The Best EDI Software
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Nobody likes change, but as your business grows, you don’t have a choice but to embrace it. You need to consider adopting efficient solutions like EDI to streamline transactions with trading partners. But given the wide variety of EDI software and services on the market today, it can be difficult to find the one that best fits your company’s needs. Whether you’re new to EDI or a long-term user, this buyer’s guide will help you better understand your choices so you can find the EDI solution best suited to deliver a strategic advantage to your company.
Specifically, this guide will provide you with information on the following topics:
What Is EDI Software?
Electronic Data Interchange (EDI) software is a robust technology that facilitates the exchange of business documents from one computer to another in a standard electronic format between trading partners, allowing them to work together efficiently. Thousands of standard business documents can be sent automatically through the EDI software. Some common examples include shipping statuses, invoices, purchase orders, inventory documents, and customs information.
EDI technology eliminates manual B2B communications, allowing companies to save time and money across the supply chain, increase processing speed, reduce errors, improve collaboration between trading partners, and increase customer satisfaction and loyalty. Because EDI is entirely paperless and requires little to no human intervention, business documents flow directly from the sender’s computer system (e.g., a logistics system or an enterprise software) to the recipient’s computer system (e.g., an order management system).
Features of EDI Software
| Feature | Description |
|---|---|
| EDI translation | Identifies the data necessary to write, retrieve the necessary information from any corresponding system (ERP or sales order, for example), arranges the data in a structure that the vendor can understand (meets the format of their system or a pre-agreed upon order structure), and send the request to the vendor |
| EDI mapping | Translates information to a format that is more easily used in new environments. This includes flat-file, XML and others. |
| Secure transactions | Use of protocols such as Secured FTP and HTTPS to secure communication and keep your transactions between the involved parties. |
Benefits of EDI Software
EDI has been around since the late 1960s, and the benefits have always proven to be dramatic. Here’s a look at some of the benefits of EDI software:
| Benefit | Description |
|---|---|
| Improved speed | Accelerate the business cycle by about 61 percent. EDI messages can be sent automatically using pre-configured workflows, so transactions between trading partners can be completed in just a few minutes rather than days or weeks. |
| Increased accuracy | Processing transactions manually has a greater risk of human error, which can greatly affect your business. Experts estimate that data quality problems cost U.S. companies approximately $3 trillion per year. EDI can deliver around a 30 to 40 percent reduction in transactions with errors. |
| Reduced transaction costs | Decrease your transaction costs by about 35 percent. For buyers handling numerous transactions, EDI software allows savings up to millions of dollars annually due to early payment discounts. |
| Better customer experience | Ensure the synchronization of expectations between the seller and the buyer, thereby reducing ambiguity between parties and achieving higher levels of customer satisfaction. Some estimates suggest that EDI can decrease the order-to-cash cycle time by about 20 percent, improving business partner transactions and relationships. |
| Improved inventory management | Inventory management is crucial, as it affects every area of your business - from the warehouse floor to customer support. By automating the process of exchanging business documents, you can easily increase your supply chain visibility. EDI has a tracking feature that allows you to easily determine what inventory you have and where it is. And because EDI provides real-time updates, you can effectively allocate your resources, prevent shortages and virtually eliminate excess inventory. |
What Does Your Business Need?
Whether your company is a small business, a nonprofit organization, or a multinational corporation, you must have an accurate, efficient and timely way to exchange business documents with your trading partners. This means the integration of EDI solution into your current B2B communication system. Without an EDI-based system, passing orders and other documents to trading partners is costly, time-intensive, and error-prone.
There are many different types of EDI, including direct EDI (also known as point-to-point), web-based EDI, an EDI network, and full B2B integration. Each type of EDI has its benefits and drawbacks depending on the size and need of your business.
- Startups and other small businesses: Startups and other small businesses looking to buy an EDI solution can usually get by with a web-based EDI, which can be accessed and used via web browsers such as Google Chrome and Firefox. Using web browsers, you can simply fill out standardized forms with the business data you want to share. Web-based EDI is often the easiest and most affordable way for small and midsize businesses to start exchanging business data with their trading partners using EDI. Also, because a lot of web-based EDI solutions partner with big retailers like Target and Walmart, the complexities that come with a typical EDI setup are reduced.
- Existing EDI users looking for additional functionalities: As your business expands and you connect to more customers, your EDI software should scale without the need to hire dedicated staff to manage your EDI capabilities. If you have unclear growth plans, you may want to consider getting a cloud-based EDI to ensure limitless scalability allied to manageable and flexible pricing structures.
