Frequently Asked Questions on EDI Answered

Tricia Hartigan, TrueCommerce EDI Solutions

What is EDI? Why do you need it? What benefits are possible?

The acronym is used often, but many people are left asking three main questions- What is EDI?, Why do I need it for my business? and What benefits could it mean for my company?

Q: What is EDI?

A: EDI stands for Electronic Data Interchange. EDI is a set of standards which govern data formats and thereby allows disparate computer systems to be able to read the data which is sent. EDI systems and networks can then easily transport data from one source to another, and overcome any incompatibility issues. EDI documents use specific computer record formats that are based on widely accepted standards. However, each company will use the flexibility allowed by the standards in a unique way that fits their business needs.

Q: Why do I need it for my business?

A: To put it simply, EDI replaces the faxing and mailing of paper documents by leveraging electronic interchange of data. Its not only faster, but its also more accurate, allowing for automation and streamlining of your business processes.

Q: What benefits could it mean for my company?

A: The overall benefit is summed up in the answer above as to why you need EDI for your business, but here are three specific benefits you will see as a result:

1. Reduces or eliminates manual data entry errors- By removing the manual keying of vital business documents such as Purchase Orders, Invoices, Acknowledgments and much more, your companycan benefit significantly because the number of errors is heavily reduced. Therefore the number of hours required for a person to process an order from bid request to invoicing for example is greatly reduced. In this way, labor costs are reduced, and time efficiency improved. Transactions are faster, more efficient and accurate.

2. Streamlines transaction processing- Because of the reduction in manual data entry errors, the number of hours required for a person to process an order from bid request to invoicing for example is greatly reduced. In this way, labor costs are reduced, and time efficiency improved. Transactions are faster, more efficient and accurate. Here are a few more examples of how it can streamline your business:

• Electronic documents can be delivered far more quickly than their paper counterparts, thus the turnaround time from order to delivery can be reduced.
• By using EDI for forecasting and planning, companies are able to get forward warning of likely orders and plan their production and stock levels accordingly.
• Integrating electronic documents means they can be processed much faster, again reducing lead times and speeding up payments.

3. Competitive advantage- EDImakes you attractive to deal with from your customers’ point of view, so in their eyes you are cheaper and more efficient to deal with than a competitor who uses paper. Your costs will be lower because you will require less manpower to process orders, deliveries or payments.

We here at True Commerce EDI Solutions hope this will serve as a guide for you when researching EDI and the benefits it could mean for your business. If you are interested in learning more, please view our what is EDI presentation and contact us if you have any questions.

By True Commerce EDI Solutions, Microsoft Dynamics EDI provider

Frequently Asked Questions on EDI Answered is a post from: Distribution Software Blog

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