EDI: Migrating Toward Cloud-Based Trading Networks

The Basics 

Electronic data interchange (EDI) was an innovation — allowing trading partners to transmit purchase orders, shipping notices, invoices and other documents — back in the 1970s. But most EDI systems haven’t caught up with the technological times, making them cumbersome and time-consuming to implement and use.  

Buying organizations typically establish their own specific EDI guidelines and expect their suppliers to comply with these specific requirements. This leads to suppliers building out multiple one-to-one custom integrations to meet the needs of all of their different buyers. To implement traditional EDI, buyers must integrate their back-end systems, create custom data mapping to each trading partner's unique requirements and manually validate each integration and EDI document. This process usually takes up to 12 weeks. Furthermore, the validation phase — which involves exchanging files via e-mailing human review and manual error correction — can itself take several weeks to get straight.  

Today’s EDI is painfully slow, as it takes 12-16 weeks to onboard new trading partners, lacks real-time visibility into transactions, and requires days to address production issues. 

The Future 

The future of EDI involves migrating in the same direction as other business technologies — toward cloud-based interoperable networks. Cloud-based trading networks will become a centralized location for companies to publish and maintain their unique EDI requirements.  By digitizing EDI requirements in a centralized cloud location, trading partners can eliminate building custom one-to-one integrations and can consolidate their integration into a single point.                                                       

The manual process of validating EDI transmissions is eliminated — because all EDI guidelines, rules and requirements have been entered into the cloud-based EDI network — testing and validating can be in real-time against the actual requirements, reducing the process to days or even hours. As data is transmitted to the cloud network, it can be transformed and tested immediately against built-in scenarios representing common partnership transactions, making the process of catching and correcting errors quicker and easier. Companies can build fewer integrations faster that can be reused, reducing the time it takes to go live with a new partner from weeks to days.  

Once the trading partnership is live and transactions are flowing, a cloud-based EDI system automatically stops invalid transactions from being transmitted, preventing chargebacks and damage to the trading relationship. Invalid transactions are returned with recommendations on what needs to be changed, and tools are provided to quickly make those changes, allowing business to resume. 

The future of EDI does not require costly and dedicated infrastructure. Instead, cloud EDI networks provide standard pipes (AS2, VPN, SFTP) on a reusable network, all accessible via modern application programming interfaces (APIs) — which is not part of traditional EDI solutions. 

As more and more companies join the cloud-based EDI trading network, they all benefit from the network effect. As each company onboards and brings along their supply chain network, more and more potential partners are added.  Once a company is on the network, they can start trading immediately with any other company that's also part of the network.  The future of EDI is on the path to becoming pre-connected. That means that companies will be able to onboard new supply-chain partners instantaneously, with a flip of the metaphorical light switch.  

By simplifying integrations, automating testing, and providing access to a network of pre-integrated partners, cloud-based EDI networks enable companies to get to market 10X faster. This modern approach allows businesses to accelerate revenue generation with few resources and upfront investments.   

Resource Link: https://orderful.com