What is EDI And How Can It Benefit My Company?

Are you considering EDI (Electronic Data Interchange) but are not sure how EDI will benefit your company? Has your trading partner asked you to implement Electronic Data Interchange (EDI) recently? Read on to learn what EDI is and what benefits manufacturers and distributors like you can expect by incorporating EDI technology into your business.

What is EDI? EDI allows your company’s computer system to “talk” to your customers’ systems and electronically exchange business documents and information. Because the information is digitally exchanged, any business process associated with this can be easily systematized and automated to alleviate unnecessary entries. This form of data transfer is routinely used for exchanging business information such as purchase orders, invoices and shipping information, while also being able to seamlessly integrate with leading ERP and accounting software solutions.

What Can EDI Do For My Company? Organizations use EDI to exchange data in an electronic format to increase efficiency and decrease costs. It enables you to greatly reduce the administrative burden associated with the manual processing of business documents. Delivery times can also be dramatically reduced from days to hours, helping you improve your cash conversion cycle in many cases. Being EDI-compliant will provide you a strategic advantage with retailers and organizations that rely on time sensitive delivery and electronic automation. Such relationships can also lead to new or innovative applications and services.

Reduce or Eliminate Manual Data Processing Errors and Time. By removing the manual keying of vital business documents such as orders, invoices, acknowledgments and much more, your company can benefit significantly because the number of errors is dramatically reduced. For example, this automation significantly reduces the number of hours required for a person to process an order from bid request to invoicing. As a result, labor costs are reduced, and time efficiency improved. Transactions are faster, accurate and more efficient.  Here are a few more examples of how EDI can streamline your business transactions:

  • Electronic documents can be delivered far more quickly than their paper counterparts, thus the turnaround time from order to delivery can be reduced.
  • By using EDI for forecasting and planning, companies receive early notification of likely orders and can adjust their production and stock levels accordingly.
  • Utilizing electronic documents means they can be processed much faster, again reducing lead times and speeding up payments.

Reduce Lead Times and Inventory Levels. Electronically exchanged documents are delivered dramatically faster than paper-based files, thus reducing order to delivery turnaround. Companies receiving advanced shipping notices (ASNs) or acknowledgments know in advance what is going to be delivered, and are aware of shortages. Using electronic data exchange means faster processing, reduced lead times and quicker payments.

Improved Supplier Relationships. Printed electronic documents are easier to read than those faxed. Correct documents help ensure accurate shipments and reduce chargebacks, which will help improve your relationships with suppliers.

Slash Paper Processing Costs. Paper-based data exchange systems produce inherent disadvantages in relation to their electronic counterparts. Upon implementing EDI you will reduce expenses in areas such as:

• Stationery/forms/paper

• Printers and ink

• Document storage

• Lost documents

• Postage

Position Yourself for Success In Your Industry. Being an EDI compatible organization makes you more attractive to potential customers, enabling you to provide lower cost services and be more efficient to work with when compared to a paper-based competitor. Retailers and organizations will perceive you as being more attractive to do business with, cheaper and more efficient, and requiring less manpower to process orders, deliveries and payments.

Emerald TC can help seamlessly implement EDI into your data exchange business processes.  Call Cherry today for more information.

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