What is an EDI Value Added Network?

What is an EDI VAN (Value Added Network)?

An EDI VAN (Value Added Network) offers a business to business (B2B) network of electronic communications, a network which includes an array of 'value added' services, as well as facilitated communication protocols that otherwise would not be available when going through the Internet or regular phone lines.

value added network (VAN) is a private, hosted service that provides companies with a secure way to send and share data with its counterparties. Value-added networks are a common way to facilitate electronic data interchange (EDI) between companies.

The main goal of a VAN is to facilitate electronic data interchange (EDI) between businesses. The VAN sits on top of an existing common carrier. The carrier provides additional services on top of the infrastructure called value-added services. Hence, the name value-added network.

A value-added network is the medium that enables business documents to be transmitted electronically between a diverse group of organizations, nationally and internationally.

The majority of EDI still occurs through EDI VANs.  As long as two organizations are using the same EDI VAN, communication is possible regardless of which EDI protocol is used to transfer information.

When a company starts their EDI journey they may choose to set up direct EDI or point-to-point connections to other EDI enabled businesses, which can very quickly turn into an integration mess. While this scenario provides great flexibility, a major problem is the cost scale is the size of the trading community which can quickly become expensive and complex, 

A single connection to an EDI VAN simplifies the complexity of managing multiple EDI direct connections. The EDI VAN is simply a secure network where EDI documents are exchanged between a network of business partners. An organization will be provided with a mailbox by the EDI VAN provider. Documents are sent and received from the mailboxes on each organizations network.

Value Added Network Solution (1200 x 628 px)

Benefits of an EDI Value Added Network 

Optimize your supply chain while reducing manual processing costs and improve customer relationships

Not only is using a VAN more efficient and more accurate, but it also saves the cost of hiring human data-entry professionals for the exchange of information. In addition to the many EDI benefits companies who enlist the services of an EDI VAN provider can expect,

Secure

Secure

Electronic data transfers can be made securely using encryption

Secure

Standardized 

VANs transfer data using standard formats, such as XML and CSV. They allow the data to be read by the various ERP software used by companies. 

Secure

Expanded Network Connections

By connecting with a network of companies, a business can quickly onboard and begin trading with new EDI-enabled partners.

Secure

Inspection and Authentication  

The EDI VAN will verify the identity of the business partner and validity of the message. 

Secure

Mailboxing

Messages are automatically routed to the correct mailbox. Business partners connect to the VAN to retrieve their messages

Full Audit Trail 

All EDI messages are tracked and recorded

 

How Does an EDI VAN Work?

An EDI VAN receives a mail from a sender, sorts and delivers it to the recipient's mailbox. A trading partner retrieves messages by connecting to the VAN, which validates the message and verifies the recipient's identity. It then provides a full audit trail, and all messages are tracked and accurately recorded

Most VANs also provide visibility tools that show the delivery status of data and some corresponding workflows, allowing companies to better coordinate dependent activities through the system rather than exchanging phone calls and emails. 

Value Added Network Solution (1200 x 628 px) (1)

Value Added Networks simplify the communications process by allowing the company to communicate with fewer parties.

Why Use an EDI Value Added Network?

A VAN original function was to be the main communication channel that delivered data securely from one mailbox to another, but there are additional services that a VAN can provide. That is why it is one of the most common EDI solutions today.

With the rise of new EDI standards and communication protocols, VANs have evolved to support many different requirements. VAN capabilities have expanded to include EDI translation, data validation, re-processing, authentication, encryption, and reporting. VANs also include a wide range of other services that aim to simplify document exchange with many partners via EDI networks. 

Read More : What Does EDI Stand For?

EDI stands for Electronic Data Interchange which is the exchange of large amounts of information computer-to-computer in a specified format between business partners. 

Read More : Complete EDI Guide

This is one of the most up to date EDI guide you will find on the internet with over 11,500+ words. It covers topics like history of EDI, EDI stats and market growth, benefits of EDI, EDI transaction types, EDI standards and more

How Does EDI Work?

How Does EDI Work?

