The world of EDI is a relatively new and ever-evolving system that can be somewhat overwhelming to someone who has little to no prior understanding of the processes. Many may think that it’s a complicated system that won’t tangibly apply to their business needs, while others may not realize the scope of what EDI capabilities can do to streamline their business. Here we provide simplified explanations of five of B2BGateway’s main EDI benefits.
Achieve compliance to meet your Trading Partners requirements
This essentially means following your customer’s rules. If you want to get your items into the big stores, any and all of them have specific shipping and receiving requirements that must be met before they even consider stocking your goods. If you get in and fail to continue to follow their rules, they will apply chargebacks and penalty fees ultimately until the point where they terminate your sales agreement. Ensuring that you have a reliable go-between that understands the terminology and has a working understanding of the requirements is critical to maintaining a functional relationship with the vendor.
Removes the need to re-key data – thus greatly reducing human error
When companies first started the changeover from processing handwritten purchase orders to entering them electronically, it took the work of an operations team hand-keying each order from an item list submitted via fax, mail, or written on the back of a napkin by a sales rep. Orders would get “fat-fingered” and numbers transposed or dates would get mixed up, causing a host of problems for the customer in the way of over/under stock or unplanned shipment delays. With the massive volume of transactions processed daily by major trading partners, the probability of expensive errors occurring was more than they wanted to risk.
Electronic communication and integration speeds up the supply chain and gives greater visibility to all parties
Like tracking numbers but better, EDI can provide a nearly live-time link to the status of your goods. Once a process is complete, both sides will also receive confirmation reports to ensure that each party is on the same page. The system is designed to track and record every step of the process, so if there happens to be a breakdown somewhere, it’s easy to diagnose and correct the issue by tracing back the reporting codes.
Drastically reduces labor costs
Through automation of order entry and shipping management, it takes a fraction of the time it took in the past to move the same amount of goods and information. After the initial setup and testing phase, many of the functions of inventory maintenance and purchase order processing are completed with confirmation sent within hours- events that in the past could have taken days. Instead of having a team dedicated to payment processing, another team tracking inventory, and whole fleet of people keying in orders, you can combine them all into a smaller monitoring group that will keep the gears running smoothly.
Speeds up your ‘order-to-payment’ cycle with your customers
In a traditional paper invoice process, the invoice is generated once the order ships and is sent via regular mail to the buyer, resulting in a lopsided receipt of goods prior to billing and payment. With the automatic invoicing and reconciliation systems in place with EDI, shipping and billing can happen almost simultaneously, keeping accounting on both sides accurate and timely.