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May 4, 2011

EDI is Key for Business Growth

If your business is growing and inventory is flying out of your warehouse, you are more than likely gearing up and preparing to supply large retail operations, manufacturers, or the automotive supply industry – if you’re not already doing so.

Maintaining business at this level almost always will require that documents such as orders, shipment records and invoices be exchanged electronically rather than on paper with your customers and suppliers. You may have heard the term EDI and wonder what it means, why you need it, and how it can help your business grow.

EDI – What it Means

EDI stands for Electronic Data Interchange and is an agreed upon set of standards that allow for the exchange of business documents between trading partners.

EDI – Why You Need It

EDI implementation will require your business systems to communicate with your trading partner’s business systems. All big box grocery, electronics, clothing and automotive manufacturers depend on EDI to exchange data directly with their trading partners (customers or suppliers) on a computer to computer level to manage their business.

As a matter of fact, the automotive industry has been relying on EDI since the early 70’s, rolling out and integrating their Tier 1 suppliers beginning in the early 80s. This is why your business needs to become EDI ready.

EDI – How it can Help Your Business Grow

EDI has allowed industry as a whole to increase productivity through better scheduling, which in turn results in reduced lead times which brought on lower inventory volumes and faster turnaround. Integrating an EDI solution also means more than receiving EDI transactions and then having customer service re-key the data into a backend system, a practice that often causes increased data entry costs and increased data entry errors.

Keying errors are usually the biggest factor when orders are rejected or chargebacks are incurred. It is easy to process three or four orders a day manually, but it is simply not feasible to process three to four thousand orders this way.

There is an old saying that states “if you want to play with the big boys you need the big toys”. Implementing and integrating your business systems with an EDI solution is the way to obtain the “big toys” that will allow your business the opportunity to play with the “big boys”.