EDI Process | Prepare, Translate and Transmit

There are three main components to sending EDI documents:

1. Prepare

2. Translate

3. Transmit

 

Step 1: Prepare the documents to be sent

EDI (Electronic Data Interchange) requires electronic versions of files. Instead of printing a paper purchase order, you would organize the necessary information to build an EDI document within your system. The sources of the data and the methods available to generate the electronic documents can include:

  • Data entry by human intervention 
  • Exporting data from excel spreadsheets or internal databases
  • Reformatted electronic reports into data files

Step 2: Translate documents into EDI format

Put your collected internal electronic data through a translation software to convert into the EDI standard format. EDI standards describe the format in which the data will be sent and received. Most common standard sets:

  • American National Standards Institute (ANSI) X12 in North America
  • UN/EDIFACT globally 

There is two ways to use translation software;

You can purchase EDI translation software that you have to manage and maintain on your premises. This requires dedicated IT resources with specialized mapping expertise in order to define how your internal data is to be mapped to the EDI data.

Alternatively, an EDI service provider would provide the translation services. Using this option you would send your electronic data to the EDI Service provider, who would then handle all mapping, translation and support to and from the EDI format on your behalf. 

Step 3: B2B Connection and Transmission of your EDI documents

Once your business documents are translated to the appropriate EDI format they are ready to be sent to your business partners. There are several types of EDI for this connection:

  • secure internet protocol (AS2) 
  • connect to an EDI Network provider with a Value Added Network (VAN) 
  • a combination of both, depending on the particular partner and the volume of transactions you expect to exchange.

 

How Does EDI Work? - Commport Communications

Types of EDI

There are many methods organizations will use in order to enable EDI across their trading community.

Ready to find out more?

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Complete EDI Guide

This is one of the most up to date EDI guide you will find on the internet with over 11,500+ words. It covers topics like history of EDI, EDI stats and market growth, benefits of EDI, EDI transaction types, EDI standards and more

Types of EDI

Types of EDI

There are many methods organizations will use in order to enable EDI across their trading community.

Electronic data interchange (EDI) is one of the most common forms of structured electronic exchange of business documents between organizations. 

More than 85% of all electronic business transactions take place using EDI. EDI is used in industries including retail, banking, high-tech, manufacturing, and services. 

Types of EDI include:

Types of EDi - Commport Communications

Direct EDI/Point-to-Point

Direct EDI, sometimes referred as point-to-point EDI, establishes a single connection between two business partners. In this approach, a business would connect with each of their business partners individually. Typically large corporations that have business partners with whom they exchange a high volume of EDI documents will choose this method.

While Direct EDI provides more control for each business, it can become very complex quickly. Different EDI trading partners often use separate EDI protocols which means you need to support each available option.

With the direct connection model, you will need to purchase a software package that enables you to use all the agreed upon protocols, such as

EDI via AS2 (Applicability Statement 2)

AS2 stands for Applicability Statement 2. Easily described as a business to business connection in a point-to-point manner via the web. AS2 is one of the most popular methods for transporting EDI data securely and reliably used by millions of businesses, including most major retailers, such as Amazon and Walmart.

EDI via SFTP (Secure File Transfer Protocol)

SFTP stands for Secure File Transfer Protocol, also called SSH File Transfer Protocol, is a network protocol for accessing, transferring and managing files on remote systems. SFTP provides organizations with a higher level of file transfer protection which allows businesses to securely transfer billing data, funds and data recovery files.

EDI via FTPS (File Transfer Protocol)

FTPS stands for File Transfer Protocol Secure which is an extension to the commonly used File Transfer Protocol. In FTPS, FTP data travels through the network using either Secure Sockets Layer (SSL) or Transport Layer Security (TLS) protocols.

EDI via Value Added Network or EDI Services Provider

The majority of EDI exchanged today occurs through EDI Value-Added Network (VAN). As long as two organizations are using the same VAN, communication is possible regardless of which EDI protocol is used to transfer information. Unlike Direct EDI this means organizations can manage one connection with the EDI VAN instead of separate lines of communication with each potential partner. Many businesses prefer this model to save them from the ongoing complexities of supporting the varying communication protocols required by different business partners.

How it Works

An organization will be provided with a virtual mailbox by the EDI VAN provider. From there documents are sent and received. A trading partner retrieves messages by connecting to the VAN, which validates the message and verifies the recipient's identity. It then provides a full audit trail, and all messages are tracked and accurately recorded.

