The untapped opportunity of EDI

Posted on 6 Nov 2014 by Malcolm Wheatley

25 years on, can anything new be said about EDI? Plenty, says David Eyes of EDI specialists Data Interchange. IT contributing editor Malcolm Wheatley finds out more.

Hailed almost 25 years ago as the universal business-to-business integration tool of the future, the day-to-day reality of Electronic Data Interchange (EDI) in practice has turned out rather differently.

For instance, many manufacturers have EDI connections with only their very largest customers and suppliers. More often than not, those connections will utilise different EDI standards and communications protocols. And finally the specific EDI transactions exchanged with those customers and suppliers are often limited to just a small subset of the overall range of potential transactions encompassed by EDI.

Failure—or opportunity? Very much the latter, insists David Eyes, head of business development at Data Interchange, an international provider of EDI and B2B integration solutions.

“There’s a widely believed misconception that EDI is really something for companies to use with their key trading partners,” he notes. “That’s just plain wrong: there’s massive value to be gained in using EDI with any customer, or any supplier. And that value can be enhanced even further by using EDI as a full two-way information flow, right across the full breadth of transaction types.”

So how, exactly, does this value arise? And why haven’t more businesses seen it? The problem, says Eyes, is that EDI has tended to be seen as a way of receiving and transmitting information. In fact, he says, EDI’s true value arises through an enhanced ability to process information, rather than merely receive it or transmit it.

“What you’re really getting with EDI is the ability to integrate customer requirements into your ERP system, very rapidly and without error, almost as soon as those requirements are recognised by the customer,” he points out. “So very quickly, you understand your customer’s requirements, and can in turn share those requirements with your own suppliers. So you’re speeding up the supply chain, and by a significant amount.”

Moreover, he adds, EDI makes it easy for a manufacturing business to further add value by making use of EDI’s two way business processes and by removing the need for human intervention.

“Customers find ASNs – advance shipping notifications – incredibly useful,” he points out. “Routinely, ERP systems produce them – but without EDI, there’s no straightforward or cost-effective way to transmit them to a customer.”

Likewise, he adds, EDI is the ‘digital glue’ that permits the automation of the entire order-to-cash business process.

“With EDI, you can connect orders to delivery despatches, delivery despatches to customer receipts, and customer receipts to electronic invoices – there’s a huge cash flow benefit. And what’s more, the instant exchange of data that EDI provides then allows manufacturers to identify any potential invoice payment issues at the earliest possible point.”

That said, stresses Eyes, Data Interchange itself is more than just an EDI software provider with its own EDI network. Instead, he explains, Data Interchange thinks of itself as a firm of EDI experts, offering advice and insight.

“We look at individual customers’ business processes, looking for ways to leverage EDI to improve efficiency, reduce risk, reduce error, and reduce waste and manual processing – which we almost always find,” he sums up.