Electronic Data Interchange (EDI) is the computer-to-computer exchange of business documents in a standard electronic format between business partners.
By moving from a paper-based exchange of business documents to one that is electronic, businesses enjoy major benefits such as reduced cost, streamlining processes, reduced errors, and improved relationships with business partners.
EDI can work hand in hand with API integration. API integration allows data to be pushed or pulled in or out of a system, which then using EDI can allow information to be sent or received to/from customers, suppliers, 3PL warehouses, or other internal systems.
There are two main types of EDI:
Web-EDI involves using a pre-built portal that is already integrated with a trading partner's (e.g. a retailer) back-end system. This allows them to send PO’s to their suppliers through the portal, and then receive shipments, Invoices, and other EDI messages in return from the supplier, when they are keyed into the portal. The winner here is the retailer, and the loser is the supplier, as the supplier will still need to key orders into their own system, as well as confirm orders in the portal. They will then need to manage shipments, invoices, product catalogues, and other messages through the portal, as well as through their system. Effectively doubling manual data entry.
The main benefit of web-EDI is quick compliance, but the downsides are non-streamlined processes, the potential for manual keying errors and a cost of time/wages of employees keying in information manually.
2. Fully Managed EDI
Fully Managed EDI offers complete, end-to-end integration between a trading partner, such as a retailer, and a supplier's system. PO’s raised from a retailer should flow through to the suppliers' Inventory Management, ERP, or POS systems. Messages such as ASN’s and Invoices are sent back automatically to the retailer, based on triggers such as authorizing a PO or completing a Shipment.
A Fully Managed EDI solution should support the integration once it’s live, and have good message validation and error notifications set up to ensure a robust connection between the retailer and suppliers system.