Integrated EDI vs. Non-Integrated EDI

Mar 19, 2020 8:43:34 AM

Streamline-upgrades,-deployments,-and-process-optimization

Electronic Data Interchange (EDI) has revolutionized how businesses process their purchase orders and invoices.

Though EDI has existed from the early 1970s, the last two decades have seen tremendous growth in the use of EDI. The software has also evolved by leaps and bounds to minimize the manual processes and optimize utilization.

Before we understand the difference between integrated and non-integrated EDI, let us get a peek at the basics of EDI.

What is EDI?

EDI is a system that facilitates the exchange of information electronically between two companies in a standard format. Generally, this software is used to process purchase orders and invoices efficiently.

What is EDI Integration?

EDI integration refers to the integration of your EDI software with your ERP system. However, EDI integration also sometimes means the integration of EDI with other internal enterprise systems such as accounting software.

What is Non-Integrated or Stand-Alone EDI?

Non-Integrated or stand-alone EDI is an isolated portal which is not connected to the ERP or other systems in the organization. In other terms, without EDI integration, you are left with islands of technology that are not connected.

Now that we have understood what EDI and EDI integration is, let us look at the difference between an integrated EDI and non-integrated EDI.

Integrated EDI vs. Non-Integrated EDI

Speed of the process cycle

The purchase order processing is long, tedious, and involves multiple departments of your organization. The pace of this process cycle will, in turn, determine the time of your supplier payments. Hence, companies need to aim to shorten their purchase order process cycles to make vendor payments on time.  

A non-integrated or stand-alone EDI doesn’t operate in sync with the ERP system. Hence, it would involve more manual handling than an integrated EDI, which automatically extends the work cycle on purchase orders. Integrated EDI helps you effectively connect with other internal ERP systems and automates the end-to-end purchase order process cycle, which hastens invoice processing.

Winner: Integrated EDI

Responsiveness of the system

Ever-evolving technology has linked multiple internal and external business parties to channel commerce. While this inter-linking has made communication and processes transparent, it has increased the complexity of the process. An efficient EDI solution can adapt to a your fast-paced business growth.

A stand-alone EDI may not work well with other integral ERP systems, which makes it challenging for it to keep up with the speed of commerce and respond actively. On the other hand, integrated ERP enables responsiveness as it can easily handle numerous trading partners and payment at the same time with little human intervention.

Winner: Integrated EDI

Process Accuracy

An error in processing a purchase order can cost a company lots of money. Moreover, the error may have a negative domino effect on other business processes and in turn, hurt the vendor relationship and reputation of your company.

As it still involves considerable manual processing, a stand-alone EDI is error-prone. Besides, it may not communicate well with other ERP applications, which may lead to loss of crucial data. Integrated EDI enhances the accuracy of the purchase order process. It manages the data efficiently as it can talk to other ERP processes without any hindrance.

Winner: Integrated EDI

Process and Staff Productivity

The productivity of the process and staff will have a direct impact on the profitability of your business. Any company would want its EDI software to improve the productivity of the process and team.

Non-integrated EDI would need your staff to monitor a few aspects of the purchase order process. As the integrated EDI can automate the process to a large extent, your team can focus on other essential tasks. Hence, integrated EDI would increase the productivity of your staff.  Also, the volume of purchase orders a non-integrated EDI can process is less when compared to the integrated EDI.

Winner: Integrated EDI

Processing Costs

Purchase order processing involves a lot of expenses. While a few of those expenses cannot be eliminated or reduced, other costs can be decreased through process improvements and efficiency.

Integrated EDI minimizes manual effort. Hence, you can save a lot on labor costs. By cutting short the payment cycles, integrated EDI can help you make the vendor payments on time. Thus, you can not only save your company from chargebacks but sometimes also avail vendor discounts for early payment.

Winner: Integrated EDI

Implementation

The duration of the implementation process and the complexity of the procedure would determine the cost of your EDI implementation. This process would also need you to do some legwork on all the prerequisites for the implementation.

Integrated EDI is a sophisticated software that is connected to numerous internal and external applications. It would also need a lot of prerequisite software applications in your organization for successful implementation. Thus, it might take more time and money to implement than the non-integrated EDI application.Integrated EDI implementation is not free from challenges  

Winner: Non-integrated EDI

How to Decide?

Though integrated EDI may initially cost more and take longer for the implementation, it has long-term benefits that cannot be matched by non-integrated EDI. Integrated EDI would be more adaptable to your organization’s growth.

Also, the type of EDI you need would depend on your business size and the number of trading partners you have. If the size of your company is small and it has only one or two trading partners, a non-integrated EDI would also work for your requirements. However, EDI integration is a must-have for companies that deal with more than two trading partners.

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