Electronic data interchange (EDI) can streamline the process of effectively analysing data to verify or quantify business decisions and deliver a significant competitive advantage, according to MessageXchange.
“Modern data analytics technologies have made business intelligence more accessible to non-data analysts. Therefore, businesses that haven’t yet adopted EDI could be falling behind compared with their savvier competitors,” MessageXchange managing director and co-founder, John Delaney said.
EDI is an automation tool that allows businesses to automatically share purchase orders, shipping details, invoices, and more between business partners’ software, eliminating the need for human intervention. This speeds up the supply chain process, reduces errors and processing time, and delivers efficiency benefits for organisations along the entire supply chain.
“EDI documents flow straight to the appropriate application at the receiver’s end and are processed immediately. Data sharing is instant rather than taking days or even weeks. Collecting data is the essential first step but it’s how organisations use it that unlocks the business value that EDI brings,” Delaney added.
MessageXchange has identified three key benefits of EDI:
1. Manage stock more effectively
Manually inputting information into software around the procure-to-pay cycle is cumbersome and expensive. Companies can use the data in EDI messages to analyse how long each supplier takes to fulfill goods. Based on this, retailers can more accurately predict the right time to place a new order. Data can help predict demand and reduce the risk of overstocking or understocking.
2. Predict and conquer the slow payers
Time is the biggest challenge with a manual invoicing process because of the lag between creating and sending an invoice manually, the supplier processing it, and the business receiving payment. EDI technology creates and sends invoices automatically, reducing costs compared with paper-based systems. Organisations can use this data to easily build reports to provide visibility into order and payment pipelines.
3. Monitor supplier performance
Organisations can use the data from EDI messages to identify top suppliers by order volume or value, letting decision-makers see key relationships. When decision-makers understand how long it takes for orders to be dispatched and delivered, it becomes possible to set key performance indicators for delivery timeframes.