Guide to EDI Solutions & Integrations
For several hundred years, commerce was primarily based on the movement of written documents, such as invoices, credit notes, and purchase orders. However, these documents were handled by humans with the ability to read, interpret, and rationalize and therefore, they did not follow a standard layout.
Today, computers are involved in every business process, from accounting and payroll to production, administration, and logistics. Using a paper-based process is no longer a feasible option because of the costs and labor involved.
Let’s consider the exchange of a purchase order between a buyer and a supplier. The buyer enters data into the purchasing system to generate a purchase order, prints it, and mails it to the supplier. The supplier receives the purchase order, keys the data into the sales order system, prints an invoice, and mails it to the buyer.
This paper-based exchange of business documents not only takes days, but it is also prone to errors due to manual data entry. Electronic data exchange can simplify and expedite the process. However, since the documents are intended to be sent, received, and interpreted by computers, they must be in a standard format that computers can understand.
What is Electronic Data Interchange (EDI)?
A standardized, platform-independent way for businesses to exchange information, Electronic Data Interchange (EDI) business data offers tremendous advantages over paper-based systems of information exchange. The technology not only reduces administrative burden and costs, it also provides decision-makers the accurate, real-time information they need to make better resource planning decisions.
EDI file formats allow exchanging information digitally in a standardized format. The technology is used by businesses to transmit data to partners, as well translate the EDI files received from trade partners.
Industries that Use EDI X12 Standards
Implementing EDI may look overwhelming due to the massive schema of ANSI X12 standards that includes hundreds of nodes and elements and rigid message structure. However, exchanging documents electronically in a standard format has proven to be a driver of operational excellence.
According to a study conducted by Forrester Consulting, electronic processing of invoices costs $3.50 per invoice, while manually-processed invoices cost $30 per invoice on average . The savings are not just limited to processing costs. Instead, EDI payments also enable faster communication with trade partners, which in turn improves business relationships. Considering the benefits, EDI information ordering is a natural solution for any business that wants to reduce the administrative burden associated with information transmission, improve business relationships, and achieve greater accuracy and efficiency in order fulfillment.
Today, a multitude of industries use EDI in countries around the world. Whether in the healthcare sector, retail, or the automotive industry, EDI is transforming the way businesses communicate and yield value.
The industries that commonly use EDI X12 standards include:
EDI Solutions for Retailers
Keeping a retail business running smoothly is a complex process. The high volume of invoices and orders not only make the paper-based exchange of documents time-consuming but also error-prone. Therefore, retail businesses require a full-service EDI solution that can parse incoming EDI data and construct EDI transaction sets to be sent out to suppliers. This, in turn, enables the quick turnaround of purchase orders and ensures accurate and efficient exchange of information between retailers and suppliers.
EDI Solutions for Banking and Finance
Banks, stock brokerages, consumer-finance companies and other financial institutions provide a wide array of services and products to their clients. One of the major factors that impact the bottom-line of a financial institution is its ability to manage complex information flows such as handling receivables and payables, processing benefits eligibility claims and transmitting merchant settlement files. Many of these processes remain very paper-intensive, with a lot of opportunities to truncate paper checks and move towards EDI automation.
In addition to being a lower-cost alternative to the traditional paper-based approach, EDI automation helps financial institutions manage the complexities associated with working across international boundaries, including differences in accounting practices and regulations.
EDI Solutions for Supply Chain
Accelerated globalization, larger product offerings, and shorter lead times have all compelled businesses to look for solutions that can reduce the large volumes of paperwork associated with managing a supply chain, while enhancing the speed of information flow between trade partners.
EDI has emerged as a solution that facilitates more frequent and automatic transfers of information required for a high degree of coordination within the supply chain. As a result, an EDI-enabled supply chain is more effective than a manual supply chain in terms of shorter order cycles, greater product availability, and lower transaction costs.
EDI Solutions for Healthcare and Insurance
Administrative costs are a part of doing business. But in healthcare, it’s a proven fact that the costs of benefit verification, authorization, claims and billing, and other business transactions remain too high . While some of these costs are inescapable, the exchange of healthcare information can be automated to save time and money for healthcare providers.
EDI ordering system offers lucrative administrative benefits that healthcare providers and payers cannot ignore. It facilitates rapid yet secure exchange of data between healthcare partners, while ensuring data quality and addressing compliance issues.
EDI Solutions for Automotive
In the globalized just-in-time (JIT) environment of the automotive industry, delivery of the parts required to manufacture a vehicle must be quick and frequent to minimize disruptions to the production process. To ensure this, manufacturers should be able to onboard suppliers as quickly as possible and exchange information with them in a quick and reliable manner.
EDI file formats allow auto manufacturers and suppliers to exchange information in a faster, error-free manner, thereby providing them up-to-the-minute information about production and deliveries. This, in turn, streamlines the production process and improves operational efficiency.
EDI Solutions for Transportation
A fulfillment and transportation company relies on data from multiple entities to move goods through the supply chain. Using a manual approach that requires a dispatcher to manually key information into the dispatch and billing information not only is time-consuming, it can also result in costly data entry mistakes.
EDI payments system enables trucking and transportation companies to eliminate the need for manual entry of information and ensure seamless communication flow between all parties with electronic transmission of standardized documents. The real-time data exchange offers companies better visibility of the fleet and leads to better resource utilization and planning.
Exchange Business Data Electronically with EDIConnect
Designed to simplify the process of parsing and building EDI messages, EDIConnect, the leading EDI automation software, offers full support for incoming file translation, acknowledgment generation, transaction construction, and validation.
With its drag-and-drop interface, EDIConnect automation software enables users to handle complex EDI schemas, perform validations, and write to a destination of their choice. For building an EDI message, users can import data from a wide assortment of sources, such as fixed length files, Excel workbooks, delimited files, and other formats. Using the advanced data mapping capabilities of EDIConnect, the data can easily be mapped to an EDI format, validated, and sent to a trade partner.
The entire process of parsing and transaction construction can be automated to reduce administrative burden, save time, and ensure efficient exchange of business documents.
EDIConnect EDI service offers support for the parsing and construction of all ANSI X12, HL7, and EDIFACT transaction sets without the need of custom coding, thereby allowing businesses operating across a wide spectrum of industries to implement EDI and achieve operational efficiency.