Electronic data interchange (EDI) is the electronic communication of business transactions such as purchase orders, confirmations, invoices and shipping updates between suppliers and trading partners. Once handled by old school paper documents and faxing, EDI now happens electronically through cloud-based software.
Why is EDI important?
For suppliers, EDI is all about compliance. When a supplier adheres to a trading partner’s EDI requirements, they are more likely to deliver exactly what was requested, when it was requested and where it was to be delivered. They’re also less likely to experience chargebacks. A chargeback is a financial penalty that a trading partner assesses on a supplier when the supplier doesn’t meet their EDI compliance requirements. Persistent non-compliance and chargebacks will result in a low retailer scorecard from the retailer. Earn enough low retailer scorecards and the relationship will likely be over soon.
How does EDI work?
EDI documents flow both ways, from trading partner to supplier, and supplier to trading partner.
It’s useful to think of EDI in three steps: Preparation, Translation, Transmission. Let’s use the EDI 856, otherwise known as the Advanced Shipping Notice (ASN), as an example.
A supplier prepares the ASN by inputting shipment details – such as product information, quantities, dates, and carrier information – into a document form in the EDI platform.
The EDI platform then translates this information into raw data as it transmits the ASN to the retailer.
Diver deeper: How Does EDI Work?
What are the benefits of EDI?
EDI, and specifically a finely-tuned EDI platform, is game-changing for suppliers. EDI automates manual tasks, reduces errors (caused by those pesky humans), minimizes risk, eliminates chargebacks, and ultimately, strengthens trading partner relationships.
For trading partners, EDI ensures they get exactly what they want, when they want it.
With eZCom’s award-winning EDI platform, Lingo, suppliers gain access not only to elite, user-friendly software, but also accessible U.S.-based customer support and dedicated development and integration teams.
Integrating with other business systems
Modern EDI platforms like Lingo integrate with numerous business systems to increase efficiencies and reduce costs. From accounting systems and ERPs to 3PLs/WMSs and eCommerce platforms, EDI integrations can help suppliers improve communications between internal systems and with external trading partners.
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