EDI is truly a standard for electronic document formatting but many companies on the receiving side don’t understand why EDI appears to be different for every trading partner. Shouldn’t an order (EDI 850) from every customer look the same? That’s ideal but it’s not realistic.
Every company uses different software to run their business. The EDI standards are flexible enough to allow each company to create an 850 that best matches their accounting or ERP software. Company A might be using SAP and Company B might be using Sage. All orders that Company A sends from SAP to their suppliers will have the same EDI structure. All orders that Company B sends from Sage to the same suppliers will have the same EDI structure too, but it won’t look the same as Company A's.
Company A and B get the most benefits from EDI by standardizing the 850 from their perspective, but the same benefits don’t extend to their suppliers.
As an EDI outsourcing service provider we’ve come across hundreds of adaptations of the EDI 850 and no two are alike. Then there’s the 810 (invoice), 856 (advanced ship notice), 940 (warehouse shipping order) and so on. They are all part of the EDI standards but it’s the implementation of those standards that can be overwhelming for suppliers. The burden is on the suppliers to accept all the different EDI documents exchanged with their customers. If the suppliers want the business they have no choice but to comply and adapt.
To learn more about the structure of EDI, download the whitepaper “What is EDI and How does it work?”
EDI is something your company needs if you do business in certain industries. Unless you’re in the IT department you don’t necessarily care about the inner workings of EDI.
For those looking for a fundamental explanation of EDI, I’ve written a whitepaper titled “What is EDI and How does it Work?” It’s written with the novice end user in mind but it will also benefit those of you who are technically minded.
The whitepaper is free and available for download here: What is EDI?
Two things that frustrate companies most about EDI are the complexity and the cost. Believe it or not, EDI costs have come down considerably since the early days but they are still too high for some.
EDI costs are typically made up of three components:
1) Translation and communications software
2) Mapping fees
3) Value Added Network fees
Software can cost you thousands of dollars. VAN fees are a commodity and cost just pennies per kilocharacter. If you outsource EDI there are no software costs but other variables such as transaction fees may come into play.
The most expensive cost for EDI that is a going concern is mapping. Mapping is the process of taking EDI data received from your trading partner and reformatting it for your back office application (Accounting, ERP or WMS). When data from your back office application needs to go back to your trading partner it requires mapping too. The cost for mapping from your IT department, consultant or outsourcing service provider can be thousands of dollars for each trading partner. Sometimes the revenue you earn from a customer is too small to even cover the costs for the mapping.
What’s the alternative? At this point I’ll put on my sales hat and tell you that at Integral Group we’ve done something radical in the EDI industry when it comes to pricing. With our EDI outsourcing service there are no trading partner setup fees, mapping fees, VAN fees or transactions fees of any kind.
We charge customers a flat monthly fee based on the number of trading partners and transactions per month. We have different plans with enough room to grow without an increase in cost. When you add a new trading partner it costs you zero. There are no surprises when you receive an invoice from Integral Group.
For more information see our plans page.