5 Reasons to Invest in EDI for Your Business

There are a variety of reasons businesses seek out the benefits of an electronic data interchange (EDI) solution. EDI’s blend of document standardization, process automation, and digital transmission of information make it a remarkable tool for improving efficiency, controlling margins, managing inventory, and more.  

Why your ecommerce business should consider EDI

Our partners at SPS Commerce have put together a list of five reasons to invest in EDI for your business.

1. We’re living in an omnichannel retail world

Consumers are driving the evolution of retail and the retail supply chain, finding new ways to shop and purchase goods. Retailers and suppliers are responding by adding on sales channels to make sure they’re getting out in front of consumers. These new sales channels don’t typically play nice with the older sales channels and they’re often siloed from one another.

When your sales channels can’t communicate, you risk selling the last of your inventory through one sales channel, while still accepting orders through another. Then you have to explain to customers why their order is canceled or delayed.  

If you sell through multiple siloed channels and you’ve never accidentally oversold a product, you’ve gotten lucky. As your company grows and more channels are added, the need for an omnichannel approach intensifies. EDI solutions can integrate multiple systems and sales channels to help your business achieve a truly omnichannel fulfillment and retail strategy.

2. Accurate, consistent, and thorough data is more critical than ever

When your business systems and sales channels can’t communicate, you end up relying on manual data entry and manual processes, usually at several points across your organization. The potential for keystroke errors is inherent to manual processes. When that information is transferred to other departments, the errors could be compounded across the organization.                                                                                             

Let’s pretend for a minute that every keystroke is accurate. When the data can’t be transferred automatically, more manual processes are necessary to integrate the data for making better inventory forecasting decisions. The workarounds used to combine the data often cause process errors and flawed results that could steer you in the wrong direction.  

The more comprehensive the data you collect, the more insights can potentially be gained. To get that comprehensive data, manual processes and system silos must be eliminated, and EDI automation can help.

EDI can connect your vital business systems, including ERP, IMS, OMS, WMS, accounting software, e-commerce platforms, and more. Not to mention you can more precisely collect and transmit data, leading to better forecasting for your business.

3. Tighter inventory management makes a big difference

When forecasts and decisions are made based on inaccurate, incomplete, and inconsistent data, surpluses and stockouts are common. A product that wasn’t a great performer suddenly sells out as fast as it hits the shelf. An item that looked particularly popular was actually a glitch in the data. EDI automation can help you see the big picture to make better category, assortment, and inventory choices.

Inventory visibility reduces the chances of surpluses and stockouts. EDI can help you see where your ecommerce inventory is now, where it’s coming from, and when it’s moving to is next destination. Automated inventory status inquiries via EDI can keep retailers updated on their suppliers’ inventory, and vice versa, to help keep goods flowing smoothly.

Manual steps in your inventory replenishment process can cause problems if you accidentally send the same purchase order twice or fail to submit a purchase order. EDI assists with transmitting replenishment orders only after inventory has reached a specific threshold, decreasing or even eliminating the potential for surpluses and stockouts.

4. Resources and assets are finite

As an organization matures and grows, the requirements of resources like staff, inventory, systems, space allocation, and more change. Businesses often run into obstacles that can hamper the speed of development needed to address those demands.

For example, surprise spikes in sales can cause inventory depletion, retail fulfillment delays, and late shipments, which has a ripple effect of disappointed consumers and potentially strained trading partner relationships. More sales can also put pressure on manual data entry processes, warehousing logistics, and hiring.

EDI can add scalability and agility to existing resources and assets. It enables tighter control of inventory to better designate space in stores, warehouses, and distribution centers, as with just-in-time inventory practices. 

When manual data entry tasks are reduced or eliminated, employees that performed these duties can shift their attention to other priorities that grow the business and drive innovation.

5. EDI helps you be a more valuable business partner

As mentioned earlier, consumers are driving the speed of retail’s evolution. Retailers are trying to keep up, but they can’t do it alone. They need to collaborate with the suppliers, vendors, distributors, 3PLs, and other organizations in their network.

Legacy systems and outdated processes at any point within the supply chain can slow everyone down. That’s part of why many larger retailers and big brands won’t work with a vendor or supplier that doesn’t have EDI.

Improved accuracy, efficiency, and automation is beneficial for your business internally, but also for the trading partners in your network. EDI automation and compliance can help your company retain current trading partners and open the door to new opportunities.

As an extra bonus, EDI can streamline the onboarding process, accelerating time to value with new business partners.

Conclusion

The benefits listed here are just a few of the advantages provided by EDI. The more documents and processes you can integrate and automate with EDI, the higher the potential for better sales forecasting, inventory visibility, speedy ecommerce fulfillment, and more. As consumer shopping habits evolve, more retailers and suppliers will invest in EDI to keep up with the pace of change, including your competition.

Attaining an EDI solution could help you preserve and strengthen your market share by empowering your business with the agility and speed it needs to satisfy consumers and retail needs.