Electronic Data Exchange | Leveraging EDI for Business Success

To help you stay on track employing the best EDI approaches and decisions, X12 offers a 3-blog series explaining the essentials of automating data exchange. This third and final blog delineates three key business benefits of automating and integrating B2B transactional data sharing into daily operational processes from members of the X12 Business to Everything (B2X) Subcommittee.

The more time employees spend processing data, the more employers pay for a process to be completed. Processing data manually can be time-consuming, error-prone and costly. Manual processes alone can adversely impact a business in terms of productivity and the amount of time employees are consumed by completing internal, non-core business processes.

Integrating electronic data interchange (EDI) into your business infrastructure drastically reduces the expenses involved in managing your internal operations. Using EDI allows businesses to automate their data sharing, providing much faster, more accurate processing to cut costs, increase productivity, and decrease inaccurate processing due to human error.

With EDI technology, businesses eliminate data errors and reduce the hours employees spend on manual tasks, allowing them to focus on necessary tasks that will benefit the company’s profitability and move the business forward. EDI also reduces the expenses of storage, printing, postage, mailing and recycling ─ all of which contributes to a company becoming environmentally sustainable.

While the advantages are seemingly endless, the following narrows the benefits of EDI to three that will help you gain a competitive edge in today’s global business ecosystem. 

1)  EDI improves speed and accuracy

Some quantifiable ways that EDI helps companies work smarter and faster:

• EDI improves data quality, delivering at least a 30 to 40 percent reduction in transaction issues by eliminating errors from illegible handwriting, lost faxes, mail, and keying and re-keying errors.
• Machine-to-machine transfer of documents with receipt confirmation reduces manual “rip-’n-read” of emails, printing of documents or worse, waiting for U.S. Postal Service delivery of documents.
• Saving processing time can potentially reduce overall processing costs up to 20 percent and increase business efficiency, assisting in improving customer relationships.
• Speed and accuracy allows companies to process their transactions more quickly to pay vendors and other partners, strengthening business relationships.

2)  EDI’s effect on business efficiency

EDI helps you modernize critical business operations to drive continuous cost containment, growth and opportunity. These benefits build a strong case for EDI’s influence improving business efficiency and productivity.

• Quick processing of accurate business documents leads to less re-working of orders, fewer stock outs and fewer cancelled orders.
• Automating the exchange of data between applications across a supply chain ensures that business-critical data is sent on time and can be tracked in real time. Sellers benefit from improved cash flow and reduced order-to-cash cycles.
• Shortening the order processing and delivery times enables organizations to reduce their inventory levels.
• Corporate social responsibility and sustainability is achieved by replacing paper-based processes with electronic alternatives. This conversion will both save you money and reduce your CO2 emissions.
• A standard business language facilitates business partners onboarding any place in the world.
• Businesses critical data is ensured for distribution on time.
• Accurate, consistent and thorough data moving through the business is now more critical than ever.
• Business processes are streamlined and organized.
• Companies can scale back or reallocate staff to focus on more profit producing activities.
• Speed and accuracy of interdepartmental activities improves.
• Employee efficiency and productivity increases.
• Your business scales up quickly through streamlining and electronically connecting all of your internal processes and departments in a standardized format.
• Inventory is automatically managed.
• Better relationships are fostered with customers and vendors, which encourages them to respond quickly to your requests.

3)  EDI guarantees standardized interoperability between businesses

X12’s EDI standards are used millions of times daily. The X12 EDI Standard is an expansive vocabulary that helps small businesses talk to giant retailers, health providers talk to insurance companies ─ and even trains to run on time. 

This language started 40 years ago, when various computers and systems needed a standardized format to communicate and exchange digital information. And just like any other language, EDI has words and sentences, vocabulary and syntax.

Over the years, EDI has grown and flourished, helped along by thousands of people from diverse industries using and benefitting from it daily. To drive innovation, experts also come together three times a year through X12’s standing meetings to meet and discuss how the language is performing, what new challenges need to be met and how the language and vocabulary needs to adapt and thrive. This collaborative, consensus-driven process is open to all who are interested in using the language or vocabulary – from the smallest of businesses to the largest corporations.

The result is a continuously adapting language and expansive vocabulary that allows millions of transactions a day to seamlessly flow across networks. This common language is compatible with all syntaxes and technologies – creating a true common language for data communications. 

For example, this vocabulary includes data elements and aggregated sets of data elements. It is the business content of EDI messages ─ including the data definitions, attributes, and relationships ─ that collectively ensure messages are consistently, effectively, and accurately communicated between trading partners. Many people recognize X12’s EDI standard and its numerous and comprehensive transaction sets as representative of the X12 metadata, but X12 also produces technical reports, implementation guides, external code lists and other representations of the metadata which are utilized by millions of trading partners.

In addition, X12 supports numerous syntaxes considered the logical expressions of metadata in computer or human usable formats, including the EDI Standard, Table Data, HTML and XML, with more syntax options expected in the future. X12 metadata can be mapped or cross-walked to related standards or applications, enhancing interoperability.

X12’s Bridge (https://bridge.x12.org, subscription required) allows end users to view and use X12 metadata to build complementary solutions, using APIs in other syntaxes such XML. Implementers who have invested in the EDI Standard syntax can associate the metadata for other purposes, leveraging the investment they’ve already made. The foundation that enables the successful use of various syntaxes is grounded in standardized and well-understood metadata, represented by the collection of X12’s work.

Conclusion

Where is the future of EDI headed? Increasing demand for digitalization to support the paperless office is expected to drive growth of the global economy. That said, many business enterprises with complex supply chains rely heavily on successful trading partner communications. Aligning your business strategy with EDI as the foundational backbone to build and support emerging digital technologies is the first step to achieving viable success.