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What is EDI?

Posted on 30th January, 2020 What is EDI?

The digital world has made it a lot easier to transfer information, not just throughout the country, but throughout the world. As long as you have access to the internet or a mobile Wi-Fi signal, you will be able to access and input information and updates to databases. This is an essential facet of modern commerce and plays a particularly key role in the world of logistics, warehousing and distribution.

The interchange of the future

Electronic Data Interchange, commonly abbreviated to EDI, is the way businesses communicate and transfer information electronically that would previously have been done on paper. These include things like purchase orders and invoices that in the past would have been written out and posted. This would generate a great deal of paperwork, which in itself could become a logistical nightmare. EDI allows for the fluidity and flow of information between two parties, with none of the associated paper trail.

A two-way street

EDI has been around in various forms since the early 1970s, but the way digital technology has advanced in the last two decades has massively impacted on every aspect of our lives. EDI software creates a data exchange between two or more computers. These portals are typically used for the fast transfer of business information within companies and between business partners, such as suppliers and customers. There’s a variety of different EDI software packages available – a logistics partner such as Boughey Distribution uses Microsoft Biztalk to manage its EDI messaging into and out of its ERP system from SAP via a secure portal.  

Streamlining the business

The EDI model continues to prove to be a major benefit to businesses, by lowering costs and improving speed, accuracy and business efficiency. The more companies can implement EDI processes, the more efficient and streamlined their service will become.  Business entities that conduct business electronically are referred to as Trading Partners. Both parties will have to be using similar EDI software and EDI compliance ensures that you are able to exchange business documents in the way the people you do business with require. Each piece of documentation must adhere to the specific EDI format, to ensure the successful exchange of EDI documents. The most common forms of EDI data exchanged are purchase orders and invoices.

Out with the old…

The manual process to generate these documents used to be much more complicated. For example, a customer would create and send an order, which might be by phone, fax, email or post. You’d receive the order via whatever media it was sent in and enter the order into your system, possibly electronically, but sometimes typed out manually. You would enter your order into your internal computer system, which created an invoice to fulfil the order. If an order of despatch needed to be created, that would generate more paperwork. Your customer would receive the order, enter the invoice into its internal system, to then it could be fulfilled.

…in with the new

The EDI process is much simpler and more efficient. The modern process is simply the automatic exchange of formatted EDI documents between yours and your trading partner’s internal computer systems. The cycle is drastically reduced and there is no paper and no personnel involved. Though email is a digital communication, it still needs to be opened, read and processed by an actual person.  EDI does away with even this aspect of the process, making it truly a seamless digital solution.  

EDI goes a long way

Boughey Distribution has its own bespoke EDI processes in place in its warehouse and distribution  centre in Wardle, Cheshire. By adopting the EDI system, we are able to work with a variety of trading partners in a much more cost-effective way, with real-cost savings and real-time tracking. The system enables us to work with the biggest retailers to the smallest start-ups to ensure that they have a logistics partner and stock provider all of them can trust. Our Electronic Data Interchange goes a long way to making that fully reliable service a reality for all our clients, whoever and wherever they may be.

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