6 questions to invite about EDI readiness in 2020
When Novell’s star as a networking giant was beginning to wane, a salesperson visited a customer to ask why they hadn’t upgraded to the latest version of NetWare. Surprised, the customer said they didn’t think they still used NetWare. They checked and they did, but it had simply been running away in the background unnoticed – so much so that someone had built a wall in front of the server!
What does this have to do with EDI transactions? A key goal of many digital transformation strategies is the ability to work and collaborate more closely with customers, suppliers and partners – and that’s exactly what sending and receiving EDI transactions does.
Exchanging EDI transactions has been around for so long that some people have forgotten that it is, perhaps, the first real piece of digital transformation. While companies look for new ways to connect, EDI offers a tried and tested solution. With over 40% of companies still using manual processes today, transmitting EDI transactions also provides a low cost and effective way to build your digital supply chain.
So, how do you know if you’re ready to make the switch to EDI transactions? Here are some important questions:
Are most of your customers already trading with EDI transactions?
Research has shown that for senior executives, some of the benefits of digital transformation include faster time to market (36%) and meet changing customer expectations (35%). If your customers are already trading digitally, the pressure is on to meet their trading conditions. If you only have a few major customers, you may be able to establish point-to-point connectivity with each individual customer. But if you have many customers or are looking to grow your business, it may be better to explore the services of an EDI Cloud network provider.
Do you want to reduce your B2B trading costs?
If you’re still using manual processes (phone, fax or email) to conduct business transactions, moving to EDI transactions provides a simple way to significantly reduce your trading costs. Research says this shift can reduce your transaction costs by 35%. In addition, EDI transactions help remove human error that can lead to inaccurate orders and poor delivery. When you consider that chargebacks are estimated to cost over $150 billion every year, the ability to get as close as possible to the perfect order is imperative.
Do you exchange a wide variety of business documents?
When it comes to business transactions, it’s easy to focus on orders and invoices but there is a wide range of other business documents that need to be exchanged to build an effective supply chain. A good example is the Advanced Shipping Notice (ASN) – a digital document that provides information about a pending delivery. EDI transactions allow for the smooth exchange of product and shipping information as goods pass through your supply chain.
Do you want to reduce your Order-to-Cash and Purchase-to-Pay cycles?
We all want to get paid as quickly as possible, and EDI transactions have been proven to reduce your business cycle times by over 60%. Within your order-to-cash cycle, EDI can reduce the time to payment by 20% while improving the relationship you have with your customer.
Do you want to optimize your inventory levels?
For many years, inventory optimization as been a top priority for supply chain professionals. By sending EDI transactions, you can shorten the order processing and delivery times so that inventory levels can be reduced. A higher percentage of accurate orders means there’s less need to carry excess stock in your supply chain. In addition, EDI records all transactions so you can analyze the performance of your supply chain and suppliers to better plan your optimum inventory levels – a significant benefit, considering that the majority of supply chain organizations are focusing their analytics efforts on inventory optimization.
Do you want to improve visibility and transparency in your supply chain?
In a 2019 KMPG survey, 93% of supply chain executives put end-to-end supply chain visibility at the top of their priority list. Trading digitally is the minimum requirement to achieve supply chain visibility. You need to be able to know which transactions are taking place and their current status. Real-time visibility into transaction status enables faster decision-making and improved responsiveness to changing customer and market demands. In addition, customers are increasingly demanding ethical business operations from their vendors. This begins with supply chain transparency.
Choosing your ideal EDI transaction solution
If you answered yes to any or all of the questions above, then you’re ready to embrace EDI transactions. The next question is: How can you gain all the EDI features you need at a cost that’s right for your business?