Benefits of Value Added Network (VAN)

  • 1. Error correction
  • 2. Improved exchange
  • 3. Secure
  • 4. Standardized

 

Value Added Network Solution - Commport Communications

Internet EDI

Internet EDI is simply conducting EDI through an Internet browser. It replicates paper-based documents as a web form. 

Internet EDI enables small - and medium-sized businesses to create, receive, turn around and manage electronic documents using an internet browser. The Internet EDI  interface is meant to be user-friendly and not require a lot of experience with EDI systems. Its popular with small to medium businesses as set up is quick, easy and business partners anywhere in the world can connect without dedicating IT resources to their EDI implementation.

Benefits of Internet EDI:

  • Management capabilities for hundreds of trading partners
  • MH10 shipping labels
  • Proactive notification email alerts
  • Business rule validations
  • Duplicate checking
  • Reports for all inbound transactions
  • Retrievable archive
  • Document import and export to enable partial integration
Web EDI - Work Flow | Commport Communications

EDI Outsourcing

EDI Outsourcing also referred to as B2B Managed Services is an option that enables companies to use external specialist resources to manage their EDI environment on a day-to-day basis. This includes software and or hardware, infrastructure and ongoing updates or changes to EDI specs or maps.

There are many benefits to outsourcing your EDI:

  • Small set-up fees and a lower total cost of ownership
  • Pay per use model 
  • Human errors are eliminated
  • Access to EDI experts  
  • Managed connectivity, testing and setup, updates and support are covered
EDI Outsourcing Service Provider - Commport Communications

If you have implemented a fully integrated EDI compliant system but still have partners who want to send you faxes a managed EDI Service can be your clearinghouse for fax automation.

EDI Software

Often used by companies that prefer to manage their own EDI environment

Implementing EDI software in-house assumes that a company has the internal bandwidth to be able to implement and maintain the software on an ongoing basis. This includes understanding how to map between different document types, how to onboard or connect to trading partners and possibly provide integration to other business applications such as accounting packages or ERP software. IT resources will also be required to maintain it on an ongoing basis. 
The_integrated_EDI_Bigger_Picture - Commport Communications

Which EDI Solution is Best for you?

10 Step by Step Guide To Find The Best EDI Solution Provider

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Complete EDI Guide

This is one of the most up to date EDI guide you will find on the internet with over 11,500+ words. It covers topics like history of EDI, EDI stats and market growth, benefits of EDI, EDI transaction types, EDI standards and more

What Does EDI Stand for?

What does EDI Stand For?

(Electronic Data Interchange)

EDI stands for Electronic Data Interchange which is the exchange of large amounts of information computer-to-computer in a specified format between business partners

EDI has been in use since the 1960s, however in more recent years EDI came to play a key role in enabling supply chain automation, digital transformation and B2B business process automation.

More than 85% of all electronic business transactions take place using EDI. This method of exchanging documents is used in industries including retail, banking, high-tech, manufacturing, and services. 

Computer to Computer 

Computer to computer EDI saves time and cost associated with manual data entry, eliminating the need to mail, email, fax, and manually process documents.

Electronic Data Interchange (EDI) follows a certain set of standards that allow the senders documents to flow straight through to the intended application on the receivers end. This enables the processing and return documents to be accepted and processed immediately.

Manual Process (No EDI)

Manual Process (no EDI) - Commport Comunications

 

 

Common Errors with No EDI System

 

  • Missing or lost documents 
  • Time delays
  • Hard and soft costs
  • Pricing inconsistencies 
  • Weak security 
  • Poor customer relationship

Staying compliant with your business partners’ EDI requirements is crucial to a positive customer relationship.

Automated EDI Process

Benefits of an EDI System

  • Immense savings in time
  • Significant cost savings
  • Reduced drain on resources overall
  • Reduced error rates in data transfer (we almost want to say ‘eliminate’ here!)
  • Improved security of data being transferred
  • Reliability – you can have confidence that data is reaching its destination

 

Automated EDI Process - Commport Communications

 Information moves directly from one internal system in one organization to a internal system in another.  

