What Are the Benefits of EDI?

Since the 60s, EDI (Electronic Data Interchange) technology has been used to exchange data between partners and IT systems. With EDI, businesses can virtually exchange information, logistics, tax data, and other critical elements quickly and transparently. 

EDI differs from other information interchange systems because of the standardized nature of the documents. This means that all documents exchanged must use a standard, everyday language that enables the computer system to integrate them. 

This standard format describes what each bit of information is and what form (for example, mmddyy, integer, decimal).

Without this standard format, companies would send documents differently. The receiver’s computer system may not be able to understand the sender’s specific structure. 

There are many benefits of EDI, which we discuss below. Let’s get started. 

The Benefits of EDI

There are many benefits to EDI, which include the following:

1. Money-Saving
2. It’s faster and more accurate
3. Improved efficiency 
4. Eliminates paper

Let’s look at these in more detail. 

1. Money-Saving

Using EDI means reducing disputes caused by data inconsistencies, less paperwork, reduced administration, fewer compliance checks needed, and faster-moving stocks.

In fact, all the benefits below will help save you money in the long run. Companies without EDI rely on a paper-based process, involves covering the costs of printing forms, postage, administrative overheads, and manual validation of information. 

EDI costs at most one-third of its paper-based equivalent. According to the GS1 UK, EDI can help businesses save £8.50 ($11.83) per invoice and £14 ($19.48) per order. That’s significant savings to be had!

2. Accuracy and Speed

Companies using EDI find that transactions that usually take five days to complete with paper are completed in under an hour. Cycle time is reduced by a massive 75%, and some companies even report a 97% in reduction time. 

Adding to the speed of EDI is the accuracy of the process. Paper-based processes can typically have as much as five percent inaccuracy due to incorrect data.

This can produce significant headaches for those dealing with these inaccuracies.

Inaccurate data can be the result of incorrect manual data entry or illegible handwriting. The benefit of EDI means that with a standardized format, errors are less likely to occur. 

3. Efficiency 

As with anything that includes human intervention, there is a risk of error. Errors harm business and can result in delays, inconsistent data, and disputes. It may even affect your business and trading relationships. 

EDI can streamline the prompt processing of business documents. This leads to less re-working of orders, fewer cancellations, and a considerable reduction in headaches! In fact, EDI is said to save as much as 50% on HR. 

EDI efficiency and the reduction of manpower needed to file and process data adds to the cost reductions. It also empowers staff to concentrate on other tasks, which will ultimately increase your business’s efficiency. 

4. Sustainability

Sustainability has never been more critical. To show your business partners or clients that your company cares about sustainability and climate change is essential. EDI reduces paper usage significantly. 

This reduction in paper usage promotes corporate social responsibility and will save the company money and reduce CO2 emissions – win-win. 

For more info on how to make the most out of EDI, check out these tips.

EDI: A Step in the Right Direction

Moving away from manual data entry and EDI is an excellent move. It saves lots of money, improves accuracy and efficiency, and demonstrates that the company takes sustainability seriously. 

As you can see one of the benefits of EDI, your staff has fewer headaches re-processing orders and data and more time on other essential business tasks. It can help streamline your orders and the exchanging of important information.