Enterprise Resource Planning (ERP) and Electronic Data Interchange (EDI) are two sides of the same coin. ERP solutions consolidate processes, manage resources, and create a single version of truth for company data. On the other hand, EDI is the globally accepted protocol for transmitting electronic documents within and between businesses.
The relationship between ERP and EDI stems from the fact that documents shared through EDI, such as purchase orders and invoices, are created with ERP systems. Before transferring them to their intended recipients, an EDI platform converts the documents into a pre-configured EDI standard, which can be understood by the receiver's data management system and processed autonomously.
Similarly, when a trading partner shares data through EDI, the organization's EDI platform automatically translates it into ERP-ready information.
EDI and ERP were once separate entities, independently deployed and handled by different IT teams. However, thanks to technological advancements, EDI platforms that can readily integrate with existing ERP systems now exist. By integrating EDI with ERP, your enterprise can maximize the use of both technologies and achieve significant benefits.
Today's article explores the benefits of a robust EDI and ERP integration and how to implement EDI with ERP successfully.
How is EDI different from an API?
While EDI and APIs are both ways to exchange data, they achieve this in different ways and each serves different purposes. EDI allows businesses to exchange information in a machine-readable format via automation. API stands for Application Programming Interface. APIs allow direct communication between different software applications. APIs are subject to different standards and protocols for information exchange. JSON is an incredibly common format. APIs retrieve data immediately and are what power a lot of mobile apps on your phone.
APIs offer a lot more flexibility with regard to communication than EDI does. EDI relies on established standards, and this allows for consistent interpretation of data by parties on both sides of EDI transactions. API connections are used at various points in EDI processes.
Businesses have diverse requirements in regard to data exchange. Both EDI and APIs can address the full extent of these needs. As a result, both are needed for business growth. EDI systems play a significant role in meeting compliance requirements while APIs can enable custom integrations with legacy software and more quickly deploy new applications.
Advantages of an EDI-ERP Integration
Admittedly, the complexity of integrating EDI and ERP can be a daunting barrier for many organizations, particularly smaller enterprises that are just starting their digital transformation journey. Because both technologies use different data formats, a lot of integration work is needed to make them view the information in the same way.
Nevertheless, committing to the process can remarkably improve the value you get from the solutions. Below are several compelling benefits of investing in EDI-ERP integration.
- Enhanced Data Accuracy
ERP and EDI are both essential solutions for streamlining business processes. An ERP system minimizes manual tasks and paperwork by automating data collection, processing, and reporting. At the same time, EDI eliminates the laborious and error-prone task of translating documents before sharing them with trading partners.
When deployed together, EDI and ERP facilitate end-to-end automation, where data is collected, processed, shared, and received automatically, reducing errors along the chain. Moreover, both systems share one standard view of business information, upholding synchrony and integrity and making it easier to detect and fix data issues.
With accurate and timely data, you can make better business decisions, avoid disruptions to your supply chain, and improve customer satisfaction.
- Accelerated Business Cycle Speed
Using EDI and ERP to automate document processing and sharing removes bottlenecks like manual data entry and multiple rounds of review, allowing businesses to work faster and more efficiently. Purchase orders, invoices, stock-taking, and payments can all be created, approved, and sent with little to no human intervention.
Furthermore, EDI-ERP integration enables you to track your internal and external data on the same platform, which gives you a comprehensive view of operations as they occur. Having easy access to all relevant facts and data hastens decision-making and minimizes the margin of error.
- Improved Supply Chain Visibility
On its own, ERP is an excellent tool for managing internal transactions. However, the typical supply chain encompasses not just your organization but also vendors, partners, and even customers. IntegratingEDI with ERP extends the perimeter of data beyond your enterprise, enabling you to see more, if not all, of the supply chain.
With better supply chain visibility, you can manage inventory and resources more efficiently and even detect potential problems before they escalate.
- Higher Customer Satisfaction
Constant EDI-ERP integration allows you to maintain a reliable and consistent flow of information between your enterprise and trading partners. You can easily track transactions, spot errors or exceptions, and take prompt action on the same platform.
Streamlined information flow and visibility improve your efficiency toward resolving process, quality, and customer support issues, potentially preventing negative feedback and lost customers.
Overcoming EDI Integration Challenges
Despite the benefits of EDI platforms, EDI integration does not come without challenges. Multiple EDI standards and formats exist, and this complicates data exchange depending on what format your trading partners use.
A couple of options exist for overcoming these discrepancies. Data mapping offers one solution because it converts data from multiple formats into a standard format your EDI system can consume. Alternatively, integration platforms accomplish a similar end result by translating EDI documents from any number of formats.
Adding new trading partners into the mix can present problems for businesses. Requirements vary by trading partner making seamless integration difficult. To address this challenge, businesses can develop standardized onboarding processes and related documentation to assist their partners with onboarding.
Implementing an EDI system is complex and requires specialized knowledge for proper implementation. Companies can outsource to EDI consultants to readily fill that need or use EDI software to simplify the process.
Best Practices for Successful ERP and EDI Integration
Successfully integrating an ERP system with EDI requires careful planning and precise execution. Following best practices for ERP/EDI integration go a long way toward achieving that aim.
The type of custom integrations you need will depend on both your own company’s data requirements and those of your trading partners. Make sure to take into account the types of documents that will be exchanged.
Carefully evaluate the right integration approach for your business. Since you’ll be using it for some time to come, make sure it offers the flexibility and scalability your company needs. You might opt for a direct integration with your existing ERP system. Alternatively, an integration platform might be most suitable.
Place an emphasis on data at the outset. Accurate mapping of data is important. Choose tools that automate the process of mapping EDI documents to their underlying counterparts in ERP systems. Introducing checkpoints at various stages of the process will ensure data integrity is maintained.
How Can You Implement EDI with ERP?
Seamlessly integrating EDI into an ERP system is often easier said than done. Many businesses struggle to achieve flawless communication between these two solutions, which is required for optimal processing times, minimal errors, and consistent compliance. EDI integration with ERP is especially challenging for organizations transitioning into a cloud-based ERP platform while still using heavily-patched legacy EDI.
Although third-party integration plugins exist to bridge traditional EDIs with ERP systems, they often require additional manual customization to fit specific organizational requirements, adding both cost and complexity. To avoid compatibility issues and get the most from your systems, you must invest in an updated EDI solution that seamlessly integrates with your ERP, whether on-premise or in the cloud.
If you are like most enterprises, you probably do not have the required ERP-EDI integration expertise in-house. So, the best move is to liaise with a third-party partner, preferably an EDI services provider experienced with your specific ERP system. With the right vendor and platform, you can minimize configuration time and avoid costly downtime during the integration process.
Let REMEDI Help You Integrate EDI with ERP
Implementing an EDI solution with your ERP can be a daunting task. Nevertheless, you can achieve a successful and seamless EDI-ERP integration relatively easily with the right approach and partner.
As the leading enterprise EDI experts, REMEDI is your one-stop shop for everything you need to get your EDI and ERP working seamlessly together. With experience spanning more than two decades, we have the resources to help your enterprise achieve maximum benefits from an EDI-ERP integration.
Whether growing or already established, our EDI experts can help you implement EDI with ERP quickly and cost-effectively. That way, you can worry less about administrative tasks and focus on running your business.
Contact a REMEDI expert today to learn more about ERP and EDI deployment and how we can benefit your integration plans.
