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The Pros & Cons of EDI

Communication is key to a successful business, just ask anyone.

That’s why it’s even more important for companies like yours to keep up with common business protocols like electronic data interchange. EDI has been a standard for electronic communication since the 1960s, long before anyone began to dream of selling products over the Internet or to a customer using nothing but a tiny computer they carry in their pockets.

Taking a Hard Look at EDI

EDI can be a boon to companies like yours, but not every business requires EDI in order to function.

If your only goal is to work with customers directly and your suppliers are willing to accept orders processed manually or by other means, you may never have to investigate an EDI system, but for other companies, especially those that do a lot of B2B transactions, it can be an invaluable resource for a variety of reasons.

EDI can be a huge cost- and time-saver for businesses that process large orders from other companies. Since there’s very little manual intervention, the costs are low and orders are extremely accurate. Orders are inputted by trained operators, but practically everything from that moment on is automated. Losing the paper and the potential for transcription errors makes business easier and more environmentally-friendly, as well. The high level of security involved in EDI transmissions also means that you have a lot less to worry about.

Industries like healthcare, automotive, financial services, tech and retail have used EDI extensively for decades without problems. This doesn’t mean that EDI is without flaws, but it does say a thing or two about the reliability of the format. Even so, EDI isn’t perfect and comes with a few negatives.

These include the expense of the system itself, the cost of training employees and ongoing expenses related to maintaining a backup and the security for the system. EDI can also be confusing since it operates with several standards in use simultaneously. Training is vital for EDI-related employees to avoid problems related to those fluctuating standards.

Making EDI Cheap and Easy

If you hope to expand your operations to a larger market that will demand you utilize EDI, it may feel like a daunting task to implement everything you need at a cost you can afford. There’s good news on this front, though.

Instead of building a costly EDI system and learning EDI protocols yourself or hiring an experienced EDI operator for your facility, you can treat EDI like software as a service. EDI doesn’t live on the cloud, but you can transfer the job and upkeep to your favorite 3rd party logistics firm. Many of the best 3PLs have EDI systems in place and trained employees you can utilize, saving you even more time and money.

EDI can be a great way for your small business to expand its networks and connect with larger businesses, but it’s also often a headache to set up and can be a major expense. Companies already working with a 3PL can easily reap the same benefits by asking about adding EDI as a service in their package.

July 06, 2017
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