Is your EDI system manageable? Is the time and effort to maintain accurate mappings causing roadblocks in your operations? Are chargebacks eating into your profit margin?
Switching EDI providers or starting with your first electronic document interchange (EDI) system is an important investment. When your EDI solution is well calibrated, it can become a launchpad for your business’s enhanced profitability and scalability. EDI enables many automation and visibility practices that make competing in the modern retail and supply chain landscape possible.
EDI systems vary. Some are updated regularly to keep up with changing business needs, while others are updated more sporadically, potentially magnifying IT costs. A complicated EDI solution can present training issues, especially if your EDI coordinator leaves abruptly. If you’re not familiar with all the processes EDI can improve, you may miss an opportunity to solve some of your most pressing business problems by choosing the right EDI provider.
Whether you’re evaluating EDI for the first time or replacing an existing EDI solution, here are some points to consider.
- Get buy-in from leadership. Typically, executive teams or management are the people who approve budget for EDI projects. Convince them with data and features. EDI can improve order processing speed, volume capacity, inventory visibility and more. Identify the pain points, production bottlenecks, process inefficiencies and lost opportunities. Demonstrating where your competition is succeeding can help with motivation, too.
- Assess resources and key stakeholders. What infrastructure, software and systems are already within your organization? That could include an ERP, WMS, CRM, accounting software, content management, networks, servers, etc. Perhaps an existing EDI solution that no longer fits your needs. Identifying what you have can help you decide if a potential EDI solution works with your existing resources.
- Create a list. Make a list of what problems you need to solve for now, as well as where you want to be over the coming months and years. Beyond reducing and eliminating manual data entry, there’s streamlining order-to-cash processes, improving inventory visibility, adding drop ship capabilities, and other modern business needs. Categorize and rank what you absolutely need, what you want for the future and what would be “nice to have.”
- Identify suitable solutions. Compare your lists to EDI systems. Each solution has varied strengths in functionality, scalability, reliability, onboarding and speed to value. Some EDI solutions are standalone, while others have a suite of complementary add-ons to upgrade capabilities as business needs change. Importantly, whether to choose a traditional in-house EDI solution, a cloud-based EDI provider or a hybrid EDI system should be carefully analyzed.
- Calculate total cost of ownership (TCO). The total cost of ownership over the short and long term varies for the different EDI options. In-house EDI departments have greater costs up front that will diminish after the initial implementation, but may increase again as the business grows. An outsourced, cloud-based EDI provider requires less up-front investment, and has a monthly, quarterly or yearly subscription fee, with more predictable costs over time when the company grows. With cloud-based EDI, the costs of infrastructure improvements, maintenance and staffing are the full financial responsibility of the EDI provider, such as SPS Commerce. Monthly costs and infrastructure investments for hybrid EDI systems depends on the specifics of how your system is set up.
- Read reviews and referrals. Other businesses are already using EDI solutions you’re considering. Buyer beware if you’re looking at a brand new, unproven EDI provider. Find out how the EDI solutions you’re considering have performed for others. Even if the EDI provider has great testimonials, ask them directly how long they’ve been working with NAV, how many customers they have for it, and information to contact existing customers, particularly those that are running Microsoft Dynamics NAV. Ask your top trading partners or logistics partners what EDI providers they use, if they would recommend it and why. If a business with similar systems has found value in a specific EDI system, it’s worth considering as it may work well for your business, too.
- Create a careful implementation plan. Timing is everything, and that’s no different for rolling out EDI solutions with minimal disruption. Even before the project is finished, the change management of implementation has many moving parts, milestones and timeline expectations. A detailed project plan is needed to integrate existing systems, convert and migrate data, update processes, create new procedures, train employees, confirm compliance with trading partners, etc. Depending on the size of your trading partner network, a successful EDI rollout will be measured in months or quarters.
Selecting and actualizing the right EDI solution for your company takes time and research. Of course, there will be some cost, but the efforts will be worth it when your business is better empowered to serve your customers. In addition to happy buyers, the streamlining and optimizing of your inventory and supply chain that EDI enables can ultimately help you grow your business, easily paying for itself in the long run and then some.
Guest post in partnership with SPS Commerce. For more information watch the webinar from December 12, 2017.