Electronic Data Interchange or EDI is the technology that allows you to exchange business documents from one computer to another computer. Furthermore, all the documents will be exchanged in the standard electronic format. So how can it be helpful for the business?
When you are doing business, you will also have a partnership with a lot of businesses. And while doing so, you will be signing the documents. Thus, before finalizing the conditions, you will be sharing the document many times. However, instead of sending a person every time, what if you can simply send the document through your computer?
This is what EDI integration does, you can read more about it at integrationinc.com.
How does it work?
You can understand the working of the EDI system in simple steps.
- The first step is that a sender will export the purchase order.
- In the second step, the business document will be converted into the EDI format through the in-house computer system. This will be done through mapping software or another EDI translator.
- In the third step, the EDI document will run through the conversion software to ensure accuracy in the structure according to the EDI standards.
- The EDI document data will be transmitted either to a network (VAN) or a protocol (SFTP). Or it will be transmitted directly to the client through similar protocols.
- Thus, it creates a secure line between 2 businesses. They can share the documents without paying the documentation fees. Furthermore, there won’t be any need for authentication and credentials.
So when you are shopping, the customer won’t be facing all these. What the customer will do is this.
- In the first step, a customer will place his/ her order from the supplier (Amazon)
- Secondly, the supplier will send the invoice and thus, now both parties have their receipts.
This acknowledgment of receipts is what EDI is supporting. Until both parties acknowledge the receipt, the order won’t be completed. Therefore, after this confirmation, there won’t be a need to re-key information. So if manufacturers are doing business with different retailers, they will simply share the order information through EDI. All the order information will be directly saved in the system.
When it comes to the success or failure of software, you need to look at its market. And undoubtedly, EDI is working really well in the industry. Here are some examples of companies that have been using the system successfully.
1 – Cuckoo
The first example that we have is Cuckoo. It is one of the biggest manufacturers of home (electronic) appliances. So they are making juicers, blenders and rice cookers, etc. And because they are the manufacturers, they will need a business partner that will sell their products.
Their main seller was Amazon Vendor Central. And because Amazon is working on a larger scale, there was a need to have contact with all the warehouse managers across the country. To do so, they needed an EDI solution. A solution that will allow the managers to see the assigned orders to their warehouse. Furthermore, it will help him with printing his shipping labels.
So now they are successfully using the EDI integration system. This is helping them with their sales despite the volume of the order.
2 – Z Athletic
Another example of a successful EDI integration system in the business is Z Athletic. They are working with Amazon direct fulfillment label printing. This company manufactures sports equipment. Their biggest seller is Amazon direct fulfillment. However, because of the huge volume of orders and a large-scale partnership, it often gets difficult to manage the printing of labels.
Thus, they implemented an EDI system to make their label orienting faster and quicker. When doing a large-scale business, printing individual labels is a headache. It takes a lot of energy and effort. Furthermore, the task becomes to time taking. This will affect the business because customers will become agitated if the orders take a long time.
However, with the introduction of the EDI system in the company, the tasks became a lot easier. They were printing the labels quickly and efficiently. Thus, bulk printing became a lot easier for them.
3 – Plastic cover
This company manufactures protection solutions for floors, carpets, and other surfaces. They have industrial plastic sheets and their main suppliers are Grainger and Amazon. Having two big selling partners means the orders are in bulk amounts. Therefore, they need something for inventory management. Thus, they use the 3PL warehouse for managing the inventory. And after that, they will need a system for managing their orders. Because they have been working with the 3PL warehouse for order management and shipment. Thus, they were in need of EDI integration.
In addition to this, one of their demands was that the invoices should be posted on their online system (QuickBooks) automatically. They used the EDI integration system and have been successfully managing their business. They can now share their inventory between suppliers and their 3PL.
4 – Gemini
Another example of a case study for EDI integration is Gemini, which is a manufacturer of musical instruments. Their biggest seller is also Amazon. Furthermore, they are also in a business partnership with Costco, Musicians Friend, and Fry’s electronics.
The system that they were using was QuickBooks that were managing their inventory and financial transactions. Their demand was a system that can make direct customer order entries into their QuickBooks. In this way, they were able to process their labeling and shipment more efficiently.
With the use of the EDI integration system, their business experienced positive growth. Thus, they ultimately shifted all their other channels to the EDI system too.
5 – Proactiv
Just like other businesses, Proactiv also used the EDI system in their business. They are a manufacturer of cosmetic products and are doing business with Oracle E-business. They were managing their fulfillment channels through 3PL. After adapting to the EDI system, they are experiencing ease in their order labeling and management.