Will the Advantages of EDI Hold Good in the Future Too?
EDI in recent days is changing B2B transactions by making them online and much easier. But most of the traditional paper-based transactions using companies are facing difficulties to accept and understand the benefits of EDI, while some companies are facing an issue about the application of the EDI and where does their company go if they implement EDI? Recent developments have also started a rivalry between EDI and other systems like Blockchain and API. Thus, it is important to understand the advantages of EDI first.
Advantages of EDI
1) Shortened ordering time
There is a huge decrement in the ordering time and this is not only with corporate
companies but also with the E-Commerce websites after installing the EDI. If you wish for more orders in a short period of time then EDI is more beneficial.
2) Paper cutting
EDI has also affected positively on nature as all the works and documentation are getting done in a digital format and there is a decrement in the usage of the papers in the Corporate. So if you are a person who has a lot of virtual space but no physical place to keep a hard copy of documents then EDI is the system you need to look for.
3) Eliminating Errors
As the process is simple and semi-automated, there are fewer chances of the error being generated, no matter whether a typing error or the transaction errors can be easily traced and recovered. So you don’t need to worry about any kind of error because EDI will do it by itself.
4) Fast Response
As all the data is compiled in one software itself, the response to any query is faster via EDI. Plus, you can access the data within seconds and not only that even the response for the errors is quick to access.
Not only the documents but even payments can also be done digitally in electronic data interchange in EDI as it supports most of the payment gateways like PayPal, Google Pay, etc. Not only these, even Credit cards and Debit Cards payment systems of respective banks are also getting integrated with the EDI software.
These are some of the widely known advantages of electronic data interchange.
Application of electronic data interchange
In today’s business world, the application of EDI is extremely widespread. Let’s have a quick look
- Industries and Commerce: Here the electronic data interchange is used for the various data transactions which are common in industries like inventory data, purchase bills, invoices, analysis data reports, etc.
- Banking, financial & insurance companies: Electronic data interchange comes very handy in banks and financial companies for various data transactions between the bankers and account holders. Data like loan interests, balance inquiry, insurance policies can be transacted using EDI.
- Transport and customs: The main aspects of transportation and shipping industries are to maintain the data of the supply chain. These works can be handled with ease by using electronic data interchange
- Automobile & Manufacturing: The electronic data interchange plays a vital role in secured data transfer of all the designs and analysis of the systems between the manufacturing companies. It can also be used for various data transaction between the other departments of the same company
- Health Care sector: Here the EDI technology can be used for data interchange of health reports, insurance policies, status claims, payments, eligibility, enrollment, and dis-enrollment which can be shared with the patients and workers
Benefits of EDI
- Increasing speed of business: The best thing for any business is speedy growth, this is possible only if the documents are processed with speed, and the most common benefit of EDI is speed. It can increase the speed of any kind of data transaction up to 20% as it can manage inventory automatically, ensures that all the payments are completed quickly, etc.
- Detailed analytics: One of the most important benefits of EDI is that it gives clear insights about all the analysis done. And these details can be used for the improvement in the company regarding product, service, shipping, logistics, etc.
- Efficient B2B relationships: it has always been said that a good relationship is equal to good business, the numerous features in the EDI can get handy to any kind of situation and adapt any kind of format and convert it into the requirements of the other party.
These were some of the most popular benefits of electronic data interchange.
Difference between paper-based business and EDI based business
Let us compare this aspect with a suitable e.g.. In an inventory of paper-based business
- The system will notify the buyer that there is a shortage of items. The buyer will cross-check and create an order and places it
- He enters all the information in the purchase department system to create the PO and then mails it to the vendor
- After some days, the vendor receives the post and arranges all the items required
- The vendor creates an invoice, attaches it with the shipment and mails it back to the buyer
- Then the buyer sends the details and expenditure to the accounts department
This process of interchanging data on paper takes weeks and if any error occurs then it may take up to months to process, now imagine if this work has to be done with EDI then,
- The buyers EDI system will generate an invoice as soon as the inventory goes into a critical level and sends it to the purchasing department and to the EDI system of the vendor
- Within seconds, the vendor’s system informs the transport department and manufacturing unit about the requirements. After this, it generates the bills and sends it to the buyer’s account department with the requisition of payment with suitable links.
- Any kind of error can be modified within seconds in EDI electronic data interchange.
All this process is done within hours and without any errors. This e.g. shows that EDI is more efficient and time-saving than conventional systems.
Future of EDI
EDI is getting a boost in recent days as most of the companies are getting into it. As EDI ensures great trade communications and transactions between the companies, it is also getting complex for the companies for the management of technology around security. There are several companies using EDI
List of companies using EDI
And many more
So there comes a question about the future of EDI. Above all those questions one important question arises is will Blockchain replace EDI?
What is blockchain?
Blockchain is a set of data records which is called blocks that contain cryptography and with the help of maths circulates the data throughout the world using the internet and cryptography. How will this be a problem to EDI future scope, let’s analyze
Recently blockchain has stepped into the B2B sector and some experts see EDI as a competitor and some say EDI and Blockchain are made to collaborate. According to IDC, Blockchain adoption in 2021 in these sectors will be
- Financial services: 35%
- Distribution and services: 25%
- Manufacturing and resources: 20%
- Public sector: 10%
This is basically because there is less risk, more visibility, and cost considerations.
But on a serious note what is the future of EDI? In recent years, the advanced API and Blockchain technologies are offering tough competition to EDI. API is a set of procedures for creating any application that has access to interchange the data between two operating systems and software. So EDI has to come up with a good competition as it is getting tougher, not only for the EDI but for the rest of the competitions too. So to stay in the competition, one has to be strong enough in almost all aspects to make the future brighter and it’s always an interesting thing to see what will replace EDI?
As discussed above, the applications of EDI technology are numerous. It offers many advantages as well as benefits for your business and assists in saving your resources to a great extent. Therefore, adopt EDI in your business model as soon as possible to leverage it to the maximum level.
If you are thinking which EDI solution is best for your business then have a look at ‘MapMyEDI’ solution. It offers many exclusive advantages over its competitors’ EDI solution. To obtain more knowledge on this call us +1-423-896-1025 and Get in touch with us