Rising freight costs, port congestion and labor and material shortages: these are just some of the pandemic-fueled issues causing unprecedented global supply chain disruptions. And while companies attempt to stay ahead of these ever-shifting challenges, they’re also handling an uptick in the number of online orders, placing even greater pressure on the compressed supply chain.
Businesses have no room for human error, slow processes or wasted money in this challenging environment. To optimize supply chain management, they need electronic data interchange (EDI) automation, the digital exchange of standardized information from one trading partner to another.
EDI creates visibility into a supply chain’s back-end processes and helps companies handle complex processes. It replaces the manual, paper-based information exchange processes that often cause human errors and delays. For example, if an employee faxes an inaccurate purchase order, correcting and routing it to the right parties can waste valuable time and money. Human operators often get overloaded with work, slowing down critical processes.
Automation can eliminate these mistakes and issues. Yet despite the benefits, a mere 5% of warehouses apply automation, and more than 80% don’t use any automated techniques. While scaling up automated practices can feel like an impossible task, EDI automation can create an easy entry point for adoption.
EDI automation eliminates the exchange of paper documents like POs or invoices traditionally sent through e-mail, or even snail mail and fax. It standardizes business documents and enables exchanges between computers, even if they operate on different systems.
With EDI automation, companies can gain complete visibility into their end-to-end supply chain, which allows them to foresee issues and delays and take proactive action. It also drives agility by empowering companies to respond to a rapidly changing market and reduces operational costs by eliminating excess inventory and reducing error-prone manual tasks.
When implementing EDI, businesses generally take one of two approaches. Point-to-point EDI creates a direct internet connection between all trading partners. In this case, the company manages all integrations, mapping, monitoring and maintenance. Others opt for a fully managed EDI service, where a third-party partner handles these processes.
Companies must weigh the level of EDI management against employee time as they consider which approach to take. Direct EDI offers companies complete flexibility, control and ownership, but managing various standalone integrations across applications gets unwieldy. Conversely, managed EDI is a comprehensive solution — including technology, skills and expertise — but it offers limited flexibility and no visibility into the flow of integrations, data and mappings.
Both types of EDI require investment and patience. Customized EDI integrations rely on expensive software and experienced IT professionals, and fully managed EDI costs grow as integrations increase. Companies should also be prepared for lengthy onboarding times as they must integrate with trading partners’ differing guidelines and testing requirements.
EDI’s challenges can quickly become barriers to automation adoption, but there is a way to maximize efficiency and impact. An integration platform as a service, or iPaaS, connects systems and applications for business process automation.
With iPaaS, companies connect their enterprise resource planning (ERP) systems to their trading partners. In the meantime, application programming interface (API) integrations create a seamless user experience. Users can manage EDI transactions, streamline ERP integrations, overcome typical EDI challenges and, in some cases, enable customized ERP system integrations at scale.
Because iPaaS-enabled EDI integrates with numerous supply chain platforms, the technology expedites trading partner onboarding for faster adoption and expansion. It also allows users to see across their entire ecosystem in real time to manage complex supply chains, optimize processes and react to issues before they cause breakdowns. iPaaS helps companies keep pace with consumer expectations by providing easy access to critical inventory and fulfillment information. In the likely scenario that customers want to know the status of their orders, integrated EDI rapidly pulls that information from the ERP and puts it directly into the consumers’ hands. But without an integrated EDI, that information is hard to access and clumsy to share.
The automation that iPaaS enables also reduces manual labor costs, eliminates human mistakes and frees up time for employees to focus on the kind of high-value work that helps businesses grow. And the technology can reduce processing times and facilitate faster business cycles.
Navigating modern supply chain challenges requires modern solutions, especially since these pressures will likely drag on for years. But it all starts with transparency and easy access to information. Companies need a thoughtful EDI integration strategy that opens up a complete end-to-end view of the supply chain to increase access to information while saving money, quashing human error and proactively finding and fixing potential problems. All of this comes together to create happy customers, which increases brand loyalty and enables business growth.
Mark Simon is vice president of strategy at Celigo.
Timely, incisive articles delivered directly to your inbox.