What is “EDI” ?
26 June 2023
26 June 2023
EDI, or Electronic Data Interchange, is a practical, fast and secure tool that enables your IT system to interact with your trading partners’ information systems end-to-end, and without human intervention, thanks to electronic exchange protocols.
In short, it’s a good way to optimize your exchanges, save time, simplify your users’ lives, cut costs and dematerialize your business documents (supply chain, dematerialized invoices, etc.).
The principle is to automate the generation and dispatch of outgoing flows, and the reception and integration of incoming flows, so that purchase orders, shipping notices, invoices, stock statements or any other type of document can be processed without human intervention.
Virtually every type of transaction your company carries out with its trading partners by e-mail, telephone, mail or fax can be managed by EDI ! (see the EDI diagram in the definition).
To do this, you need to connect your computer system to EDI software.
EDI exchanges require secure, customized communication systems: AS2, WebServices, sftp, oftp or Value-Added Networks. These are VANs, private networks with high levels of security to ensure the integrity and traceability of exchanges.
To enable all partners to communicate with each other, Electronic Data Interchange provides a standard language shared by all.
So, whatever the management system, the language is common, and deploying EDI to new commercial partners is simple. This common language is EDI standards, which ensure the interoperability of computerized exchanges via the various interfaces.
EDI standards structure messages in terms of form and content. EDI standards include EDIFACT, XML, ANSI X12, EANCOM, TRADACOM, VDA, Odette and others.
Whatever your activity – industry, retail, logistics, transport, finance, mass distribution, healthcare, public services, etc. – EDI can be applied to your company’s various processes.
In addition to meeting the demands of your trading partners, Electronic Data Interchange enables you to automate the generation, sending, receiving and recording of your exchanges, and thus gain in efficiency.
According to a study published in 2016 by DART CONSULTING, the EDI market is expected to grow by 14% per year until 2020.
An order sent by telephone, email or post has to be entered manually into both the customer’s and the supplier’s management tools.
EDI orders are automatically integrated into the partner’s ERP system. The management information system automatically retrieves the information required for preparation, dispatch and invoicing.
By eliminating re-entries and manual interventions, errors and disputes are reduced, and information processing is improved.
No more printing, typing, filing, telephone checking, enveloping…EDI documents can be exchanged in a matter of seconds.
Your business processes no longer have to wait for administrative processing !
The dematerialization of documents facilitates tracking from order to payment.
Traceability of products and logistics units is also enabled and simplified throughout the supply chain. What’s more, with a real-time view of transactions, your company can react and make strategic choices more quickly.
Electronic Data Interchange gives you a common business language with your partners, a good way to perpetuate and optimize this relationship, whatever the country.
Your users save time. They no longer have to manage paper documents. As a result, they can focus on their core business and on higher value-added activities.
By eliminating paper and simplifying archiving, Electronic Data Interchange reduces errors and disputes. As a result, processing and administrative costs are considerably reduced.
In the case of electronic invoicing, savings can reach 90% per document!
According to GS1 France, the benefits of EDI for trading partners are estimated at €18.5 per order, €0.5 per pallet for dispatch advice, and €16.3 per invoice (for tax purposes).
Has a business partner asked you to set up EDI flows? Now you know that far from being a constraint, this is a real opportunity for your company. By extending EDI to other trading partners and to as many information flows as possible, your EDI system could even become a real asset. That’s why it’s so important to choose the right EDI service provider.
Tenor supports you at every stage in the implementation of your EDI flows. Whether you opt for a traditional or WebEDI solution, Tenor can support you from the approval of your supplier flows to the deployment of your subcontractors.