Considering EDI? We’re Here to Help!
As supply chains become more complex, EDI offers the technology you need to connect your systems, trading partners, demand channels and customers. Finding the right provider, however, is essential to scaling your business and achieving your goals. In this guide, we’ll cover what you need to know about EDI, how different EDI offerings work, and what to look for in an EDI service provider. There are also links to additional educational resources, and a printable checklist you can use when evaluating different EDI vendors!
What is EDI?
EDI is an acronym for Electronic Data Interchange, which is a standard protocol that allows disparate business systems & revenue channels to communicate end-to-end, automatically. Essentially, EDI creates a bridge between your internal systems, your partners’ systems, and a variety of sales platforms, such as online marketplaces or eCommerce storefronts. By automating the transfer of data between these systems, EDI can quickly process large order volumes, eliminate errors and delays, and streamline communications across your supply and demand channels.
Who Needs EDI?
EDI has been around since the 1980s, but as the push for digital and agile supply chains increases, EDI has become an integral part of the business landscape. In 2019 alone, EDI transactions accounted for nearly 80% of all B2B electronic sales.
Some businesses need to use EDI because it’s required by major retailers like Walmart and Target. Others choose to use EDI to accelerate their order processing and scale their business operations. EDI is used by both B2B and B2C businesses, including manufacturers, suppliers, distributors, wholesalers, retailers and others.
Wondering if EDI is right for your business?
If any of the conditions below apply to you, you’re in the right place:
- My product just got picked up by a major retailer who requires EDI
- Time-consuming manual processes are stopping my business from growing
- I’m frustrated by having to retype every order from one system into another
- I need to be able to manage my orders remotely
- I’m overwhelmed by emails, PDFs and faxes
- I want to make my business more efficient and productive
Mommy's Bliss EDI Success
Watch the video to see how Mommy's Bliss was
able to get their products on the shelves of Walmart
in 6 weeks with TrueCommerce EDI
Type of EDI Solutions
This list touches on several popular EDI software and solution options.
However, many vendors offer a combination of approaches to better serve their customers.
Multienterprise Commerce Networks
These commerce networks emerged most recently, in the last decade. They provide a modern, unified approach to support omnichannel and the growing need of enterprises to connect with many supply and demand channels, including EDI, eCommerce, online marketplaces, suppliers, retailers and more.
Single Channel Networks
This type of network generally supports EDI only, with few exceptions, and provides all the components required for EDI, such as mapping, translation, and connectivity to trading partners. As companies expand to sell via multiple channels, such as digital commerce marketplaces and drop ship programs, they may find that single-channel networks restrict their omnichannel growth.
Value Added Network
VANs are a more traditional connectivity method through which a business sends transactions between multiple trading partners. VANs use a virtual mailbox to manage incoming documents, which must be manually checked and processed by the receiving party. These networks are becoming less popular as new connectivity methods are adopted by trading partners, such as AS2, AS3, FTP, SFTP and others.
EDI in the Cloud (Web EDI)
Web-based EDI uses the cloud instead of physical on-premises servers. In addition to reducing IT needs and hardware and software costs, web-based EDI lets users manage their EDI from anywhere with wi-fi. Because the software is continually updated and backed up in the cloud, there’s also no need for costly new software installations.
End-to-End Integrated EDI
This type of EDI solution enables streamlined communications between trading partners by eliminating the need for multi-vendor solutions. End-to-End EDI combines a value added network with trading partner maps and an EDI system that directly connects to demand channels and business systems such as ERPs.
On-Premises solutions use physical, on-site servers to deploy EDI software, offering businesses complete control over their solution, including security and data access. Business can choose to house their servers on-location, or use a “hosted” solution, where the servers reside in a third-party data center. Businesses choosing to maintain their own servers will need to invest heavily in IT, while those using a third party may split maintenance and security responsibilities
On-premises EDI is generally deployed by companies with significantly high transaction volumes, up to millions per month, which justifies investment in internal IT and mapping resources instead of outsourcing EDI needs. However, this option is becoming less popular as alternative fully managed service EDI solutions are offered.
What is EDI and How Can it Benefit My Company?
Benefits of Integrated EDI
Eliminate Manual Effort and Errors
Integrated EDI facilitates the translation and transmission of order data, so you don’t have to waste time with retyping. In addition to accelerating order processing and fulfillment, integrated EDI also speeds invoice and payments processes, so you can quickly recognize revenue.
Reduce Lead Times and Inventory Levels
EDI allows you to send and receive documents in a fraction of the time, which can drastically reduce delivery turnaround times. Plus, EDI documents like Advance Shipping Notices help you stay informed of incoming deliveries, so you can get ahead of stock shortages.
Improve Supplier Relationships
No more lengthy phone calls or back-and-forth emails. EDI provides automated, accurate trading partner communications to ensure the right shipments get to the right locations, on time, all while reducing chargebacks.
EDI enables your business to scale while simultaneously reducing overhead, personnel requirements and time spent managing orders. With electronic document processing, you won’t need to spend on paper, document storage, or postage.
