5 Must-Know Advantages of EDI in E-Commerce

Most businesses today are adopting technology to become more resilient and offer quick services. Digital transformation, rapidly changing market conditions, and buyer preferences are forcing industries like eCommerce to modernize their key strategies for B2B enterprises.

An electronic data interchange acts as a cornerstone for electronic commerce. The quick and easy computer-to-computer exchange of common business documents or transactions, like sharing invoices, advanced ship notices, fund transfers, purchase orders, and more eliminates the paper flow and data-rekeying. These transactions are easy to make between trading partners, which include suppliers, customers, banks, and others.

With multiple parties involved in electronic commerce, they still have separate sets of responsibilities, liabilities, and rights. The parties include –

  • Value-Added Network – A service offered to establish a computer system that helps quick and easy electronic transactions to process and communicate with the other trading partners.
  • Online Service Provider – A service where a business provider offers internet as well as value-added functions & features.
  • Internet Service Provider – A service where a company offers internet access to the users who are subscribed to the service.

Earlier, electronic sales were mentioned as B2B space and EDI was the best technical support. As the enterprises continued to grow and expand, B2B eCommerce and so did the EDI.

As per the B2B eCommerce Market report published in 2020 by digital commerce 360 B2B, EDI accounted for 78.4%, which is $7 trillion of all B2B electronic sales in 2019.

Companies that combine EDI in eCommerce industry strategically find success. There are different types of solutions that can solve many problems.

Understanding EDI Process

The fundamental steps to sending EDI documents break into three –

First, Collecting and organizing data: Instead of the manual process of printing an order, with the help of EDI, companies can create an electronic file with the necessary info to build the document.

Human data entry electronically, exporting PC-based data from spreadsheets or databases, reformatting electronic reports into data files and much more are a few methods and sources of data generated in EDI.

Second, Translating files into EDI: All that is needed is feeding the system with data which then converts internal format into EDI standard format with the help of a translator using appropriate segments and data elements.

The translator software requires specialized mapping expertise to define the internal data to be mapped to the EDI data.

Note: In case of no translator program, you can enlist the services of mapping or translation to the EDI managed services provider who can handle EDI format translation on your behalf.

Third, Connecting and transmitting documents: After the translation has been done, the document is now ready to be sent to the trading partner. It is upon the company to decide the ways to connect with their partners and perform transmission.

There are two ways to choose from – AS2 and VAN providers. Both are the secure and preferred mode of communication that helps you connect with your partner & customers securely.

Why Should You Opt For EDI?

Integrating EDI solutions with the internal systems can be advantageous – from automating the ordering process to improving efficiencies across businesses. Additionally, with web based EDI solutions, companies can  –

  1. Enhance their speed and accuracy.
  2. Speed up the business cycles by 61% as transactions can be exchanged in minutes.
  3. Improve their data quality, delivering 30% error reductions and file losses.
  4. Save time and cost.
  5. Enhance supply chain and inventory management.
  6. Deter errors due to lost orders or incorrect manual order entries.
  7. Increase productivity and efficiency.
  8. Automate paper-based tasks and concentrate on higher-value tasks while providing the right tools to complete them.
  9. Quickly process accurate business documents avoiding re-work on orders, stock-outs, and canceled orders.

When talking about the eCommerce industry, the sector has represented largely positive development. Integration of EDI can help eCommerce with increasing global supply chains, manage increasing orders, and deter potential disruption & unforeseen challenges to business.

A pivotal tool as EDI can assist eCommerce address dealing with unique challenges such as the boom in the market or needs of the customers or long-term obstacles. Let’s move further and understand the potential challenges of eCommerce.

Challenges with eCommerce Industry

Before and after the unprecedented pandemic, eCommerce underwent unique challenges that we have listed below.

Global Supply Chains: A supply chain is an expandable business located in numerous countries connecting them all. However, they can be challenging when it comes to handling long-range logistics in different time zones.

High Growth: As the technology accelerates, the use of the internet speeds up, making it even more convenient for the users to buy preferred products or services. With this rise in web traffic across the globe, managing the heap of requests within a strict timeline is extremely challenging for the industry leaders.

