Two Benefits of EDI System Integration into ERP Software

As ERP consultants, we often hear from our customers, "What can an EDI do for my ERP business?"  EDI is an acronym for Electronic Data Interchange.  The term describes broadly a set of generally agreed upon standards that define the structure of files that can be sent electronically to transfer messages.  These messages are commonly used to transfer documents such as Purchase Orders, Invoices, Advanced Shipment Notices, etc.  The main purpose of an EDI system is to transfer types of documents to be sent without any human intervention, or paper forms being sent which can cut down on processing time, data entry, and improve data accuracy.  EDI is a broad term, describing the system in which a variety of file formats and types pass between trading partners.  It can be very difficult to keep up with all the EDI requirements and changes that require reformatting.  Many busineses struggle with steep penalties called charge backs if the formats are wrong.

There are two major  that are accomplished by integrating an EDI system into your existing ERP.

1. EDI manages the import or export data to or from the ERP system in a format compatible with EDI specifications
2. EDI transfers data to desired recipients

Not all ERP systems have an EDI functionality built in, and must rely on third party software to handle the data import.  Once the EDI is setup to work with the ERP system and tested, together they can facilitate the transfer of large amounts of data without employee intervention.  The advantages to running on auto-pilot is twofold: reduction of human error, and the conservation of time and manpower.  An additional perk of running the two systems in combination is that transactions can be processed almost instantaneously, speeding up the cycle time for orders, so that your business can continue to grow without additional costs.

If you are considering integrating an EDI solution into your existing ERP, you may want to look at what type of data you want to transfer and what existing software is currently in place.  There are 3rd party companies offering various software and services related to EDI.  They range from simple one-step solutions to any segment of the process to the all-encompassing high end solution which maintains all data and directly imports and exports from the ERP system while simultaneously facilitating the transfer of files with the EDI Partners.

One example of how this might work in a warehouse fulfillment situation:  a customer might send an EDI message with a purchase order to a supplier, which can be generated by the system when the stock level reaches a specified minimum.  That way the amount in holding can be maintained automatically, since then the supplier will already have the PO in their system, allowing them to fill the order and create an invoice which is generated by their ERP system. The invoice is then sent back to the customer.  The invoice, along with shipment tracking and delivery conformation, will then show up in their accounts payable for payment.  All of this can be accomplished without any human intervention to generate or transfer the PO or Invoice.

A note about the author:
Cameron is a technical consultant with a savvy business sense. He brings to ASI a blend of business and technical expertise.  With a background in programming and development, he specializes in a variety of software and programming systems.  These include VB programming, SQL Stored Procedures and SSIS Programming, and he has significant experience working with Sage 500 ERP and SYSPRO software systems.  Cameron is an asset to the ASI team as a technical consultant because he has the ability to understand many different ERP systems and master the specific functionalities of the various programs to set-up the most beneficial system for your business. To contact Cam or find out more about what his team at ASI can do for your business visit ASISucceed.com