Our sales team is often surprised when a lot of small and medium-scale companies that reach out to us for Electronic Data Interchange (EDI) are still using legacy methods of document exchange such as paper-based exchange such as fax, or email. There is still a lot of apprehension at their end as they have misconceptions about EDI being too expensive and too complex.
Since we speak to so many customers that use our EDI and integration solutions - EDI Studio and Connectivity Studio for Microsoft Dynamics 365 Finance & Supply Chain Management, we ensure our solutions are easy to use and are cost-effective for customers. Our solutions are priced based on the companies in Dynamics 365 F&SCM for both. So, you can send as many documents and integrate your entire application ecosystem and monitor it, and you do not have to pay per integration or EDI transaction.
Since we often see customers still using mail and fax instead of EDI, we decided to do a thorough analysis of these traditional methods in comparison to integrated EDI in this article.
Comparing Fax & Email to Integrated EDI
Prior to EDI, paper-based document exchange via post was the method of exchanging important documents. But that was time-consuming, and also cumbersome to maintain. EDI came into the scene in the 1960s thanks to the need for streamlining communication for the U.S. transportation industry.
Fax earlier known as the Electric Printing Telegraph although invented in 1843 by Alexander Bain only become the norm in the 1990s. After the discovery of computers and the birth of the world wide web which also came around the 1990s, email become another way to exchange documents between partners and also internally.
Below we will do a breakdown of the methods that we surprisingly see still in use today, which are fax and emails in comparison to EDI.
Since an invoice that is sent by email or fax does not have to follow any standard guidelines like EDI, the data is unstructured and can vary for different partners. EDI uses standard formats that are accepted and recognized worldwide in a structured manner.
Additionally, using EDI you can also share structured PDFs as an email to partners that do not use EDI.
Using EDI, you can automate multiple transactions and improve processing time, without the need for multiple employees to manage the process. Using email and fax, that is not the case. As you scale, and your B2B document exchange demand increases, using manual methods such as email and fax means you need more resources dedicating more time to manage the process. Not only is a larger number of transactions difficult to manage and track but it also increases the chance of human errors.
A document is typed by an employee using Excel/Word/ or another system and then that document is either printed and faxed or attached as a PDF and sent via email. There are no automated checks performed on that invoice or order before it is sent, and that could lead to errors. And an error could lead to your documents getting rejected by your trading partners.
Most EDI solutions, including EDI Studio, offer a way you to set up error flagging so that changes can be made before that invoice or order is shared with your supplier or customer.
Managing multiple formats
Multiple vendors may have multiple formats for documents. Managing multiple formats in the ERP to input data manually can be very time-consuming. If you use EDI and your trading partners use different formats, your EDI broker can translate that document for you and share it with your trading partners. If you use email or fax, and your partners use EDI, it means hiring EDI specialists to translate these documents in-house.
Certain details in any document are important to ensure that it is a legal document, for example, a Purchase Order number, and tax details for an invoice. To ensure that a validated supplier has shared an invoice and that the document qualifies as a legal document, it is important to have these checks. There is no automated way to do that unless your employees do this manually for every transaction using email or fax.
Since our solution is embedded within Microsoft Dynamics 365 Finance & Supply Chain Management (D365 F&SCM), and EDI uses standard formats, fields such as tax details or purchase order number are part of the format. An EDI invoice cannot be shared with a trading partner unless the required fields based on the standard are filled in.
Since the process is largely manual and requires your employees to handle everything manually and fill that same information in multiple systems, using fax and email is also very time-consuming. Often times than not, if there are errors, and your invoice is rejected, it increases the time taken for the processing of the transaction and is not an efficient way to share documents.
EDI is a technology that uses a solution that automates the document exchange process between you and your trading partners. So, you can process documents faster. Also, if your EDI solution is integrated with your ERP system, and your application landscape is integrated, it will save you time spent entering that information into multiple systems. Our solution Connectivity Studio can help you integrate EDI Studio with Dynamics 365 and help you connect your application landscape and also monitor your integrations.
Convenience for the trading partner
When you share the PDF with the invoice on email or fax, the data can either be copied and pasted using OCR software by the trading partner. And it is possible to use the solution to enter data into the ERP system. If that information cannot be copied, then that invoice will need to be printed and then manually keyed in, which is time-consuming and could also lead to errors.
An EDI file when received can either be received directly into the partner’s EDI solution, or emailed as a PDF if the partner doesn’t have EDI. The file will be in a standard EDI format following a fixed data structure. Therefore, if the document is received by the partner and checked and okayed, it can easily be synchronized with their ERP system, if integrated with the EDI solution.
When you use email, the only way to track data is by searching or checking your emails, or storing the documents in files on your PC. But if you have several employees sending out emails, unless you use SharePoint to store all files in one place, you will not have proper visibility and control of what is being shared. Using fax there is absolutely no way to track the data trail unless it has been scanned and uploaded to a central repository.
Using an EDI solution like ours, you can track all the past transactions using the History feature, irrespective of how many employees are using it. This makes reporting and tracking document exchanges easier.
Using email you can request a read receipt and opt for a delivery receipt confirmation on Outlook. But your supplier can choose to ignore that email. With fax, there is no absolute way of knowing whether the trading partner received your fax unless you call them or message them online and check.
Using EDI, it is possible to request for an acknowledgment, and if the trading partner shares a transmission acknowledgment, it means that the message was received without errors. This removes the guesswork out of document exchange.
Cost per transaction
Most people we interact with, think it is better to stick to email and fax as they argue that the cost per transaction is very high. If you are counting the cost, besides paper and internet costs, you need to factor in the cost of manpower, the extra hours spent in processing documents, tracking, and correcting errors.
With EDI the costs you pay may seem higher, but you are saving on processing time, the extra hours employees spend on document exchange and management, and improved accuracy.
Interested to learn more about Electronic Data Interchange?
We have compared Electronic Data Interchange to other methods such as fax and email in the article, and EDI clearly emerges as a more enticing choice for document exchange. Besides following strict globally accepted standards, a secure network, it is also cost and time efficient, and it speeds up the processing time of transactions severalfold.
While EDI does sound complicated because there is a lot of jargon and terms associated with the technology, operating an EDI solution on the other hand is not complicated. There are several low-code/no-code EDI solutions available, such as our own EDI Studio solution that make the whole process a breeze.
To help readers, understand and navigate the world of EDI and all the terms associated with it, we have a free EDI toolkit that you can download from the link below. Using this toolkit you can understand the intricacies of EDI and then evaluate the technology for your organization.