EDI continues to prove its major business value by lowering costs, improving speed, accuracy and business efficiency. The greatest EDI benefits often come at the strategic business level.
According to a recent research study from Forrester, EDI continues to prove its worth as an electronic message data format. This research states that “the annual volume of global EDI transactions exceeds 20 billion per year and is still growing.”1 For buyers that handle numerous transactions, using EDI can result in millions of dollars of annual savings due to early payment discounts. From a financial perspective alone, there are impressive benefits from implementing EDI. Exchanging documents electronically improves transaction speed and visibility while decreasing the amount of money you spend on manual processes. But cost savings is far from the only benefit of using EDI.
But let’s start with cost savings anyway:
- Expenses associated with paper, printing, reproduction, storage, filing, postage and document retrieval are all reduced or eliminated when you switch to EDI transactions, lowering your transaction costs by at least 35%
- A major electronics manufacturer calculates the cost of processing an order manually at $38 compared to just $1.35 for an order processed using EDI
- Errors due to illegible faxes, lost orders or incorrectly taken phone orders are eliminated, saving your staff valuable time from handling data disputes
The major benefits of EDI are often stated as speed and accuracy:
- EDI can speed up your business cycles by 61%. Exchange transactions in minutes instead of the days or weeks of wait time from the postal service
- Improves data quality, delivering at least a 30—40% reduction in transactions with errors—eliminating errors from illegible handwriting, lost faxes/mail and keying and re-keying errors
- Using EDI can reduce the order-to-cash cycle time by more than 20%, improving business partner transactions and relationships
However, the increase in business efficiency is also a major factor:
- Automating paper-based tasks allows your staff to concentrate on higher-value tasks and provides them with the tools to be more productive
- Quick processing of accurate business documents leads to less re-working of orders, fewer stock outs and fewer cancelled orders
- Automating the exchange of data between applications across a supply chain can ensure that business-critical data is sent on time and can be tracked in real time. Sellers benefit from improved cash flow and reduced order-to-cash cycles
- Shortening the order processing and delivery times means that organizations can reduce their inventory levels
In many cases, the greatest EDI benefits come at the strategic business level:
- Enables real-time visibility into transaction status. This in turn enables faster decision-making and improved responsiveness to changing customer and market demands, and allows businesses to adopt a demand-driven business model rather than a supply-driven one
- Shortens the lead times for product enhancements and new product delivery
- Streamlines your ability to enter new territories and markets. EDI provides a common business language that facilitates business partner onboarding anywhere in the world
- Promotes corporate social responsibility and sustainability by replacing paper-based processes with electronic alternatives. This will both save you money and reduce your CO2 emissions
1. Vollmer, Ken. Forrester, “The Future of EDI.” Last modified February 04, 2011.