Have you tried to exchange the product data information via EDI in eCommerce? Well, you’re about to experience an effective data interchange standard. Read this article to find out what is EDI, how the EDI flow looks like, its advantages & importance.
As an example, we will also cover the EDI Walmart model that allows businesses to analyze information, keep all records in one place, and easily deliver product content to the diversity of sales points. EDI and eCommerce are two interrelated notions we need to better understand.
What Is EDI?
What electronic data interchange is? There is the key thing you need to know about EDI (Electronic Data Interchange). The EDI replaces paper records with digital ones. It allows exchanging data between computers with minimal or no human interference. Users can exchange records and any business data with their partners virtually. This is exactly what the Electronic Data Interchange or EDI term means. Lots of business processes become more efficient with the elimination of regular records.
The best example is the Walmart and EDI union which proves such technology works great, especially in eCommerce, and makes users happy! This method helps to speed up business processes since all data and records are integrated into the system right away. There are fewer sources of errors and the work does not have to be repeated.
EDI is a concept of data processing which is free of any communication protocols and transmission media. Companies can exchange computerized documents with other businesses around the world as long as they support the same EDI standards. It is as simple as exchanging info within your own organization.
There are several electronic data interchange types that provide users with structured data transmission:
- EDI via VAN
- EDI via AS2
- Mobile EDI
- Web EDI
- EDI Outsourcing
- Direct EDI
How Does The EDI Flow Look Like?
The key to EDI is to create computerized business documents that are standardized. An EDI record, for example, orders’ data, contains both customer’s and supplier’s information in different fields. In such a way, the document is stated and can be understood correctly by both parties. All data is 100% secure and is updated in real-time.
When processing an order traditionally, the buyer goes through a pretty similar procedure to the one listed below:
- Checks the data from an inventory or planning system.
- Enters the data on the purchasing system screen to create the order.
- Waits for the order to be printed in a special format.
- Receives the order and enters it in his order form.
- Calls regularly to check the progress of his order.
Adding internal processing time when sending documents via mail takes away several days. This, of course, assumes, that there are absolutely no errors in the entire data entry process and that the order is processed quickly throughout the process.
Now let's compare that with the electronic order:
- The buyer checks the data and creates an order, but does not print it out.
- The EDI software creates an electronic version of the order.
- The electronic order is automatically transferred within minutes.
- The provider's ordering system receives the PO and updates its system immediately upon receipt.
What used to take up to 5 days via paper, can now be completed in minutes. The data is more accurate, which decreases further problems and reduces the time between order and payment.
How Does The EDI Message Work?
An important basis for electronic data exchange is the EDI message, which helps to exchange the data between the companies and to import into the business software (ERP, CRM, DAM, etc.). EDI messages are important and fundamental components of an EDI system. The messages support sending and receiving data and records when working with other businesses. The messages in the EDI system are structured as stated in the EDI standard regulations:
- An EDI message contains data from a business process digitally.
- The source data is converted into the final standardized EDI format that your partner uses and then the system sends it.
- The EDI message consists of data from a supplier's ERP system and is transferred to the customer's ERP system.
- All the necessary processes are automated. There is no need to manually enter the data in the target ERP system. It saves time and money, avoids errors, and is much faster than with other transmission methods, especially with paper.
To ensure the data from the source ERP system is compatible with the format of the target ERP system, you need to select a specific configuration, when setting up the EDI system. Later it will automatically convert the data into the EDI form and then into the target form.
As soon as the EDI message has been received in the target ERP system, further business processes can be initiated. The processes can be carried out automatically and fast:
- Sending the EDI message from the source system.
- Converting the data.
- Receiving an EDI message receipt.
- Converting and processing in the target system.
- Exchanging data with the help of defined interfaces.
Advantages of EDI
According to research by GS1 UK, retailers save £ 605 million each year with EDI. The research also suggests that retailers could save an additional £ 200 million per year with the automation of a single business document, the Advanced Shipping Notice.
The main electronic data interchange advantages are the elimination of the legacy paper-based processes and putting users first. The more providers are connected, the more they pay to use the EDI solution.
- Automatizing the processes to save the budget.
- Reducing the delivery time, since the regular processing process is no longer needed.
- Transferring data is faster and easier since all processes are digital and secured.
- Reducing operational budget (like getting more paper, printing documents, hiring a courier, etc.), since you don’t have to print digital invoices.
- Reacting quickly because all processes are synchronized with your partner’s system.
- Optimizing working hours.
Avoiding errors and optimizing processes
- Automatizing all processes with procure-to-pay. This method helps to eliminate any payment errors.
- Receiving a comprehensive overview of business processes via the dashboard. These results help to optimize company processes and the supply chain.
- Improving the processes’ efficiency to exchange data faster and without errors.
- Accelerating transactions.
- Avoiding basic errors that occur because many people entered manually now.
- Setting individual business rules and alarm functions for each trading partner.
Importance of EDI Solutions
In general, almost all companies that have commercial relationships with other companies, and have to exchange data regularly, benefit from EDI solutions. Different organizations can benefit from EDI integration:
- Suitable for all industries, including retail, fashion, logistics, IT, etc.
- Focusing on the exchanged data.
- Multiplying your profit by saving on operational tasks. An EDI system works great with all types of business: selling stores, fashion retail, IT, etc.
- Reducing the time that it takes to connect the eCommerce stores.
To explain EDI in eCommerce we need to do that by combining both of them with a unique shopping experience. Web EDI Walmart is a great example of such an approach. You could learn more on the topic from the official Walmart EDI implementation guide.
Anyone can easily reach for Walmart EDI support to solve any questions and issues that might appear in the Walmart EDI system.
Electronic Data Interchange Software
Electronic data interchange system works with special software so EDI provides full security for both parties in this communication and data sharing. Electronic data interchange includes secured data, numbers, and overall information on business customers and users. That’s why we also speak up about the importance of EDI in e commerce.
You can start with this data interchange example of software:
- SPS Commerce Fulfillment EDI
- MuleSoft Anypoint Platform
- TrueCommerce EDI
- Cleo Integration Cloud
But there is a big number of software solutions; therefore, you may always find a particular solution tailored to your needs. Frequently, eCommerce businesses try to utilize EDI in order to deliver product data information to various sales channels. In such a case, you may try to use the Gepard PIM & Syndication system which supports EDI exchange standard and what is more important automates the product content delivery and improves operational efficiency by 75%.
So, are you ready to implement EDI in eCommerce?