Electronic data interchange is the system of exchanging documents in a standardized electronic format between businesses. These can be in the form of purchase orders, advance shipping notices, invoices, and inventory details. The system eliminates the need for manually processing commercial data that businesses transmit with their trading partners. This helps them to minimize operating costs, reduce inadvertent human errors, and significantly increase processing speeds. As a result, businesses notice an improvement in their internal efficiency and an increase in their revenue.
Why do businesses need to use a suitable EDI integration software solution?
EDI integration is the transmission of data between a business’ EDI platform and its back-office systems. These include enterprise resource planning, customer relationship management, inventory, warehousing, and accounting systems. This is normally done by installing and operating a compatible EDI integration software solution in the business’ IT infrastructure.
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It eliminates the need to constantly re-enter information present in one platform to another. This helps to saves time and minimize the chances of manual typing errors from occurring. Moreover, EDI integration also accelerates the processing of commercial documents between businesses and their trading partners.
Businesses can choose to implement any one of the following 3 EDI integration types in their IT infrastructure:
- Direct Integration
Under this system, employees operating the ERP platform can automatically transmit information to their colleagues handling other platforms. They just need to click a button to complete the transaction exchange. This is because a suitable software application serves a direct link between the relevant databases.
- Text-based CSV flat file
Flat file EDI integration is a simpler version which many businesses adopt to automate their back-office activities. Unlike direct integration, the system uses an intermediate CSV or specified text-based file. The employees can also process it at the touch of a button to complete the data transmission.
- Binary
This is identical to flat-file integration but stores the relevant commercial data in a complex structure. A Microsoft Excel spreadsheet generally acts as a link to access the various databases. It is commonly found in businesses operating older back-office system versions with only a few options.
How does EDI Integration work?
The processing of commercial data between businesses and their trading partners using EDI integration involves the following five steps:
- A trading partner sends a business document via its in-house EDI system to initiate a transaction,
- The EDI system converts the document into a specific format using a suitable software translation application,
- A separate processing software application assess the authenticity of the document according to specific EDI standards,
- A value-added network (VAN) transmits the document to the recipient’s EDI system via a secure communication protocol, and
- On receiving the document, the recipient electronically sends a deposition notice acknowledging the delivery.
Using the latest EDI integration software solution enables businesses to significantly improve their internal efficiency.
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The application is compatible with other back-office systems they use to conduct their activities. This enables them to easily receive and transmit relevant commercial documents from their trading partners without any difficulties. This application is suitable for direct integration, binary, or Text-based CSV flat-file integration platforms.