An EDI connection brings numerous advantages in the daily exchange with partners and suppliers. However, for many small and medium-sized companies, setting up an EDI infrastructure involves too much effort. In our blog post, you will learn about the advantages and basics of the classic EDI connection as well as modern alternatives. This allows you to integrate both suppliers with and without EDI infrastructure. Learn how these solutions work and which additional advantages they enable you to achieve compared to the full EDI connection.
How small and medium-sized enterprises optimize their electronic data exchange
In large commercial and industrial groups, the exchange of data via an EDI system has long been standard practice and is often even an important prerequisite for commercial transactions. Small and medium-sized companies also want to benefit from the digital transaction process. If they want to remain competitive in the future, they depend on a secure and smooth exchange of data and information. Whether it's the creation of electronic shipping notifications, the matching of supplier capacities or the simple exchange of all important documents - a digitized process ensures significantly greater process reliability. Sending a fax or an e-mail with an invoice or order confirmation is time-consuming, error-prone and no longer up-to-date. However, many companies face a major problem when converting to electronic data transfer. Implementing EDI systems is costly and complex. Alternatives are needed that enable electronic data exchange between sender and recipient without much effort.
EDI - what is it and which standard formats are common?
In Electronic Data Interchange (EDI), the IT systems of the sender, transport partner and recipient exchange messages. The systems communicate fully automatically and according to defined standards. In this process, electronic documents are converted into a standard format, sent and read out. Data and information can be processed immediately in the recipient's system. Transmitted are:
- Purchase orders
- Delivery bills
- Invoices
- Bank transfers
- Time lists
- Personnel data
A defined EDI standard specifies how the EDI file for forwarding the information must be structured. A typical standard format is EDIFACT, for example. This international standard was developed under the auspices of the UN and is widely used, especially in Europe. Another common format is ANSI ASC X.12, which is mainly used in North America.
The sender's ERP system is connected to the converter via an EDI interface. This converts the message into the EDIFACT file. The EDI system also includes appropriate communication software for sending the EDIFACT file.
The structure of the EDI message appears to be complex. The combination of numbers, letters and characters is incomprehensible at first glance. But these standardized designations define the information to be transmitted. The great advantage of EDIFACT messages is that they require very little storage capacity. And there are other positive aspects as well.
Data transfer with EDI: fast and secure
EDI systems allow senders and receivers to integrate electronic documents into their business processes without having to consider the partner's ERP system. Even different internal workflows of the partners have no influence on the Electronic Data Interchange.
This is what characterizes EDI:
- Transmission is seamless, without manual intervention.
- There is an enormous gain in time due to automated communication.
- Short reaction times and fast order processing are possible.
- Data exchange is error-free and secure.
- Data entries do not have to be repeated.
- Processes are transparent.
- There are cost reductions in data transmission and personnel deployment.
- Processes can be designed more efficiently.
- The business relationship can be intensified.
The introduction of EDI is too costly for SMEs
What is standard in large companies in industry is not yet really established in the logistics sector. Studies by the German Logistics Association (BVL), for example, show that almost all processes are digital in only 19 % of companies. In 75 % of the participants, the exchange of data and information is digitalized, but paper, fax and telephone still play an important role.
Many small and medium-sized companies are aware of the positive aspects of EDI. However, they shy away from digitizing their data processes. The reason? The fear of an immense effort for implementation and operation, combined with high costs. This is because all systems that generate or process documents must be linked to the EDI system via interfaces. In addition to the ERP system, these include the warehouse management system, special production and financial software, and programs for customs clearance. Integration into the existing structure thus poses major challenges for IT.
The EDI connection of suppliers
Über die EDI-Anbindung vernetzen sich Unternehmen und Kunden, Hersteller, Transportunternehmen oder Lieferanten. Für die Lieferantenanbindung per EDI gibt es verschiedene Möglichkeiten. In Frage kommen beispielsweise direkte Verbindungen über eine Standleitung oder die Integration in ein sicheres privates Netzwerk, das von einem Provider kostenpflichtig bereitgestellt wird (value added network).
However, there are also simpler, transparent solutions for communicating digitally with suppliers. With these EDI alternatives, ideally not only those suppliers are connected who have an EDI interface. Those partners who do not have an EDI infrastructure can then also benefit from the advantages of a digital solution.
Advantages of a powerful EDI alternative for companies:
- All order, delivery, customs and invoice documents in one easy-to-use system
- Accelerated, automated order processing
- Reduced workload for purchasing and receiving departments
- Timely delivery
- Low administrative costs
- Easy integration of scheduling systems such as ERP, LVS or inventory management software
- Automated integration of capacity queries at the supplier with comparison of fluctuating daily prices
Advantages for suppliers:
- Real-time information on current orders and order changes
- Increased planning reliability due to outlook on future orders
- Shorter reaction times
- Reduced workload due to automated creation of documents such as order confirmations, shipping notifications, bar and QR codes
- No investment necessary
One example of this is the SaaS solution LIEFERANTENPORTAL.DE from REMIRA. The web-based tool can be implemented cost-efficiently and without much effort. With this form of WebEDI, partners can interact via the browser. Special hardware or the installation of additional software is not necessary. All suppliers are integrated into the digital supply chain - regardless of whether they have their own EDI infrastructure.
Additional possibilities compared to EDI systems
When selecting the appropriate EDI alternative, users should ensure that all communication takes place online and in real time. Data exchange must be fast, secure and error-free. This is the only way for all users to have a precise overview of the information and goods flows in their supply chain at all times.
Solutions such as LIEFERANTENPORTAL.DE create additional possibilities. One example is the integration of a demand forecast from the ERP system or the disposition tool used. In this way, order forecasts from the purchasing company can be matched with the production capacities of the suppliers. This process creates a new level of transparency in the relationship between buyers and suppliers. In addition, orders can be tracked using the order tracking function. Buyers can thus always call up all important functions clearly - and on just one platform. Labeling is also handled by the software-as-a-service offering. Suppliers are provided with the individualized labels in advance. This significantly speeds up the goods receipt process.
Conclusion
Reliable and powerful solutions are available that enable companies and their suppliers to exchange data electronically without having to use EDI in the traditional sense. The tools are designed in such a way that (almost) no technical effort is required and the costs are manageable.
Would you like to get to know an EDI alternative or would you like more information on this topic? Then arrange a free web session with one of our experts now or get a non-binding test account for LIEFERANTENPORTAL.DE.
