27 February 2020
Did you know that the death of electronic data interchange (EDI) was predicted more than two decades ago? Surprised to hear this? Way back in 1998, when XML was recommended by the World Wide Web Consortium (W3C), the trade press predicted that EDI, along with value-added networks (VANs), would soon fade into extinction. The cost of EDI implementation was the primary factor. Critics said that EDI could not survive in a world where free data transfer was possible over the Internet. XML made it possible to conduct complex business over the internet. Today, EDI still exists and is more popular than ever because of the role it plays in supply chain optimization.
Why is EDI Implementation Necessary for Supply Chain Management?
When EDI is implemented in the supply chain process, it helps organizations:
- Improve their agility and performance
Simplify supplier onboarding
Optimize inventory levels
Streamline procure-to-pay
Reduce order-to-cash cycles
With EDI implementation, organizations are able to eliminate manual errors by automating B2B transactions. The paperless EDI process, with no human intervention, helps businesses save money that would have been spent on purchasing, printing, and delivery of paper-based documents.
EDI is a one-stop solution for most of the supply chain management challenges and helps streamline the supply chain management cycle. It maximizes efficiency and minimizes manual errors and transactional time. Data is important for EDI. However, the same data growth or volume can become a major challenge in implementing EDI.
As the supply chain transactions of modern businesses get more complex, the challenges of working with EDI are also steep.
What are the 5 Primary Challenges in EDI Implementation?
Here are a few common EDI challenges.
1. Scaling EDI
We all know that EDI is a standard protocol, but do we know that a ‘standard’ EDI purchase order differs from one trading partner to the other?
Despite the standard protocols of EDI, the document types and business rules differ from one trading partner to another. Introducing a new trading partner with a distinct transaction set to the system can be a difficult task. So, you need to scale the scope of your EDI judiciously to handle a diverse set of data rules with multiple EDI protocols.
In order to scale your EDI program, you can consider outsourcing it to an EDI service provider, instead of doing it in-house. This also gives your staff enough time to focus on core business activities.
2. Bad Data
There is no doubt that bad data can affect your business. Inconsistent data causes inconvenience in EDI operations. Many studies show that bad data is the leading problem that affects B2B business transactions.
As the volume of data keeps growing, the scope for errors to creep in is only going to increase. Incorrect manual data entries such as duplicate orders, discrepancies in prices, or other purchase-related issues make for a high percentage of bad data issues of EDI.
Manual error detection is time-consuming, expensive and can continue to result in errors. This in turn can lead to increased costs, incorrect decisions, and low customer satisfaction.
At To-Increase, we understand how critical data quality is to enable digital transformation, and we offer the perfect solution, Data Quality Studio for Microsoft Dynamics 365 (F&SCM) ERP systems.
3. Speed Issues
Gone are the days when getting process transmissions once a day was enough. With the evolving technology, customers today expect a shorter wait period. Though once a day transmission is a definite step up from the conventional laid-backpace of the EDI process, it may no longer add value to the current speed of commerce.
According to a report from Fortune Business Insights, the global EDI market is projected to reach USD 3,451.3 million, by 2027. The interest in EDI systems will continue to grow as the frequent transactions between small businesses and large organizations aid market growth.
Real-time document delivery is the need of the hour, and you need to start taking steps to get there. It helps to setup alerts and notifications that let people know when documents are stuck because of some processing errors.
4. Transparency
Ensuring visibility and transparency at every level of the supply chain process can be a difficult feat to manage. As the supply chain processes get more complex, the degree of difficulty will only increase.
Maintaining transparent communication with partners and customers can help to optimize operations and support one another.
Transparency has become even more critical in this era when businesses are shifting to more direct communication channels with consumers and trading partners. Setting up robust ways to maintain transparency between the partners in EDI protocols can be an optimum way forward to master supply chain visibility.
5. Interoperability
Though EDI has been around for over a couple of decades now, there are still many businesses that have not embraced this technology. And with those using EDI, there are chances that your trading partner uses a different EDI format. With so many different EDI formats in use, it is essential to have a solution that translates information into a format that your system can understand.
Doing business with trading partners who have not upgraded to EDI can be quite challenging. But it’s not impossible either as the services of brokers who can translate the information to an acceptable format can be availed.
Pro-Tip
Addressing challenges in EDI implementation requires you to have the right tools and follow the right processes. Spend some time evaluating the solutions that are available and come up with a plan that works best for you.
With the right support and guidance, you will be able to handle these EDI implementation challenges effortlessly.
Next Steps
The above challenges can be stumbling blocks in the process of EDI implementation. However, there are smart ways to overcome these issues to ensure smooth EDI implementation.
As a next step, find out more about our EDI solution, EDI Studio for Microsoft Dynamics 365 Finance and Supply Chain Management that can help you simplify communication and enable collaboration with your customers.