Position Yourself for Success
Hundreds of top retailers and e-tailers require EDI documents from their vendors. By using automated, compliant EDI, you’ll be able to offer better service at lower prices, making you more attractive to new trading partners.
Customer Success Stories
Common EDI Codes
There are hundreds of EDI codes used for a range of order processing communications, but most businesses will use only a small subset of them regularly. The codes listed here are some of the most used EDI transaction sets across all industries.
EDI 850 – Purchase Order (PO)
EDI 855 – PO Acknowledgement
EDI 856 – Advance Ship Notice
EDI 810 – Invoice
EDI 846 – Inventory Inquiry/Advice
EDI 940 – Warehouse Shipping Order
EDI 945 – Warehouse Shipping Advice
EDI 997 – Functional Acknowledgement
What to Look for in an EDI Provider
At this point, you understand what EDI is and how it can help your business. You’re thinking about the types of EDI solutions that will work best for your business and exploring your options. So, how can you tell which EDI provider is right for you? Use the key elements below when judging different vendors, so you can feel confident in your final choice. You can also use this list to re-evaluate a current provider who may not be providing exactly what you need!
How long has your provider been offering EDI? Have they worked with companies of your size, in your industry? If you’re choosing EDI to meet a trading partner mandate, have they worked with that partner before? Can they show proven success for a business like yours? Make sure the providers you’re considering understand how to address the specific needs of your business.
Total Cost of Ownership
To ensure you’re getting the best value, you’ll want to find an EDI provider with flexible options that can meet your current and future needs. Keep in mind that while some vendors might have higher up-front costs, others will require more long-term spend. We recommend calculating the total cost of ownership based on 3-5 years of use to get the best understanding of different solution prices.
While most EDI providers will allow (and encourage) upgrading, many will not allow downgrades during slow periods; a provider who offers both can help you manage costs through market shifts. Additionally, many EDI customers are surprised by hidden fees, so it’s essential to review the fine print of your SOWs and contracts to see what services are or are not included. Here are a few fees to look out for:
- What is the price per transaction, both included in the allotment and more importantly, the fee per transaction when you go OVER your allotment? This is an area companies are hoping you don’t catch as you pay a huge overage charge once you exceed your allotment.
- How much does the provider charge per trading partner per month?
- Per document subscription charges.
- User or labeling subscription charges.
- Upgrades and updates that are either not included or do not include services to assist with the migration.
- Network Transaction Plans that don’t allow you upgrade, or more importantly downgrade until the end of a yearly agreement.
Integrations & Connectivity
If you use an accounting or ERP business system, storefront or marketplaces, make sure the EDI provider you choose has a proven history and understanding of your ERP technology. You should also ask potential vendors about their support system. The best vendors handle all their integrations in house, but others rely on third-party consulting firms, which can be a hinderance when dealing with technical questions and concerns. Your ERP needs may change as your business evolves, so you should ask about the process if you want to switch or upgrade other systems. You want a solution that can fit into your existing model but can also transfer to other systems with minimal disruption.
Your business needs may be very different from someone else’s, so it’s imperative to know what kind of features each EDI solution has. Here are a few examples of EDI solution features you might find important:
- A Network of trading partner maps that are automatically updated to stay compliant
- Reporting and Advanced Analytics
- Support for translating PDF and Emails into EDI
Whether you choose a hosted or cloud-based EDI vendor, security is key to protecting your business transaction documents and sensitive information. Features such as at-rest encryption, SOC certifications, GDPR compliance and data retention/disaster recovery help keep your data safe.
Maybe you’re just starting with EDI, or maybe you have a host of demand channels and supply chain processes on your mind. Choosing a provider with multiple supply chain solutions enables you to easily expand your integrations, without needing to juggle multiple providers. Common products/services EDI providers also offer include:
When something goes wrong, you need an EDI partner who will answer the phone, ready to help. Some vendors outsource their support; between limited hours, hold times, transfers between operators, and a lack of specific technical knowledge, this makes it difficult and frustrating to resolve issues. Instead, we recommend finding a provider with in-house customer support, in which the employees are directly experienced with your systems and can answer your questions and concerns quickly.
Ask prospective vendors about their support systems, including availability and contact methods. You’ll also want to inquire about proactive monitoring and updates that can sniff out and solve problems before you even see them.
Reputation & Recognition
Unfortunately, you can’t rely solely on a business’s website or sales representatives to give you a holistic view of their business. To understand how a company measures up against the competition, you’ll want to look at accredited third-party, independent websites and research organizations for more details. These can range from in-depth product comparisons, to verified customer reviews.
Below is a list of established, third party evaluation and review sites you can use to see how industry experts and customers feel about your prospective vendors.
- Gartner, Inc. — Independent Research Firm with Reports on Different Vendors
- IDC, Inc. — Independent Research Firm with Reports on Different Vendors
- G2 Crowd — Highly Respected Software-Focused Review Site
- Capterra — Highly Respected Software-Focused Review Site
- Better Business Bureau — Customer Reviews and Complaints Center