- Large companies: Larger companies typically handle a large volume of transactions, so they likely follow a hybrid approach in which they combine different types of EDI to make sure they are able to efficiently work with all their trading partners. Increasingly, large companies are looking to partner with reputable EDI providers that can handle the day-to-day management of their EDI system.
Best EDI Software
Choosing the right EDI solution for your company is quite difficult, as there is a wide range of choices available on the market. While some organizations prefer to manage their own internal EDI system, many look to work with an EDI provider. Whichever path you choose, here are some of the popular EDI solutions to consider:
- TrueCommerce is an EDI and eCommerce system that provides small and midsize businesses a single platform from which to manage all of their EDI transactions. Designed to accelerate supply chain processes, TrueCommerce connects businesses to a robust trading platform with access to over 10,000 retailers worldwide.
- B2BGateway is an affordable and fully managed EDI solution that allows you to add trading partners who are not EDI-capable. Adding your trading partners into the system is very easy, as they only have to pay a one-time fee, plus a small monthly maintenance charge. Also, if you want to have your EDI and accounting programs interface, B2BGateway fully integrates with Microsoft SBA, QuickBooks, and Sage 50c.
Common Pain Points of EDI
While EDI holds a lot of promise, there are some challenges as well. Here are some of the most common EDI issues:
- Security concerns. While EDI is well established and used across many industries and organizations, there are still issues regarding information sharing with EDI partners or third-party EDI organizations. Such issues include the lack of trust, the risk of the confidential information being exposed due to security breaches, and the potential legal problems due to governmental or organizational regulations.
- Application updates may cause data disruption. Some ERP systems can disrupt EDI connections, even those that worked well in the past. Customer relationship management software, enterprise resource planning programs, accounting software, and many other advanced systems may get regular updates or improvements that make them incompatible with the software used by your trading partners.
- Software integration issues. EDI solutions can bog down your IT resources or place a great training overhead on the company. Without proper training and strict compliance with the new protocol, the transition from manual document sharing to EDI can get messy. Also, because there are several standards involved when implementing EDI, small businesses may find it difficult to exchange data with larger companies that make use of the latest version of a document standard.
- Cost of implementation and maintenance. While EDI provides huge cost savings benefits, redesigning and implementing software applications to fit in EDI into the current system can be quite costly, especially for small and midsize businesses. Maintaining an EDI system can be costly as well, especially if the volume of data you are handling is growing fast.
Market Trends of EDI Software
- Increased use of cloud-based EDI. As cloud computing makes its way into a wider spectrum of enterprise activities, cloud-based EDI system is expected to increase in usage, especially among small and midsize businesses. More and more businesses today are looking to migrate connections, applications, data, and integration to the cloud. Cloud computing is changing the rules for EDI technology implementation and service consumption models.
- Mobile EDI. Mobile devices such as smartphones and tablets are changing the way businesses interact with their trading partners. Some companies are starting to develop applications to help mobilize their supply chain. Because corporate apps are now becoming popular, it’s only a matter of time before you can download an EDI-related mobile application from the app stores.
Choosing EDI Services and Software
Understanding EDI document flow is key to considering the different service and software offerings available to you on the market:
- A business document is created in your accounting or ERP system.
- The business document is translated from its native, accounting system format into an EDI document file.
- The new EDI document is sent to the EDI VAN (value-added network) provider.
- The EDI VAN provider electronically delivers the document to the intended recipient’s EDI mailbox
- The document recipient translates the EDI document back into a readable business document and processes it.
Given the number of steps in the EDI document flow, it’s not surprising that there are providers who focus on each step. There are also end-to-end solutions providers. In fact, some ERP systems include EDI as an integrated module that is part of the underlying system.
The first step of the EDI document flow is converting a business document into an EDI file. Many software solutions on the market provide EDI translation. An important consideration when reviewing EDI translation software is compatibility with your accounting/ERP software. Interoperability is the key concern when evaluating EDI translation offerings.
EDI VAN providers handle the delivery of the EDI document. The VAN provider will map the document to the recipient’s standards, provide testing services, and ensure proper file delivery.
One of the most important considerations when purchasing an EDI solution is the breadth of the service. Whether you are looking for translation software, a VAN provider to partner with, or a full ERP solution which incorporates EDI capabilities, there are a large number of options available to your company to consider. If you are looking to uncover the ones that are appropriate for your business, consider utilizing our free software search service.