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10 Ways EDI Improves Your Bottom Line

Electronic Data Interchange - EDIElectronic Data Interchange (EDI) is altering the way companies collaborate with their trading partners. Many companies, in fact, are now integrating EDI with their ERP as a strategic move to improve their bottom line. If this technology is in your organization’s future, the following benefits may provide incentive to implement EDI sooner rather than later:

1. Faster business cycles

Electronic Data Interchange cuts the time it takes from order to shipment in half.1 Orders transmit automatically, going directly into the trading partners’ systems for faster fulfillment. With full EDI-ERP integration, many other documents throughout the cycle transmit between you and your partners as soon as they are triggered. You no longer have to wait for faxed or mailed data to be re-entered by employees.

A major electronics manufacturer calculates the cost of processing an order manually at $38 compared to just $1.35 for an order processed using EDI.”

EDIBasics, 2014

2. Reduced staff time

By automating communication between your biggest trading partners, your employees spend fewer hours reviewing, entering and updating information in disparate systems. Employees are able to focus instead on more worthwhile tasks.

3. Lower inventory levels

The reductions in processing and fulfillment time have a direct impact on inventory levels. Inventory moves through the cycle faster and out of overhead that much sooner.

4. Fewer errors

There’s an estimated 30-40% reduction in transactions with errors when data is communicated through EDI.2 By replacing faxes and emails with Electronic Data Interchange transactions, data re-entry errors are avoided.

5. Eliminate paper costs

EDI replaces paper forms of many documents, including purchase orders, invoices, shipping documents and confirmations. You’ll not only help save trees. You will also reduce your costs associated with printing, faxing, mailing, storing and handling those paper documents, as information is communicated with your trading partners electronically.

6. Discounts for early payments

Invoices sent through EDI go directly into the partner’s systems for faster handling by Accounts Payable. EDI payments can then be transmitted, received and verified quickly, which allows companies to take better advantage of early payment discounts that may be offered by their partners.

7. Faster decision-making

Studies show that Electronic Data Interchange allows companies to make decisions 10% faster.1 Quicker informed decisions are made possible by improved visibility to the status of business processes.

8. Fewer cancelled orders

Prompt order processing leads to reduced numbers of cancelled and re-worked orders.

9. Opportunities with new business partners

Many larger companies are now requiring that their suppliers have Electronic Data Interchange capabilities in order to transact business with them. Growth could mean upgrading your technology.

10. Happier customers

All of these benefits result in happier customers and improved customer retention. By streamlining your operations, lowering operational costs and improving the visibility of your processes, your team is able to provide faster, higher-quality services.

Related article:

4 Ways ERP Connectivity Improves Your Business

Ready to Integrate EDI with ERP?

Efficiency gains are at their greatest when EDI is fully integrated with your ERP system. Look for onscreen EDI that allows users to complete transactions directly from the document window. Such functionality is included in Trek Cloud ERP.

Learn more about Trek Cloud ERP

Sources cited:

1Castellina, Nick. Electronic Data Interchange Enables Efficiency and Visibility.

2EDI Basics, 2014