately.

Reducing errors. Human error costs money and slows things down, but EDI software can fix both of those issues by eliminating the need for human input in the document sharing process. Also, by formatting data according to previously agreed upon standards, there's much less opportunity for factors such as sloppy handwriting to interfere with business processes.

Improving efficiency. By taking document transfer off your employees' plates, EDI software frees them up to handle other business processes that need attention. Similarly, the reduction in error and increase in accuracy means no more having to do things over, saving you and your workers time. Also, increasing the speed at which these processes are completed can have major impacts on inventory levels and your ability to meet your customers' needs faster.

Key Takeaways for Buyers

When searching for an EDI system that will meet your business needs, it's important to consider the many different ways this technology has been made available to users. They include:

• Direct EDI (also known as point-to-point). Creates a single data-sharing connection between two businesses.
  
• Web-based EDI. Using an internet browser such as Google Chrome or Firefox, companies can fill out standardized forms with the data they want to share. This is an appealing option for small or midsize businesses (SMBs) that don't have the budget for self-contained EDI software other companies might.
  
• Mobile EDI. Using applications designed for mobile devices, users can transfer data from anywhere at anytime. There are security concerns with this option, but as it grows in use, these concerns are likely to be addressed.
  
• Outsourced EDI. Companies can trust a third-party EDI organization to handle all their electronic data exchanges.
  
• EDI software. Often the best option for distribution organizations that have to transfer data frequently and require a certain level of security when doing so.

In addition to the many EDI system options to consider, buyers should be aware of some common issues with the implementation of EDI software. Two of the most common are:

• The transition. You need to have a company-wide plan in place for switching over business processes from manual, paper-based document sharing to EDI. Without proper training and strict adherence to the new protocol, the transition can get messy.
  
• The budget. It's important to be aware of any and all costs—including any related to the EDI service itself, required hardware, maintenance and/or the implementation of this new system.

If at any point in your search for an EDI system you decide you need a hand, you can always reach out to our software advisors for a 15-minute consultation over the phone at (844) 687-6771. We'll help match you with several EDI software providers that suit your unique needs so you can spend less time Googling and more time concentrating on your business.