One thing I’ve noticed whilst being in the EDI space for so long (and you can read more on that here) is that not a lot of business folks understand what EDI is and what it does for their business.
And in my time, I’ve heard all sorts of comments on it;
“It’s back-office stuff. I don’t need to know how it works, it works.”
“It’s something that happens without me doing anything manually.”
“It connects our business with the important big suppliers.”
“I don’t know what it does, but it works great.”
You get the gist.
But here’s the thing. Electronic Data Interchange can be the lifeblood for a business. It can help a business achieve great ROI, when implemented correctly. It can cut inefficiencies in a supply chain process.
So, what I’ve done is break this down in easy-to-read sizeable chunks what EDI can do for a supply chain. 7, in fact!
Number 1 – Transform your value chain into innovation drivers
So what’s a value chain in terms of a business. Well, Gartner puts it as “A value chain is a concept describing the full chain of a business’s activities in the creation of a product or service — from the initial reception of materials all the way through its delivery to market, and everything in between.”
Okay, so where does EDI come into this to drive innovation? Glad you asked.
Well, EDI can and does (and will continue to do so well into the future) play a big part of this by having your computer systems to talk directly to your trading network’s computers as well as your own internal IT systems. It can automatically exchange and process business-critical paperwork (such as orders, invoices and shipping notes) digitally and in a timely manner.
The whole process can be done faster, cheaper, and more accurately, and without human intervention, and that’s a good thing because it’ll reduce those pesky errors raised by customer services.
What’s the end result here, well, this results in a rich flow of highly accurate, real-time data that can be leveraged in your value chain.
How so? Well, it gives you a golden opportunity to take greater control of your supply, distribution and D2C networks, as well as automate various data points. It can process an accurate flow of data in your own internal IT landscape as well as to your trading partners.
Thing is, since that accurate flow of EDI data can be reported against and easily assessed through data analytics, what you have in your hands, is rich EDI-powered data you can leverage.
Think about that for a second! You can spot trends with this data. A treasure trove of actionable insights you can leverage would do wonders for your business.
Let me give you an example; a vendor-managed inventory EDI (or VMI) process will enable you to see product demand spikes early on in the cycle. Meaning it can reveal previously invisible trends in customer buying habits much earlier in the cycle all through the data coming from the vendor.
When you can spot these new trends in real time, you can gear-up your value chains and analyse your progress in real time. It’s this kind of flexibility that can also drive innovation and increase speed-to-market for new products too. Or speed up your time to market.
Number 2 – Value-add your business with iPaaS-based EDI
It pays to be prepared when a crisis hits your supply chain. The Link™ platform can act as a real-time early warning system when your value chains are put under stress.
For instance, you can immediately spot bottlenecks caused by suppliers who start to miss delivery deadlines or fail to deliver the agreed number of SKUs promised on advanced shipping notices (ASNs).
EDI can also flag up in cases where trading partners fail to pay within an agreed and acceptable time frame or that they routinely return orders. You get the gist.
A joined-up approach to supply, distribution and D2C means you’ll be able to track how your business is being affected by a supply chain shortage, a distribution problem or a drop in D2C demand. This insight can then be used to swiftly make the right decisions and shock-proof your business.
Number 3 – EDI gives you greater flexibility with your trading partnerships
In the 70’s, the leaders in the EDI space, back then, knew how to go about integrating and automating data between two (or more) computer systems whether they were internal or external. Standards were set and everyone who wanted to adopt the new-age of EDI had to adhere to these standards.
Even today, this allows you greater agility and freedom to work with the best trading partners who’ve adopted the same EDI standards. You also get to join a global network of customers and suppliers all using the same system.
This, alone, can open up new and exciting opportunities for you.
Number 4 – EDI can help reduce your order-to-cash cycle
Remember the days when orders were faxed across and someone at the other end would have to manually input that order onto a standalone system, whilst trying to read what some of the texts printed out were meant to be. The whole transaction would take days or weeks to fulfil.
By having EDI in place, it can affect a wide range of factors including efficiency of order management, timely order fulfilment, help meet shipping and payment collection, to name but a few.
Having an EDI solution in place can speed up customer delivery time by almost a third, a recent research found. Just imagine all those trading partner discounts you can take advantage of plus favourable and improved payment terms.
Number 5 – EDI can help you have an efficient and lean supply chain
Businesses that are using EDI along with JIT (just-in-time) inventory management, can generate daily or even hourly shipping schedules, giving them very close control of their supply chain and the confidence to greatly reduce the stock they hold. Firms using EDI can also send and speedily process purchase orders and ASNs, drastically reducing lead times.
Transactions are instantaneous when done in electronically. Meaning, the processing and handling of paper and input of data are eliminated with no re-keying of data. Therefore, the chances of errors, time spent on auditing, and tracing errors are all significantly decreased.
Thus, the processing and handling of paper and input of data are eliminated with no re-keying of data. Therefore, the chances of errors, time spent on auditing, and tracing errors are all significantly decreased.
Number 6 – Switch from a forecast-driven to a demand-driven business model, all with EDI
If you’re reliant on paper, email and spreadsheets then you know they’re notoriously slow and complicated. This means you’re constantly trying to piece together old data to get (even an inclining of) an idea of how your supply, distribution and D2C channels are performing.
This is where cloud-based EDI solutions can come up trumps. Can give you highly accurate, real-time view of critical business data. That’s because EDI constantly updates the status of invoices, credit notes, returns etc., and you can have all of this information centralised to give you a full picture of what’s happening right now.
With this real-time view, just think of the advantages EDI software users have to spot opportunities and challenges faster, helping you to switch from a forecast business model to a one driven by data and real-time customer demand.
Number 7 – EDI can help you achieve a better understanding of “cost to serve”
Do you know who your most profitable trading partners are? You may know which clients place the most orders or drive the highest levels of revenue. But which generate the most profit for your company at any given time?
Again, with highly accurate and real-time invoicing data available through EDI transactions, it can help you conduct an effective cost-to-serve analysis.
Okay, so what does that mean? Well, this will enable you and your company to understand where the biggest influences on your profit margins lie. It can also serve as a basis for understanding which customers are more or less profitable and for identifying ways to do things differently, more efficiently, and produce a win-win situation.
This will help SME’s immensely due to the automation, speed and accuracy of EDI, plus it enables greater control of their supply, distribution and D2C networks. With greater control SME’s can finally, transform these channels from static pipelines into strategic data-rich assets driving growth and innovation.