EDI BENEFITS

 Benefits

Efficiency is one of the main advantages of Electronic Data Interchange. In Electronic Data Interchange, sending and receiving business documents can be done within a few seconds, where it takes days and weeks if the documents are exchanged via postal services. This will surely reduce the costly delays of transactions, saving both time and money.

Computers process EDI documents without human interactions. This improves the accuracy of the exchanged data by minimizing data entry errors in manual keying and typographic errors in handwritten documents. Therefore, the time and cost of reprocessing erroneous documents will be eliminated.

Unlike in traditional postal services, there’s no need to inspect and follow up each stage of a B2B transaction. If the delivery is successful, the message sending party will get a receipt of acknowledgement within a few seconds. Even if there’s something wrong in a transaction and the documents get rejected, there’s always the ability to correct and retransmit them without any delay.

Automating paper-based tasks eliminates the labor-intensive processes and improves the productivity of the labor force. Therefore, the staff can use the excess time to concentrate on critical tasks which need more attention.

Electronic data exchanges eliminate redundant tasks and avoid generating duplicate documents.

EDI reduces the cost of printing and postage of paper documents and the cost associated with the long transaction process.

Electronic Data Interchange enhances the security of transactions by sharing data over secure protocols like AS2, SFTP, etc.

It improves traceability by providing real-time status reports. By integrating EDI software with companies’ internal systems, users can easily collect business data and analytics.

EDI is like a common language where companies all around the world link together. This helps both large and small companies to expand their marketplace.

It is an environment-friendly replacement for tons of paper-based documents exchanged in large scale companies daily. This helps corporates to pay off their social responsibilities and maintain positive goodwill.

Limitations

When going for Electronic Data Interchange, the migration process might be quite expensive for smaller companies. The initial setup is way more time-consuming. Companies may have to rearrange hardware resources and redeploy software to be compatible with the new system. Network security considerations might be quite complicated since transactions happen electronically. But companies can eliminate these problems to a great extent by using cloud-based EDI solutions.

There are too many EDI standards. So, it’s hard to cooperate with multiple partners with different standards. If one partner’s EDI document format is not supported by the other party, those messages will be rejected by the receiving EDI translator.

Since this migration affects the whole business process and the organization structure of the company, aligning and re-educating staff to the new automated system is quite challenging. A resistance to change might also arise among employees.

Conclusion

EDI allows transacting business documents electronically across trading partners, increasing the efficiency of transactions and productivity of staff, improving the accuracy of data and reducing the unnecessary costs associated with paper invoices. There are different EDI transmission methods and standards which support communication in a variety of industries. The strategic business level shows the highest benefits of EDI based operations. Hence, companies should focus on the big picture when moving to Electronic Data Interchange.

General BENEFICIAL  Definition :-

EDI (Electronic Data Interchange) is a process of transferring data / documents electronically between several machines within an organization in a format that can be recognized on each of these machines. Generally used for transferring. Business transactions with a compatible computer system, for example between ATM machines, between banks. With the same protocol, each of these machines can be said to communicate with each other so there is no need for manual interference.