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How Can an EDI Solution Simplify Business Processes

How Can an EDI Resolution Simplify Industry Processes?

What is EDI?

Electronic Data Interchange (EDI) is a flat file format or technology that B2B trading partners use to send and receive business transactions. It’s a straightforward and secure solution that can be used to simplify and automate business processes. It’s often known for helping organizations better fulfill orders and ship goods.

The exchange of EDI documents is typically between two different organizations. A common automated process is the exchange of purchase orders and invoices. For example, Company A buys goods from Company B. “A” will send purchase orders to “B,” who will then send invoices and shipment notices to “A.”

Once a document is prepared it can be translated and then linked to transmit the proper EDI documents by direct, point-to-point EDI connection via a secure internet protocol. EDI uses a range of secure protocols to ensure the secure exchange of EDI documents. The protocols range from long-established technologies, like FTP, to web-based EDI via AS2, and API-based systems like AS4, plus others.

How Can an EDI Solution Simplify Business Processes?

Most trading partners who exchange EDI files have industry-specific requirements governing their EDI translation. Healthcare, retail businesses, and logistics often exchange EDI-compliant documents. However, it’s useful for fields like higher education, technology, and banking/finance as well.

Some of the many ways an EDI solution can simplify business processes are:

EDI Saves Time and Money

EDI can save time and money by replacing manual B2B communications, like email, postal mail, and fax, with automated data exchange. In fact, it can speed up business cycles by over 60 percent.

The traditional method of sending typical business transactions back and forth involves timely and costly steps by having to email or mail data back and forth and manually entering information. This paper system method can add days to weeks of back-and-forth shipping time to the process.

When paper is eliminated, spending can also be cut by reducing the transaction costs of the entire paper process (printing, filing, postage, etc.). This can save organizations more than 35 percent on transaction costs overall.

EDI Eliminates Company-to-Company Variations

EDI allows each business partner’s computer system to speak a simple, common language.

EDI Can Help Multiple Industries

From among the large number of transaction types EDI handles every day, it doesn’t just help with order fulfillments, scheduling shipments and shipping confirmations, and tracking goods – it can do so much more!

It can assist the healthcare industry through exchanging patient health information, health insurance processing, and prescription information exchanges. It can also assist the accounting industry with generating invoices and providing audit trails. And it can assist the aviation field with flight information exchanges, passenger name records (PNRs), and international compliance and standardization.

EDI Can Permit Fewer Errors

Utilizing an EDI solution can help eliminate the risks that paper and email usage is susceptible to by 30 to 40 percent. Aside from manual data entry errors posing as less of a probability, other human errors can likely be eliminated. EDI eliminates human mistakes like illegible faxes and handwriting, incorrectly taken orders or keying errors, and lost orders or mail – costly flaws that could potentially derail or lengthen the order process and time it takes to fulfill the job from start to finish.

It also provides real-time visibility into transaction statuses. This can enable faster decision-making and allows better responsiveness to errors and customer needs.

Bonus: It Offers Environmental Benefits

EDI doesn’t just help simplify business processes; it offers environmental benefits too. By replacing paper-centralized processes with electronic alternatives, EDI can reduce waste and promote sustainability. The operational efficiencies EDI increases can also lead to less energy waste by permitting fewer errors.

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