In today’s fast-paced, digital landscape, electronic data interchange compliance is an essential aspect of meeting commitments and maintaining strong business relationships.

Supply chain organizations neglecting to meet EDI compliance mandates risk significant financial consequences, in addition to potentially damaging trust-based relationships with customers and partners. They can lose millions of dollars per year through chargebacks, penalties and lost business if they fail to fortify EDI compliance in their supply chain operations.

The formation of trusted relationships is in many ways dependent on EDI compliance, yet businesses large and small often struggle to meet those requirements if they’re not using the proper technology. It can be challenging to navigate changing deadlines and multiple types of EDI documents, all varying in complexity depending on the customer or trading partner. What’s more, the failure to live up to service level agreements (SLAs) tarnishes partner relationships. A common issue that hinders EDI compliance and causes frequent chargebacks is poor integration across software and systems in electronic business-to-business (B2B) communication.

Not only can the absence of EDI compliance alter business relationships, but it also can negatively impact internal operations. Non-compliant businesses may experience greater delays in processing orders and receiving shipments, leading to increased costs and lack of customer satisfaction. 

Businesses that still rely on manual data entry are also much more prone to errors, which can cause incorrect orders, shipments and invoices. They may also suffer from limited visibility into their inventory levels.

EDI compliance saves businesses money by streamlining documentation, resulting in fewer violations, mistakes and supply chain delays. It also allows them to cut administrative processing time by 50%, compared to traditional order-to-shipment cycles. Finally, EDI tools reinforce security by restricting access to authorized users.

Through standardization of message formats, EDI facilitates communication and transactions between companies using different internal systems. The technology is especially beneficial to supply chain-oriented businesses such as manufacturers, distributors, retailers and logistics providers.

Companies selecting EDI-compliant integration software should consider a cloud-based model that’s built to facilitate communications across the ecosystem. Such platforms, with their blend of technological capabilities, allow organizations to modify and mature their integration solutions as their business grows. They should also look for a platform that provides end-to-end visibility of multiple supply chain partners through application programming interfaces (API)s. This can be accomplished by outsourcing these responsibilities to third-party experts who handle compliance needs. Or, if your organization has the internal resources and appropriate skills, you can also consider a platform that offers full control to bring EDI integrations in-house where appropriate.

Proper EDI compliance strengthens relationships with vendors and customers by avoiding chargebacks and SLA violations. A well-integrated EDI platform also provides greater visibility into order status, inventory and transactions between trading partners, and reduces the time it takes to process orders and deliver products.

Ultimately, businesses that adopt EDI-compliant strategies and technologies gain a competitive edge, as they can offer trading partners a more streamlined business process.

Dave Brunswick is senior vice president, products at Cleo.