EDI Standards 

EDI standards define the location and order of information in a specific document format

  • Standards eliminate company-to-company fluctuations, allowing each business partner's computer system to speak the same language.
  • Standards describe the format in which the data will be sent and received.
  • Most common standard sets: American National Standards Institute (ANSI) X12 in North America, UN/EDIFACT globally 

EDI integration enables businesses to share a wide range of document types, most common are the purchase orders (850) and EDI 810 invoice

Businesses will need an EDI translator to translate the EDI format so the data can be used by their internal systems and thus enable straight through processing of documents. These translators can either be an in-house software or an EDI service provider

 

Complete EDI System

A complete EDI system consists of the following components 

  • Translator or Internet EDI application
  • EDI mapping 
  • A secure, dedicated reliable network that sends and receives the transactions 
  • Support services 

 

Types of EDI 

Integrated EDI Solution

An Integrated EDI solution translates your inbound documents, like purchase orders, from your trading partners’ EDI files into a format that can be imported directly into your ERP, accounting or other business system.

Internet EDI Solution

Communication of EDI messages via the Internet. Internet EDI is most often considered in contrast to doing EDI via a VAN (Value Added Network). In this situation, Internet EDI is simply a communications pathway, where EDI data is passed between trading partners using Internet protocols.

EDI Outsourcing

EDI outsourcing is also suitable if you have implemented a fully integrated EDI compliant system but still have partners who want to send you faxes. Commport’s managed EDI Service Bureau can be your clearinghouse for fax automation. We can process all of your paper-based documents and generate their electronic equivalents in the format of your preference for electronic integration. What could be easier?

 

 

Ready to find out more?

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Complete EDI Guide

This is one of the most up to date EDI guide you will find on the internet with over 11,500+ words. It covers topics like history of EDI, EDI stats and market growth, benefits of EDI, EDI transaction types, EDI standards and more

New Year, New ERP?

Migrating to a New ERP This New Year?

 Start involving EDI experts earlier in the process and save 1000's of Dollars!

Many companies realize the importance of streamlining their supply chain processes - the myriad of benefits reaped from automating manual processes in order to better manage large volumes of paperwork, reduce hours of administrative duties, and reduce the potential for errors that could be encountered at any step of the supply chain process.

When companies make it a priority to invest in a new ERP (Enterprise Resource Planning) software, a large investment for any size company. A common mistake companies, regardless of size, seem to make when preparing to move to a new ERP business system is not involving EDI experts earlier in the process.  Most companies tend to place EDI on the bottom of the priority list.

The backbone of your business comes from your ability to fulfill customer orders and, in turn, receive prompt payment for those products.  The most important factor in streamlining your supply chain process is ensuring you can integrate purchase orders received from your customers, as well as issue invoices as simply and efficiently as possible.  A key component of establishing full integration is ensuring your import and export data files have mapping layouts available for your EDI solution provider to utilize when setting you up to trade with your customers.

Commport’s EDI analysts run into issues when brought in too late in the game. Some of these issues arise from third party IT professionals creating import and export files without knowledge of EDI standards and best practices. Companies are then forced to pay additional third party fees to revise layouts once they begin working with their EDI solution provider, resulting in a large amount of back and forth between your EDI provider and ERP system provider, thus causing your implementation fees to skyrocket.  Consulting subject matter experts early in the process allows them to work together with your ERP system support team to create/generate the correct EDI or flat file (.csv, .xml etc.) output and input files in a single effort, resulting in large monetary and time savings.  

Migrating to a New ERP Involve EDI Experts Early in The Process - Commport Communications

When considering the move to a new ERP system, call your EDI solution provider to provide consultative services to ensure you are following EDI standards and best practices when setting up your supply chain internal processes. Our implementers’ extensive experience assisting with these migrations provides invaluable direction on simplifying and streamlining your processes and creating correct import and export files to best suit your business needs.

To aid you in selecting an ERP business system, or planning your company’s migration to a new ERP software, Commport has created a checklist of items to review. We have also indicated the times at which investing in EDI consulting from your EDI provider is recommended and highlighted any red flags that should alert you to a possible software inadequacy.

9 Step Checklist to Integrate Your New ERP with Existing EDI System

Review

Review the supply chain and logistics components of the new ERP system to ensure you will be able to fully integrate your EDI documents.

EDI Consulting

Secure the consultative services of your EDI provider at this point in the process to help review the EDI components of the business system you are considering and to advise you on the pros and cons of the EDI platform it provides.

Import/Export?

Ensure the EDI component of the business system has the ability to import/export data files containing all the information in your documents.

Mapping Layouts?

Look into whether or not your system has file mapping layouts that identifying all data locations in the data file required for import/export documents.

