Covid-19 restrictions has seen many businesses face staff shortages and supply chain delays, while forcing them into a different way of conducting business with digital technology at the forefront of the change.
Electronic data interchange (EDI) can play a significant role in the emergence from Covid-19 for retailers and their ability to compete effectively into the future, according to MessageXchange.
EDI streamlines the process of exchanging information and goods, reducing errors and minimising the time and cost of a transaction. Research shows EDI can reduce the cost of a financial transaction by up to 90%. To maximise the value of EDI, it’s important to understand how it works and where it can deliver improvements.
Retailers spend time and money on daily activities such as submitting purchase orders, tracking the supply chain, monitoring stock levels, and managing invoicing and payments. This can be time-consuming without automation, which holds up, and adds cost to, the procurement process.
Manual processing can introduce errors on purchase orders and payments, which leads to delays receiving stock and can even incur penalties such as late payment fees. It can also mean retailers and suppliers pay more in processing costs and administration time.
Through EDI, files such as purchase orders, advanced shipping notices and invoices are exchanged directly between the retailer’s and supplier’s software, facilitating near-real time interactions.
MessageXchange managing director, John Delaney said many successful retailers look at EDI as a strategic operation and in turn, a critical part of the business, but is something often overlooked by smaller retailers.
“EDI can have a huge positive impact on the bottom line and this can be a real advantage in the post-Covid emergence,” he said.
“Companies usually look to EDI to reduce errors from manually entering PDFs or using OCR scanning, to speed up procurement processes and reduce costs. EDI also provides visibility into the supply chain and frees up employee time and resources for other important tasks.”
MessageXchange has outlined three things businesses should consider to set themselves up:
1. Understand the business outcome
Having a clearly defined outcome and understanding of what the business is trying to achieve from EDI will help ensure it stays on the right track. The outcome might be to remove manual processes, get better visibility of procurement or better manage inventory.
2. Understand where the business is at
Businesses need to be aware of what the current software used for procurement is capable of, including whether it supports the message types the business wants to use such as advanced shipping notices and whether the business has the technical resources required in-house.
EDI will streamline a lot of the procurement processes in the business, from ordering, receiving stock and updating inventory to receiving and paying invoices. With any new technology, employees will need training on how to use it properly for the solution to be truly effective. EDI only works if suppliers are on board too. Retailers must consider each supplier they work with, paying special attention to their limitations. Knowing a supplier’s capability is a crucial step to consider early on to avoid shortfalls, such as knowledge, technology, or funding.
3. Find a partner, not just an EDI provider
Naturally, many questions will arise throughout the EDI implementation process. Having a trusted partner can help shorten the roadmap from starting out to realising the outcome. The information the partner provides can be leveraged during the implementation stage, and beyond.