In previous blogs, we’ve talked about the basics of electronic data interchange (EDI). But what are the benefits of EDI for your business? To succeed in today’s challenging multichannel business environment, home furnishings retailers, manufacturers, and logistics providers must share, analyze, and collaborate on orders, invoices, shipping, catalogs, pricing, and other mission-critical information faster and more accurately than ever before.
Read the article, What is EDI for some background information.
EDI transmits business financial documents digitally. Rather than through physical paperwork. We’ve entered the age of automation. The more you automate and standardize your EDI processes, the more significant the benefits. You can organize data immediately and analyze for your company. By integrating EDI into all of your business processes, you can get even bigger benefits.
Some common uses and benefits of EDI include:
- Sending and populating invoices both from customers and to vendors.
- Receiving confirmation of transmissions to other entities and applications.
- Sending and populating purchase orders, bringing them into fulfillment systems.
- Acknowledging purchase orders, by integrating into the invoice and inventory system.
- Sending shipping notices and logistics information to refine the process of fulfillment.
Let’s dive into some of the core benefits of EDI.
When used properly, an EDI system will automatically transfer data from one party to another. This naturally eliminates errors, as the data is transferred from one system to another without any manual input. Manually inputting the data can be misread, misfiled or forgotten, improperly inputted with typos, and other big errors that cost you time and money.
EDI uses consistent formats across both parties–the sender and the receiver–which can be read by the receiving system. This reduces the chances of manual error. By setting data standards, you can get data automatically imported into their system. You can use EDI for everything from inventory management to customer invoicing.
Mistakes are costly for a business. Not only do they lengthen processing time and add to administrative hours, but they can ultimately lead to a poor reputation with your trading partners. A business that has errors throughout its processes is going to spend a significant amount of time and money addressing these problems, in addition to finding itself dealing with unhappy vendors and customers.
Increasing Speed of Business
Speed is important for any business. The faster a business can process its documents, the faster it can fulfill them. One of the biggest immediate benefits of EDI is speed. EDI can shorten the length of time businesses require to process a transaction by up to 20%. By increasing the general speed of business, EDI can:
- Confirm item delivers to customers quickly
- Ensure that vendor payments are processed quickly.
- Complete sales to customers.
- Automatically manage inventory.
Many businesses spend an extraordinary amount of time on their administrative services. When a business becomes bogged down with documentation, it becomes inefficient and unprofitable. Businesses tend to create progressively more cumbersome systems for manually dealing with their data and their document transfers — when instead they could be dealing with everything automatically.
Insight in Analytics
Analytics are an incredibly important part of business intelligence. While data is pulled into your organization automatically, it can then be analyzed for important insights. These insights can then be used to improve your company metrics, whether you’re attempting to improve order fulfillment or general shipping and logistics.
Vendor Scorecard is an example of using EDI analytics. Based on documents sent and received by your vendors and the data processed by your suppliers, you can analyze which suppliers are more efficient to respond, make their deliveries and keep their promises. Through this type of analysis and these business metrics, EDI can help you streamline your business and rank your vendors, logistics partners, and others suppliers and do more business with your trading partners that are most likely to deliver consistently and on time.
You can use advanced EDI platforms to predictively identify potential supply disruptions, bottlenecks, and supply chain issues early. Therefore, you avoid problems that will impact customers, products, or services. You can track fulfillment performance, full performance metrics, and compliance as well. Depending on the EDI platform and analysis solution that your organization is using, you can tailor it to your business and its needs. Relevant analytics as you trade with your manufacturers, logistics partners, and the customer is one of the huge benefits of EDI.
Efficiency Between You and Your Partners
Better relationships is a stepping stone towards better business development. By maintaining solid relationships with vendors, you provide better services for customers.
EDI makes sure you receive vendors invoices on time and you can get those invoices reconciled with delivered items quickly so you can pay those invoices timely. By supporting these relationships with vendors, you encourage them to respond quickly to your requests. The easier it is for your business to manage your vendor relationships, the better your customer service is to your customers.
As your business grows, you need to be able to manage each of your vendor and partner relationships better. EDI helps in tremendous ways.
Businesses with EDI can show they provide better lead times, better processing, and better accuracy. Businesses save on their administrative costs. And these cost savings help you grow.
What are Your Benefits of EDI?
Modern EDI solutions are often cloud-based and use an open computing approach, making EDI affordable and easy to implement for home furnishing businesses of all sizes. When furniture retailers work with an EDI software vendor with an established industry track record, they will usually find that relationships already exist with many popular RMS and logistics providers. They can very quickly start exchanging EDI documents with their own customers and supply chain partners.
Check out MicroD’s EXIM EDI solution.