Top 5 Reasons You Need Managed EDI
Top 5 Reasons You Need Managed EDI
See all EDI insights
Top 5 Reasons You Need Managed EDI
May 12, 2022Stephen "Stevie" Hay
Whatever industry you’re in, you may have been hearing about EDI, or electronic data interchange. If you haven’t purchased a managed EDI platform for your enterprise yet, you should. In the below article, we’ll give you a brief overview of EDI and the benefits that fully managed EDI will bring to your organization.
What Is EDI?
We have already covered the basics of electronic data interchange (EDI) in this blog, but here is a quick overview.
EDI is a standard format to exchange business information between any two organizations through electronic means—eliminating the need for paper documents. This means that you and your suppliers, shippers and retailers can move any documents in any language and from any application. EDI standardizes the location and order of information into a document that anyone can read, allowing you to share data instantly between parties.
A big benefit of EDI is that you can use it to exchange a range of document types. This means B2B partners can exchange everything from bills of lading to purchase orders to invoices and even store-specific packaging labels. If you think you might not need EDI, think again. For example, most of your large retailers like Walmart, Publix, Home Depot and others will require their vendors to have EDI set up before they will do business with them.
What Is Fully Managed EDI?
A traditional EDI system requires extensive in-house expertise to manage and maintain. Even if your IT team has the skill set to handle the complex coding and is familiar with the variety of metalanguages required to handle EDI, the sheer volume of documents going through the system would entail a dedicated EDI team. For massive enterprises like Amazon, that wouldn’t present an issue; but for small- to mid-size enterprises (SMEs) that may not be an option.
That’s where fully managed EDI comes in.
A fully managed EDI—like Aptean’s—coordinates and administers everything for you. The vendor is responsible for every aspect, including implementation, testing, monitoring transactions, handling errors and discrepancies, and creating and managing maps. They should offer full technical support, and the system should allow you to scale up as your business grows. Your vendor will also oversee the communication network between your organization and your trading partners.
If that’s not enough to sell you, listed below are five more benefits of a fully managed EDI solution for your distribution company.
1. Reduced Risk
A managed EDI vendor will always be on call, 24 hours a day, 7 days a week. Not only does that ensure that updates, new maps and changing vendor requirements are always met, it harnesses the power of EDI experts to supervise even the most complex requests from your trading partners. According to IBM, it costs about $150 to reconcile just ONE manual processing error. With EDI, everything is automated, so those costs become obsolete.
As your EDI customers come out with new requirements, vendor-managed EDI gives you peace of mind, because you’ll know your vendor has the expertise to manage those requirements. With fully managed EDI, the service package includes all equipment, licenses, maintenance and dedicated IT staff. Your vendor also governs updates and security protocols, which means your data is always secure and compliant. In addition, having fully managed EDI means that your IT team can concentrate on keeping the rest of your electronic processes running smoothly.
2. Increased Customer Satisfaction
EDI data moves business fast; in fact, EDI speeds up business cycles by 61%. With a dedicated team behind you, all issues or errors are addressed and fixed quickly and your trading partners are onboarded without any extra effort from your IT staff. While there is a very real benefit to the human touch, leave that for your service team.
Today’s retailers want their documents processed and acknowledged instantly. Some vendors, like Nordstrom, will even refuse a new order if their supplier does not respond in a set time frame.
EDI is a differentiator for your company because it enables automated, prompt processing of all documents from your trading partners--satisfying the requirements of your customers and ensuring a positive experience. EDI makes your trading capabilities almost limitless, which ensures that you can enhance the successful relationships you already have and win new ones.
3. Reduced Costs
Fully managed and full-service EDI saves your business money by enabling users to reduce daily paperwork associated with processing documents. In fact, users noted a 70-90% reduction in processing time as EDI minimizes cost-intensive manual tasks. To give a more concrete example, the average cost of manually processing an invoice is about $27.00 per invoice. With an EDI system, that cost goes down to $3.00.
Transmitting payments and invoices via EDI can decrease the cost of financial transactions by up to 90%. This could result in an average yearly saving of $117,000.
With EDI you can process more business documents every day, which significantly cuts the order-to-cash process. Implementing EDI can reduce order-to-shipment time by up to 50%, increasing customer satisfaction and diminishing processing costs even further as man hours are reduced. In addition, in certain industries like distribution, EDI limits chargebacks because it will check for errors and discrepancies such as partial shipments, damages and late shipments. Finally, the system reduces paper because your team will no longer need physical documents—everything will be stored securely in the cloud.
4. Saves Time
It seems like common sense, but EDI’s biggest savings for your company might be in employee time. EDI automates business-to-business processes, eliminates manual processes and ensures data accuracy. Your vendor handles all your EDI-related tasks, which allows your team to focus on more meaningful activities.
In addition, your vendor does all partner onboarding and creates all maps for the EDI, which reduces the time that the customer needs to start doing business with you. The vendor will even implement and test everything. Once your EDI is connected to your ERP, you’ll shorten error resolution time, gaining full visibility, so you can spot delivery errors quickly and then resolve them. Even better, Aptean’s EDI includes all equipment, licenses, maintenance and IT staff in the service package.
5. Improved Visibility
As a business owner, you always need visibility into the status of your orders throughout the supply chain. Managed EDI gives you the power to see where everything is, and both you and your trading partners can communicate order information and updates through simple reporting.
With a centralized dashboard, users can view all the transactions taking place within your enterprise any time. Anyone who needs that information, regardless of their role, can see the status of a given transaction, which allows them to act as needed.
When paired with your ERP and your logistics providers, EDI gives you visibility into everything that's happening between all applications and all parties both within your enterprise and throughout your B2B ecosystem. For business-critical files, fully managed, real-time EDI not only allows you to find and review crucial information; but it also enables you to be proactive and to react quickly when issues do occur. This improves your overall business processes. Basically, the visibility that EDI gives you is full visibility of your orders, wherever they are in the supply chain.
With a fully managed EDI service, your vendor helps your enterprise onboard new customers and ushers them through the testing and validation processes. The vendor monitors daily activities for you, quickly answers questions, proactively solves issues that occur and fixes pricing and compliance discrepancies. If you have an ERP solution with built-in and managed EDI capabilities, you can focus on growing your business instead of worrying about mountains of paperwork and keeping up with ever-changing partner requirements.
If you’d like to talk more about how built-in and managed EDI can support your business, reach out to us. We’d love to talk.
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