You’ve just been told you need to get EDI, or electronic data interchange, set up for your business.
Where do you start?
With the basics: What is EDI? What are your options? Which one makes the most sense for you?
What is EDI?
EDI is the electronic communication of business transactions such as purchase orders, confirmations, invoices and shipping updates between suppliers and retailers. The fundamentals of EDI used to happen on paper and via fax. Today they happen electronically, powered by cloud-based software.
What is an EDI Provider?
An EDI provider is a business that helps an organization manage its electronic data interchange, maintain compliance, and ultimately, turn EDI from a burden to a money and time saving center.There are a variety of EDI provider types, each offering a different set of capabilities.
Let’s dig into them.
VAN stands for value-added network. Via Investopedia: a VAN is “a private, hosted service that gives companies a secure way to send and share data with its counterparties.” Think of a VAN as a post office. It hosts “mailboxes” that can send and receive EDI documents.
You don’t see VANs too much these days. It’s primarily a communication method employed when a trading partner requires. In their heyday, they ultimately made it easier for a supplier to maintain its connections to a large number of trading partners. Instead of having to manage, say, 100 connections (and all the constant testing and upgrading that comes with each), they only had to manage their connection to the VAN.
While VANs provide access to a large existing network, they fall short in important areas such as trading partner set-up time (often not quick), EDI translation (not something they do) and automation (manual tasks are still required).
To be clear, a supplier doesn’t buy a VAN. They buy access to a VAN and then still have to figure out their EDI software.
Think of an EDI broker as a layer that sits on top of a VAN or multiple VANs while also typically offering a mix of additional services such as translation and validation. EDI brokers eliminate the need for third party document translation, saving time and money, but that doesn’t mean costs don’t exist: EDI brokers typically price on a “pay for what you consume” model. If volume is a concern, you should do the math. Moreover, EDI brokers are pushing those additional services, which may increase the total bill.
Bottom line? The EDI broker route can make sense for smaller, upstart companies, but it might not be the right fit for long should scale occur.
A service bureau is the complete outsourcing option. For companies looking to “just get EDI taken care of,” this can be attractive. But going the service bureau route isn’t risk free. Companies can find themselves flying blind, not having a clear sense of how their EDI is actually performing.
EDI Solutions Provider
An EDI solutions provider builds and maintains EDI software. Think of it as buying Quickbooks from Intuit to handle your accounting. EDI software from EDI solutions providers are typically feature-rich, customizable and able to integrate with other business systems such as your ERP and WMS.
Our EDI platform, Lingo, delivers global compatibility, always-up-to-date trading partner mapping, omnichannel order processing, universal EDI document exchange protocol compliance (VAN, API, FTP, SFTP, AS2 etc.), batch processing and more.
But beyond software, EDI solutions providers like ourselves back the platform up with in-house support and on-demand integration development teams.
Who should consider an EDI solution provider? Our biased answer is, “Everyone!” But objectively, companies considering an EDI solutions provider should have some level of internal EDI experience to effectively “own EDI.”
How to Pick the Best EDI Solution?
It certainly doesn’t feel like the easiest thing, does it? EDI, by nature, is complex. But with the right guidance and support, you can make the decision that’s right for your business today – and tomorrow.
And we’re here to help. Get in touch and we’ll figure out your EDI situation together.