Great news! You just landed that major account! The bad news? You must now be EDI compliant.
EDI is all about saving money through increased labor efficiency and elimination of data entry related errors in the business process between business partners. Done the right way, EDI can be extremely beneficial for all parties. Studies have shown a successfully automated EDI program can reduce costs by $75 to $125 per Purchase Order processed. Your partner knows this, and that’s why they won’t do business otherwise.
Not all EDI options are created equal, and it doesn’t always increase efficiency for all parties. Your partner says they have a vendor portal you can use, or you can contact a 3rd party company to setup a webform option. Very simple and seemingly inexpensive. In very low transaction volume relationships, this method can be a good fit.
Vendor Portals: Is Free Really Free?
Vendor portal options are usually the “free” option. It’s a website provided by your partner where your company can print reports and enter data manually. The typical process is that someone logs in, prints the order details, and then keys the PO details into your ERP system. You are then expected to enter a detailed confirmation into the web portal. When the product ships, the details of the shipment have to be entered into the portal so the partner knows what is coming, and how it is packed by carton and by pallet. Special labels then need to be printed for each carton and pallet related to the shipment. Because the labels are very specific, your warehouse team must apply the labels to the correct boxes and pallets.
Next, the invoice details have to be registered. Finally, payment information will need to be printed and applied in your system. For something that is “low cost,” the labor costs can actually be astronomical. If a data entry mistake is made, there are typically fines that can cut your profit margins! These costs are rarely measured by most firms, but can definitely add up.
EDI webform portal options solve the problem of multiple websites (portals) for various partners by enabling one single data entry portal for all partners. An EDI webform portal requires less training than multiple vendor portals, but there is a cost for the portal and each transaction entered into it. However, the costs of data entry labor and data entry errors still remain.
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Integrated EDI Can Alleviate Your Concerns
Another option for handling EDI is an integrated approach advocated by Data Masons that truly drives down the cost of doing business and frees resources to help grow your business instead. The objective of the platform is to eliminate data entry processes using a “lights out” automated model. Business users are alerted when issues arise with plain language messages that enable a “management by exception” experience. The ROI of an investment in the platform can be huge as documents can be integrated and processed for pennies, and in some cases less than a penny. Most importantly, your business operates more quickly and accurately with an automated and integrated approach. A strong provider can connect your ERP to many external touchpoints and internal systems such as a WMS or shopping cart solution.
Take care when evaluating your options for an EDI process - both today and in the future. Consider factors such as your anticipated growth in transaction volumes over the next 2-3 years, the amount of time your team spends entering data, what all of this effort is truly costing your firm in terms of missed opportunities and overhead, what your transaction count per month might be, and the cost of manual data entry and mistakes. For example, drop ship programs can create efficiencies for you and your customers but also create new burdens. EDI automation removes those burdens – increased business without increased headaches.
EDI integration is easier than you might think. Our white paper explains how.