EDI stands for Electronic Data Interchange. EDI is the computer to computer exchange of documents like purchase orders, shipping notifications, invoices, payments and other documents in electronic format between trading partners. This eliminates paper mail, fax and email document exchange between businesses. In a paper environment, the buyer would send purchase order to the supplier, supplier would send a confirmation email, then send paper shipping notification, invoices, etc. All of these documents would have to be entered and processed manually by the buyer. Rather than exchange paper documents, the virtual exchange of documents via EDI automates the process, eliminating paper trails, improving efficiency and reducing errors.
B2B is Business to Business exchange of documents.
a. Without EDI
b. With EDI
There are typically 4 steps in an EDI Process.
Since EDI documents are processed by computers rather than humans, the EDI documents need to be in a standard format so the computer can read and understand the documents. EDI standards define the correct order and location of the units of data in an EDI document. All EDI transactions are defined by EDI standards. When business partners agree to exchange EDI documents they have to agree on the formats that will be used to exchange the documents.
Some of the most commonly used EDI standards are:
ANSI X12, EDIFACT, XML (ebXML, RosettaNet, UNIDOC), JSON
There is more, after the businesses agree to exchange documents electronically using an agreed format, they have to decide on the data transmission protocols. The data transmission protocols are the methodology used by the sender and recipient to exchange the documents. Standard protocols are:
After businesses agree to exchange data via EDI, the Document format and the transmission protocol, the next step is to agree on how to transmit the data to your business partner.
Peer to Peer – Peer to peer is when you connect to and send EDI documents directly to your business partner. Since each business partner can have its own format and protocol, that would mean each enterprise would have to build a platform to be able to intake data in multiple formats/protocols.
Rather than build on its own, business use modern EDI software that can enable the exchange of different types of EDI document standards and file transmission protocols.
Value-Added Networks (VANs) – A VAN acts as an intermediary between the trading partners. VANs receive the document and sends it to the final recipients, providing additional value add services like data translation, various communication protocols.
Managed Service Providers – Businesses are realizing that managing its own supply chain is an expensive process that take away from its core mission of providing the product to its customers. Managed service providers have stepped to manage the day to day complexity of supply chain management. They use powerful EDI translator to translate the data so it can be used by software application for straight through processing.
Features that must be offered by managed service providers:
Cost Savings resulting from moving to the Cloud and related operational efficiency. No more upfront infrastructure cost and redundant storage pay for what your use. Reduction in cost associated with printing, mailing and processing of paper transactions.
Speed and Accuracy: EDI speeds by business cycles by over 50%. Transactions are exchanged with partners in minutes rather than waiting days and wee ks for mail. Improves data quality by eliminating errors as there is no re-keying of partner documents in your systems.
Reduction in manual effort. Your staff can now focus on higher level tasks like ensuring discounts are received, transactions are approved timely etc., rather than on manual data entry.
Real time visibility into transaction status. Staff will have visibility into type of goods are being well received in marketplace so they can be restocked to meet the changing needs of customers. This gives them visibility into the status of the suply chain, enabling them to follow a demand driven supply chain model.
Dashboards to keep management and employees informed of key metrics at all times. Staff can know in real-time if files, transactions were received, and errors can be reconciled immediately rather than waiting for month-end.
Reduced paper flow and reusable workflows. Eliminates all paper transactions between the trading partners.
All these results in a large return on investment
In spite of the tremendous advantages of B2B EDI over paper based processes, companies struggle with building an effective EDI network. As discussed it requires EDI standards, formats, mapping and translation software. Creating all these in-house requires in-depth knowledge, expertise in EDI technologies and a huge outlay on infrastructure. Once it is built, then it needs upgrade, support and maintenance.
The advent of Cloud and SaaS (Software as a Service) has resulted in a number of managed EDI service offerings. MOND has developed a state-of-the-art cloud native B2B EDI integration platform that is used by innovative organizations to run their supply chains. MOND’s breakthrough low-code B2B EDI Platform offers automated trading partner mapping, one-click deployment and a revolutionary automatic upgrade feature.
MOND’s managed EDI services offers end to end solution eliminating the need for in-house IT, infrastructure or software. Along with offering all the above benefits, MOND EDI the following unique features to make sure transition to EDI smooth and cost effective.
mondCloud simplifies both your internal and external architecture and requires fewer touch points.