Electronic data interchange (EDI) streamlines the transfer of business documents between companies by reconfiguring them into a standard electronic format. A bold step toward greater interoperability, this is done using specialized software that uses EDI mapping to standardize the documents, which allows them to be received and read using different software suites.
Sounds easy, but the latest EDI solutions are revolutionizing the way supply chain companies do business with one another. In this post, we’ll give a refresher on the benefits of EDI and take a look at what the future holds for this long-standing technology.
EDI is an important part of the supply chain
Transnational exchange runs on documents and diesel (though much less diesel than it used to). EDI allows companies to share purchase orders, invoices, customs forms, and bills of lading in a standardized format that is recognized by companies all along the logistics cycle.
The benefits of this technology are many. Businesses can reduce the amount of time and associated costs spent formatting and reformatting documents by using automation rather than manual work. It also expedites the order fulfillment process, saving your clients valuable time. EDI can also reduce errors by eliminating the need to manually re-key important data from previous documents.
These benefits have made EDI popular with companies throughout the supply chain. Though EDI is often considered “legacy tech” – invented in the 1960s and was widespread by the 90s – it’s still a central part of supply chain communication. Plus, there are new innovations and developments happening in this space that could make it even more important for gaining an edge in a competitive landscape. Let’s dig into the future of EDI and some trends to watch.
EDI and API working together
The introduction of application programming interfaces (APIs) has displaced some instances of EDI, and they do have some advantages – speed, real-time data exchange, and cost-effectiveness, to name a few. But EDI remains a popular mainstay in the industry because of its advantages over API, including better security and standardization (there’s no need for your IT team to customize anything).
The pairing of EDI and API working together is something we expect to see more companies doing in the years to come. This hybrid approach allows each one to support the other by performing specific functions aligned with their strengths. This is especially true as more legacy supply chain companies turn to digitization and IoT technologies.
Using EDI for sustainability
There are tons of printed documents and paperwork involved in warehousing and transporting goods, which not only leads to hard-to-follow or disorganized paper trails but also excess waste that harms the environment. Digitization can help reduce paper waste, but only if documents can be transferred seamlessly and securely. This is a space where ESG is increasingly important to consumers and other stakeholders.
Paper waste is more than just a missed opportunity for better stewardship. Many of your partner organizations are tied to stringent ESG objectives (maybe you are, too!). Whether you’re B2B or B2C, the environmental impact of your organization is likely to be scrutinized. EDI can help support digitization for specific processes, which cuts down on unnecessary waste and reduces material costs over time.
Increasing popularity of EDI among SMBs
Historically, EDI was mostly used by large enterprise companies that could afford to manage their document processing in-house. Most small businesses simply didn’t have the overhead to invest on EDI, which put them at a distinct competitive disadvantage. Fortunately, that’s no longer the case.
Small- and medium-sized businesses can now more easily get access to the latest EDI software trends, using both in-house software and third-party providers. For example, if you outsource your warehousing to a 3PL, you’ll get access to top-of-the-line software systems without all the overhead for build-out. Just make sure that EDI is a part of their Warehouse Management System (WMS).
Conclusion
Though EDI isn’t a new technology, it certainly has a place in the future of supply chain processes. Connection is the name of the game when it comes to future supply chain trends – as faster drayage, intermodal transport, and hub warehousing take center stage in the supply chain, moving accurate documents quickly is increasingly important. New EDI trends make that possible.
Whether you’re looking for a 3PL warehousing partner who utilizes EDI software or need a custom-built EDI network, the experts at GlobeCon can help.
Get more with your partner at the Port of Los Angeles and Long Beach. Contact us.