Our world is made of invisible, connecting wires. Humans live connected to multiple ecosystem and deal with a very complex network of relations. The same goes for IT systems. We can’t think of a software, an application or even a platform as having a life of its own, because they rely on each other to keep the system going, and everything within it.
How do businesses communicate?
We see it in our everyday life. The coffee we drink in the morning is in the mug because a purchase order was sent, received, processed, the goods delivered and the payment registered. It should never be a one-sided relationship because the client who generates a purchase order through his ERP system, which further sends it to his supplier’s ERP, will definitely want to know whether the latter received it, accepted it and will deliver the goods accordingly. The communication between the two is facilitated by a common business language, which is EDI, whose main function is to keep the wheels turning. We talked about what is EDI and how it has evolved over the years in this blog article.
It is also important to define what ERP represents, as we are going to tackle on the relationship between EDI and ERP further below. An ERP system is used by a company to manage and integrate the important parts of its business, such as: planning, purchasing inventory, sales, marketing, finance, human resources, and more.
An ERP (Enterprise Resource Planning) is usually referred to as a category of business management software—typically a suite of integrated applications—that an organization can use to collect, store, manage and interpret data from many business activities.
Usually, the integration between EDI and ERP is done through application programming interface (API) capabilities or connectors. Expanding EDI with such capabilities enables a more flexible B2B integration with your partners’ transactional systems.
There are multiple ways in which you can use EDI in your B2B relationship. We will further explain the difference between a web-based EDI and a fully automated EDI able to integrate with your ERP. And the benefits that come with each of it.
What is web-based EDI?
For many businesses, the first interaction with EDI comes as a result of a large retail customer requiring EDI capability from their trading partners. In order to enable their suppliers to trade with them efficiently, these larger customers will generally provide access to a web-based EDI portal.
Web-based EDI is a solution that facilitates the use of EDI thanks to a secure web interface allowing you to easily manage the exchange of your business, logistical and administrative documents with your partners. You can send and receive EDI messages, without needing to integrate them into your internal management software (ERP).
It’s great for you to use if:
- Your volume of exchanged documents does not require an automatic integration into your ERP.
- You don’t have an ERP.
- You don’t have the budget to implement an EDI solution.
It will start hurting if:
- You need to manage B2B data exchange via multiple web-based EDI portals, i.e. manually introduce data into the specific EDI format requested by the client, which can become increasingly complicated to handle and resource-heavy, compromising growth, efficiency and profits.
- There is no integration between your ERP and the web-based EDI platform: i.e. you will not benefit from what EDI was actually developed to fix – time-consuming and error-prone manual data entry, because all information must be manually transferred from your system to the EDI platform.
What is the difference between web-based and fully automated EDI?
The key difference between web-based and fully automated EDI is the fact that the latter allows your business partners’ ERP systems to talk directly to your own, bypassing the need for human intervention. Individual documents are then automatically available in your ERP system and can be searched for and edited in your existing user interface. Automating the transmission and translation between EDI and ERP solutions removes the need for manual re-keying of messages, orders, or invoices and eliminates the possibility of user error. It makes business processes run smoothly and generates opportunities for growth.
Why would you want to connect an EDI to your ERP solution?
For companies nowadays, EDI systems and ERP solutions are critical for doing business. On the front-end, EDI enables communication with trading partners and on the back-end, the ERP is used as a system of record. The integration of an EDI to your ERP solution is crucial if you want to get rid of repetitive error-prone manual tasks, save time and money, and build trust inside your business ecosystem. This is what automation of P2P and O2C business processes means and it’s never just a one-company game. It also involves your suppliers, logistics or financial partners whose business success depends on yours and vice versa.
As already mentioned, the integration is done through APIs or connectors, which facilitate direct linkage between multiple transactional systems. Modern EDIs are already programmed to integrate with multiple ERPs, making the data transfer path simpler since the intermediary file transfer server and associated processes are eliminated.
For example, to keep the transfer secure from emission to reception, DocProcess uses secure transfer protocols such as:
- SFTP
- AS2 – is the most commonly used transfer protocol for documents, highly secure and Drummond certified
- AS4 – (PEPPOL AS4) has become a standard back in 2013 and has been adopted in the PEPPOL authorized partner network (of which DocProcess is a part of) in 2016. Compared to AS2, AS4 increases XML standard and certificate compatibility, and thus data protection.
- And others (AS3, Azure Blob, OFTP, S3) depending on the customer’s needs.
How can you benefit from a fully automated EDI?
- You save time and money: reduce low value-added manual tasks and save on invoice processing, data controls, exception management and physical document disposal.
- You get accurate data: automating EDI ingestion and transformation into your ERP eliminates the need for manual data entry. As a rule, manual data entry will result in errors as data is erroneously entered. Even if 1% of orders are entered incorrectly, those misplaced values will create headaches for the entire organization. Creating an automated pipeline between EDI and ERP prevents mistakes from occurring in the first place
- You speed up sales and purchasing cycles: reduce processing time. When you can automatically exchange transactional documents with your trading partners in minutes instead of days, your organization can complete business cycles faster.
- You improve relationships with your business partners: an automated EDI and ERP integration enables your business to spend more time focusing on increasing business. No more chasing around missed orders or frantically searching for failed EDI transmissions because the data moving between EDI and ERP is accurate, automated, and easily accessed within your ERP.
Modern EDI systems are natively developed to integrate with your ERP
Modern EDI technology integrates with ERP systems and can handle inbound and outbound transactions flawlessly. Best-in-class platforms are able to handle any-to-any document conversion and offer out-of-the box compatibility with multiple ERP solutions.
For example, our BEA platform is equipped with unlimited control rules and customizable workflows to help you eliminate the need for manual work for document validation and speed up the approval process between you and your business partners. Its out-of-the-box compatibility ensures integration with over 200 ERP and accounting solutions.
Not of least importance in a business automation process is the onboarding of all your business partners. To make it easier and faster, DocProcess uses tailor-made onboarding options, adapted to every stage of your technological readiness. Our experienced team makes sure all your partners can send and receive electronic documents in no time and is capable of generating ROI within the first 2-3 months.
And since your company’s operations and processes do not exist in a vacuum and the communication between you and your partners flows through complex systems, you need smart solutions to help you take control of your in-house business processes, as well as of those that connect you to your business ecosystem. Choosing the best EDI solution for your business is not easy, but before you decide, remember to consider the major benefit you will have from using a fully automated EDI, i.e. transforming your business ecosystem into a catalyst for growth.
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