Complex Return Processes: One of the most challenging tasks for a retailer is to manage returns and the cost associated with them. As customers are given the flexibility to purchase items online as well as in-store, in-store returns add costs, such as physical store space and staff capacity required to process returns. Companies also have to deal with the development and integration of IT systems to manage them.

How EDI can Deliver eCommerce Solutions

EDI can simplify any industry operations and processes. Automating exchanges, providing greater visibility, improved efficiency, and streamlined workflows can be achieved with effective EDI implementation with eCommerce.

Advantages of EDI integration with eCommerce –

  1. Enhance Speed: EDI can provide efficiency to the business cycles that can hugely benefit. Companies can eliminate the postal service and waiting times.
  2. Cost-effective: As companies are moving towards technology, paper-based documents are reduced, saving a lot of time and cost added with the paper.
  3. Greater Accuracy: By removing the paper-based manual documentation process to record or send, or retrieve data, companies can remove chances of human error and foster accuracy.
  4. Time-Efficiency: When you have manual processes converted into electronic, you no longer have to engage your employees in a mundane and time-taking manual business instead direct them to many critical tasks.
  5. Enhanced Efficiency: With EDI, you get accuracy, time, and cost efficiency assisting the companies to enhance their productivity and focusing more on the business.

Using EDI as a Competitive Advantage

Integrating EDI in retail with the internal system will improve supply chain management. Also in terms of the competitive market, companies can enhance their –

Visibility – The rise in digitization and standardization are helping businesses to gain better visibility over the supply chains. The much-needed perspective helps in better & strategic decision-making and long-term plans.

Competitive Pricing – The effective EDI implementation reduces the manual operations of the supply chain within their management processes while grabbing the opportunity to develop a competitive edge and focus on increasing profit margins.

Reinvestment – When you have increased profits and high margins, you tend to develop a strategy for reinvestments. With this, you open doors to a virtuous cycle thereby, allowing businesses to create efficiency and drive scalability.

EDI-as-a-Service: Modernized EDI for Retail Industry

After the cloud-based tools and management services, more efficient EDI systems were in need. Businesses now look to remain competitive in the retail/eCommerce market with more modern, non-static, and flexible solutions that align with the emerging trends. EDI cloud services are meant to deliver what organizations are looking for. Cloud service is crafted to be a more flexible, hybrid EDI model that utilizes cloud-based tools and managed services to match the complex supply chain idiosyncrasies while optimizing the outcomes.

Transitioning from legacy EDI to EDI-as-a-service has become imperative to businesses wanting to stay ahead of their competitors. With improved EDI, suppliers, as well as, retailers can have complete visibility, which means they will not need multiple sources to digitize their data. They can also accommodate a wide range of protocols and standards, allowing a swift, agile onboarding process for the suppliers without additional challenges.

The automated process of EDI-as-a-Service also removes the unnecessary complexity for smooth supply chain integration processes, saving a lot of valuable time and resources on manual integrations. Last but not the least, companies can certainly enhance their ability to plan and control the supply chain while pulling their entire focus on business activities rather than mitigating errors.

In a Nutshell

Supply chain & eCommerce is an expandable complex industry that requires a robust and flexible system to manage it. EDI solutions have always aided companies to eliminate the time-consuming and resource occupying manual tasks. It also facilitates improved strategic planning, developing opportunities for cost savings, and drives efficiency through process optimization.

With time and changing trends, EDI is constantly evolving. Cloud-based EDI or EDI-as-a-service is more flexible, non-static, and aligns with the changing needs of the customer and market. However, in order to integrate modern EDI, you would need expert advice and guidance to ensure effective implementation.

Connect with a professional and certified EDI provider that delivers value to your investment and ensures the scalability of the business.

Author Bio:

Scarlett works with the editorial team of A3logics, a leading company offering EDI Services. Exploring the latest technologies, reading about them, and writing her views have always been her passion. She seeks new opportunities to express her opinions, explore technological advancements, and document the details. You can always find her enjoying books or articles about varied topics or jotting down her ideas in a notebook.

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