The Use of Electronic Document Interchange (EDI)

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Military combat methods have inspired many information technology concepts. Electronic Document Exchange or simply EDI is one such concept that was inspired by developments in military logistics used in the famous 1948 Berlin Airlift. The military combat required transporting a vast quantity of data and information across borders.

Let’s get into the business end of the topic: What is EDI? It is an exchange of business-related documents between business partners via computers using a standard document format. EDI eradicates the pitfalls of paper-based documents and in return reduces cost, and increases efficiency by transmitting information at high speeds and reducing human errors. Importantly, EDI also helps businesses achieve their sustainability goals by contributing to the company’s “Green Footprint.”

If adopted right, EDI software or ERP (Enterprise Resource Planning) systems that have integrated EDI can provide many benefits to an organization.

Cost Benefits: All Expenses associated with paper, printing, storage, filing, and postage can be eliminated with the use of EDI.

“A major electronics manufacturer calculates the cost of processing an order manually at $38 compared to just $1.35 for an EDI order.” (EDI Basics, 2018)

Efficiency and Effectiveness A document can be transmitted to a business partner within a few seconds as opposed to paper-based documents which would take days to deliver. Confirmation and acknowledgment of the information can be received instantly.

“EDI can speed up business by 61%” (EDI Basics, 2018).

The high accuracy of the data transmitted increases the effectiveness of the information sent to business partners.

Security Electronic mechanisms are the most reliable channel for transmitting data or documents. The reliability helps build a trusted relationship between business partners.

Integrating EDI with ERP systems such as Infor M3 can be complex and challenging. The first step of implementing an EDI solution is establishing a common EDI standard with your business partner. It is important to remember that your business partner will not have the same ERP system. Hence, the EDI standard will act as the common language between the parties involved. Commonly known EDI standards are EDIFACT and ANSI X.12. It is always wise to have an EDI partner who provides a common portal for the two organizations that are involved. The EDI partner will play an intermediary role between the organizations when transmitting documents.

EDI solutions integrated into Infor M3 can transmit documents such as Purchase Order documents, Advance Shipping Notes, Tax Invoices, and Supplier Invoices. EDI transmits documents and their respective acknowledgment messages. Therefore these documents can be both Inbound and Outbound documents. Standard EDI formats such as EDIFACT and ANSI X12 can be integrated depending on the requirement of the business partners. These formats define standard EDI transaction numbers for different documents. E.g., a PO is 850, Invoice is 810.


Author:
Rendl Casiechitty
Consultant


Joined Fortude 6 years ago, Rendl is an Infor-certified Functional Consultant with expertise in Infor M3 Customer Order Processing, Product Data Management, Procurement and Warehousing modules. He has worked with global clients in the Apparel and Food & Beverage domains. Rendl is currently reading for Master of Business Administration degree at the Staffordshire University, UK.