Everything You Need to Know About Electronic Data Interchange

Posted by James Lusk on

What is EDI?

EDI, or Electronic Data Interchange, is commonly defined as the computer-to-computer exchange of business documents between business partners. The process allows a company to send information to another company electronically and in a standard electronic format, rather than using paper, snail-mail and fax machines.

Because EDI documents are processed electronically, all documents must be in a standard format. Without a standard format, each company would send documents using its own format and, much like a human speaking a foreign language, the receiver’s computer system doesn’t understand the sender’s company-specific format.

Many business documents can be exchanged using EDI, but the two most common are purchase orders and invoices. Other examples of business documents exchanged via EDI are advance ship notices, inventory documents, shipping status documents and more.

What are the benefits of EDI?

In order to grow and compete with other businesses, it is crucial for companies of all sizes to implement EDI. Those who have moved away from a paper-based exchange of business documents to EDI have experienced major benefits.

Increased Efficiency

  • Paper purchase orders can take up to 10 days from the time the buyer prepares the order to when the supplier ships it. EDI orders can take as little as one day.
  • Automating paper-based tasks allows your staff to concentrate on higher-value tasks and enables them to be more productive.
  • Electronic data exchange ensures that business-critical data is always up-to-date and can be tracked in real time. Real-time data can lead to more accurate decision making.

Reduced Cost

  • Transaction costs are reduced by about 35% when cutting out expenses related to paper, printing, reproduction, storage, filing, postage and document retrieval, according to EDI Basics.
  • Studies have consistently shown that manually processing a paper-based order can cost $70 or more, while processing an EDI order costs less than one dollar.

Reduced Errors

  • According to EDI Basics, automating the process improves data quality, delivering at least a 30-40% reduction in transactions with errors—eliminating errors from illegible handwriting, lost faxes/mail and keying and rekeying errors.

Additionally, EDI promotes corporate social responsibility by replacing paper-based processes with electronic alternatives. Your company can save money and reduce its CO2 emissions at the same time.

How can Odyssey help?

We’ve designed our services with the DoD supplier in mind, and we want to help you move toward a streamlined process.

Most of the high-volume contracting vehicles, such as FedMall, General Services Administration (GSA) and the Defense Logistics Agency (DLA), are moving toward Electronic Data Interchange (EDI) because of all the benefits we listed above. However, many small businesses don’t have EDI capabilities. And while some companies aren’t experiencing the stringent label requirements, you can bet they are coming. It is important for small businesses to use a platform that is easily adaptable and is also able to provide them with EDI services.

You don’t have to be an EDI expert to complete your transactions. Odyssey takes the pain out of EDI implementation by delivering easy-to-use, scalable and affordable EDI solutions. We also provide responsive technical support and ongoing customer service to help your company overcome any challenges.

Odyssey’s sole business is developing workflow process solutions for Department of Defense suppliers. This specificity is unique, which allows us to focus on your company’s success. We are committed to our partners and provide continual development and forward thinking solutions that help you overcome the challenging aspects of daily DoD commerce.

Contact us today to discuss your EDI needs.