Today we pick up our series on all things Electronic Data Interchange or EDI by busting the common myths around implementing an EDI Integration program. The post was written for shippers who may want to do it themselves, but do know, that if you are a shipper looking to achieve further efficiencies through automated technologies like EDI integration, and don’t want to go about the implementation of an EDI Integration, you can skip the entire process by signing on with a third party logistics company, like Cerasis, who has already mastered this technology and includes it as a part of our transportation management system and services we provide.
Top 6 EDI Integration and General EDI Myths Busted
Shippers, both large and small, benefit immensely from EDI integration. So why is there so much confusion around the topic?
The truth is, many myths have circulated throughout the business world, and electronic data interchange is the focus of quite a few of these myths. These myths obscure and mislead: among them are the misconceptions that EDI is expensive, complicated and not worth the investment.
Read the top 6 myths surrounding electronic data interchange or EDI integration, and how we debunk each one of them.
Myth: It’s Too Expensive
The implementation of an EDI integration is incorrectly assumed to be a costly endeavor with little ROI.
Truth: It’s Well Worth the Cost
While there is a cost associated with EDI integration, it is definitely worth it. The cost of EDI integration is immediately justifiable. Big box retailers like Walmart and Target refuse to do business with retail and shipper fulfillment companies that do not have EDI integration. So, for a direct response marketer, it’s actually more expensive to not have EDI integration, because without it you’re closed off from potential sources of business. For this reason alone, EDI integration is well worth its initial implementation cost.
Programming interfaces, creating maps and other upfront tasks can be more than new organizations expect when they first begin down the path to implementing EDI. However, that does not mean that return on investment (ROI) is difficult to achieve. Automating transactions that were done manually provides a significant savings on each transaction. For example, on average the cost savings from automating a manually processes purchase order is $9.89, for an invoice is $11.58 and a remittance is $12.96. So you can see the savings for each document transacted and when you multiply that savings by the number of manual documents that are automated, you understand how a positive ROI can be achieved.
In addition to opening new business opportunities, EDI integration reduces the risk of chargebacks. Non-compliance with certain regulations results in financial penalties, and these chargebacks dramatically impinge upon your business’s bottom line.
Myth: It’s Complicated
The myth that EDI integration is complicated has dissuaded many shippers from utilizing an EDI system.
Truth: It Simplifies Your Business
EDI integration helps you streamline your key business practices, which ultimately translates to better overall communication. The language and documents of shipping are complicated and immense. Since EDI is the lingua franca of carrier, 3PL, and shipper partner communications, being without it means you’re missing opportunities to be involved in standardized and frictionless business conversations
Myth: It’s Disruptive
It’s a common misconception that the implementation process of a an EDI system interferes with your business practices.
Truth: It Increases Productivity
EDI integration takes little time, and the payoff is near-immediate. Electronic data exchange decreases the manpower you need for manually processing a paper order, which makes transactions flow faster. This enables shippers to redirect those man-hours to more critical business processes. This is even more true for shippers who engage with a shipper who has an EDI integration practice and system already in place. The moment you start shipping with a 3PL as your partner, you already have EDI built in!
Computer-to-computer data transfer is also more efficient and reliable: Far fewer errors occur with EDI than with manual data input. While paper orders may take upwards of 10 days to fulfill, EDI integration gets the same orders out within a day.
Myth: It’s Full Of Bugs
Many businesses are concerned that once they implement an EDI system, they’ll need to “weather the storm” of bugs that come with new software.
Truth: It’s Tried-And-True
Testing and approval are vital components of any good EDI integration process. Your 3PL partner must recognize that testing is critical to implementation because it keeps your shipping and carrier relationships on stable, solid ground. Once your EDI integration is mapped, the system is ready for all of your future orders, as well.
Myth: EDI Integration and Technology is on the Decline
The top myth by far is that EDI will disappear in favor of Internet standards such as XML and its variants or some unknown technology to be discovered.
Truth: EDI Use and Traffic is only Increasing in USE
Though this notion comes up less often than it used to, this myth does not go away, even after years of continued EDI traffic growth. IBM Sterling Collaboration Network, which is IBM’s value added network, has seen year over year growth in traffic during the decade. Additionally, companies continue to depend on EDI. Looking at 2013 research, 46% of the companies surveyed use EDI “heavily” with an additional 31% reporting “some: EDI usage. On its face, this is an easy myth to bust; EDI has worked for decades and is deeply entrenched in companies and supply chains. And as the old saying goes “if it ain’t broke, don’t fix it.” I don’t see companies ripping and replacing EDI intergration anytime in the foreseeable future. Sure companies will add on to EDI and complement it with newer technologies and formats, but EDI shows no signs of going away.
Myth: The Internet will Replace EDI Integration
When the Internet and World Wide Web first came into wide usage, many industry commentators speculated that EDI could not be used with the EDI network technology.
Truth: The Internet has Spurred More Applications of EDI Integration and Other Complimentary Internet Technologies
Nothing could be further from the truth. As we have seen the Internet is the communications backbone of choice for most current EDI integration systems. Instead of being incompatible with EDI or replacing it, the Internet has spurred growth in traffic and in EDI users, making it more accessible to more organizations.
EDI technology integration may have upfront costs associated with it, but the return on investment is quick and tangible. Don’t fall for the myths associated with EDI integration. Make sure you choose the right order fulfillment vendor so that your road to retail success is properly mapped, tested and approved.