Advantages of Implementing EDI Software

Why implement electronic data interchange (EDI) software? There’s a case for commonality — businesses worldwide have deployed EDI systems to improve the speed of information transfer and lower the possibility of human error. However, implementing EDI also comes with a host of other advantages; here’s a quick look at the top four.

One-Step Process

As noted by EDI Basics, one key advantage of electronic data interchange deployments is the elimination of multiple steps in the invoice and purchase order process. Instead of buyers generating a physical purchase order, faxing or mailing it to their supplier — who in turn creates an invoice and sends it back — EDI systems consolidate this process into a single step. The buyer’s internal system creates a purchase order using EDI standards which is sent directly to the supplier’s system, de-coded and used to create an invoice, which is then sent back using the same format. The result? A single-step process that encompasses purchases, orders and invoices without the need for human data entry or physical mail.

Labor Reduction

Another key benefit of EDI implementation? Reduced labor costs. Instead of paying a full-time employee to enter data and another employee to check this data for error before sending — to say nothing of the time and effort required if purchase orders contain incorrect information — EDI implementation allows companies to leverage worker productivity for line-of-business projects. Put simply, the high level of automation built in to EDI systems significantly reduces the amount of time and oversight required by staff, in turn lowering total labor spend.

Applicable Inventory

Any business that manages supply has a similar complaint: inventory levels. Because of time delays caused by physical mail delivery and human error, companies typically overstock warehouses to ward off the possibility of a sudden, large order requested by letter or fax that would otherwise tax existing inventory levels. In effect, businesses build in a kind of “lead time,” which allows them to handle paper-processing requirements without leaving warehouses bare.

Using EDI eliminates the need to keep “extra” inventory on hand since all requests are processed in near real time and never subject to problems such as poor handwriting, human miscalculation or lag time thanks to lost mail. The result is significant cost savings on supply since companies need only purchase the amount necessary to meet standing requests and handle the occasional emergency order; waste becomes virtually non-existent.

Data at Scale

Of course, EDI implementation is only worthwhile if the software can scale to meet company demands. When systems are properly integrated across back-end systems, CRMs, ERPs and account software, it’s possible to create a unified solution capable of handling today’s processing needs and scaling up to meet future expectations. This is critical for any company leveraging the cloud or other distributed networking models to fuel global growth — not only do companies around the globe communicate via EDI, but the nature of electronic interchange tools makes it possible to rapidly increase order processing without overburdening IT infrastructure.

EDI software is a critical piece of the commerce automation puzzle and provides multiple advantages including reduced error rates, higher transmission speeds, reduced inventory waste and the ability to scale up operations on demand.

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