What is EDI?

Electronic Data Interchange

Electronic Data Interchange (EDI) is the computer-to-computer exchange between two or more companies of standard business documents in electronic format.

There are two basic elements which comprise EDI:

• Electronic documents replace the traditional paper documents
• The exchange of documents takes place in a standardised format

Using these basic concepts any company or institution can enter the world of EDI.

What are the traditional steps without EDI?

Without the benefit of EDI, the steps to transact a purchase are as follows:

1. A buyer reviews data from an inventory or planning system.
2. The buyer enters data into a purchasing order.
3. The buyer creates a paper/electronic copy of the PO.
4. The buyer mails the PO to the supplier.
5. The supplier receives the PO and enters it into their order system
6. The buyer calls the supplier periodically to determine if the PO has been received and processed.

The time taken to create, send, input and validate a purchase order can take from several hours to up to five days, if sent by traditional mail.

The dramatic difference with EDI

Consider the same document exchange when a company places its purchase orders electronically using EDI:

1. The buyer reviews the data and creates the PO.
2. The PO is passed to the EDI software where an electronic version of the PO is created, automatically validated and transmitted to the sender within minutes.
3. The supplier's EDI system receives the PO.

What can take up to five days with paper and the postal system takes only a few minutes by eliminating the paper handling and human involvement from the process.

Remember, purchase orders are just one of the many uses of EDI.

How will EDI benefit your customers?

Speed

• Shorten lead times
• Reduced order cycle time means reduced lead times for goods and services and allows considerably lower stock inventory collection

Accuracy

• Reduced overhead required either to detect or to reprocess erroneous documents
• Reduced costs by avoiding to resend goods or services that are late or lost

Competitive advantage

• The process takes minutes instead of days
• The PO goes from the buyer’s computer through a network to the supplier's computer with no human intervention at all. There is no need to copy or transcribe the PO upon receipt, eliminating the possibility of data entry error.
• The electronic document has not been handled by any mailroom staff, postal or delivery service or data entry staff, hence no delays or mistakes are possible.

What are the steps to deploy?

In just a few steps, you could enable EDI service:

1. Provide a Purchase Order in a standardised format.
2. Share with us the specifications of the standardised format.
3. Transmit document using AS2, AS4, FTPS, HTTPS, SFTP, OFTP, OFTP2 or a connector software provided by us.
4. Undergo testing on document transmission.
5. The documents can then be exchanged automatically.
   

How much can you save?

Assumptions:
Document type: Purchase Order
File format: EDIFACT
Used protocol: AS4

If you are using the Commerce-Connections EDI Service, the cost is as follows:

Installation charge: £1,500
Monthly charge: £300

Price will be discounted if you are integrating with more than one trading partner.

Assume a monthly salary is about £1,700, you can save around £15,300 a year.

Prices may vary depending on your company’s requirements. Please make an online enquiry to talk to one of our sales representatives.