File Format Sample

Provide the exact output file format (sample) that your EDI Provider will be creating to import/export to and from your ERP system.

Sample Data

Does the ERP system provide sample data files for each transaction required together with the data file map?

Best Practices

If the files are not readily available, involve your EDI provider’s Implementation Analyst to consult with your team and the third party ERP system support in reviewing your supply chain processes, offering recommendations and providing feedback on EDI standards and best practices, as well assisting with mapping your documents.

TP Contacts

Ensure you have EDI contacts for all of your Trading Partners.

Contact US!

When in doubt, contact the subject matter experts, your EDI provider.

Customer Support - Commport Communications

RED FLAGS

No mapping layouts of the required formats for both import and export files.

Cannot provide sample files of import and export formats from their business system.

Staff unable or unqualified to map a file into your ERP.

New ERP - EDI assessment checklist - Download it for free

Ready to find out more about Commport EDI Solutions?

Drop us a line today for a free quote!

Consider Moving to a New ERP System?

Considering Moving to a New ERP System?

Consulting EDI providers early in the process can help save 1000's of Dollars

ERP System - Commport Communications

Many companies realize the importance of streamlining their supply chain processes - the myriad of benefits reaped from automating manual processes in order to better manage large volumes of paperwork, reduce hours of administrative duties, and reduce the potential for errors that could be encountered at any step of the supply chain process.  Companies make it a priority to invest in a new ERP (Enterprise Resource Planning) software, a large investment for any size company. A common mistake companies, regardless of size, seem to make when preparing to move to a new ERP business system is not involving EDI experts earlier in the process.  Most companies tend to place EDI on the bottom of the priority list.

The backbone of your business comes from your ability to fulfill customer orders and, in turn, receive prompt payment for those products.  The most important factor in streamlining your supply chain process is ensuring you can integrate purchase orders received from your customers, as well as issue invoices as simply and efficiently as possible.  A key component of establishing full integration is ensuring your import and export data files have mapping layouts available for your EDI solution provider to utilize when setting you up to trade with your customers.  Commport’s EDI analysts run into issues when brought in too late in the game. Some of these issues arise from third party IT professionals creating import and export files without knowledge of EDI standards and best practices. Companies are then forced to pay additional third party fees to revise layouts once they begin working with their EDI solution provider, resulting in a large amount of back and forth between your EDI provider and ERP system provider, thus causing your implementation fees to skyrocket.  Consulting subject matter experts early in the process allows them to work together with your ERP system support team to create/generate the correct EDI or flat file (.csv, .xml etc.) output and input files in a single effort, resulting in large monetary and time savings.  

When considering the move to a new ERP system, call your EDI solution provider to provide consultative services to ensure you are following EDI standards and best practices when setting up your supply chain internal processes. Our implementers’ extensive experience assisting with these migrations provides invaluable direction on simplifying and streamlining your processes and creating correct import and export files to best suit your business needs.

To aid you in selecting an ERP business system, or planning your company’s migration to a new ERP software, Commport has created a checklist of items to review. We have also indicated the times at which investing in EDI consulting from your EDI provider is recommended and highlighted any red flags that should alert you to a possible software inadequacy.

Migrating to New ERP - EDI Checklist Commport Communications

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The Security of EDI Data

The Security of EDI Data 

Since 1975, corporations of all sizes have put their trust into Electronic Data Interchange (EDI) to exchange commercial transactions with their trading partner community, and since 1984, they have relied and put their trust into Value Added Networks (VANs) to move these transactions in a Store & Forward model for data handling.

Commport entered the EDI Services industry and became a VAN in 1985, and built a reputation for service and customer support based upon adding to and justifying this trust.

A 'Value-Added Network (VAN)' is defined as a private network provider hired by a company to facilitate electronic data interchange (EDI) and/or provide other network services such as message encryption, message translation, and management reporting. 

The Security of EDI Data

When a company hires or contracts with a VAN, that company trusts that their data will be safe from loss and kept confidential between them and the trading partner, and that the VAN will manage this delivery request and any returned transactions.  The ability to maintain the trust of the VAN or VANs involved depends upon the security of these deliveries – they went where they were supposed to go and nowhere else.

For almost one year now (all of 2017), Commport has been receiving misrouted EDI transactions from Global Health Exchange (GHX) who seem incapable of or unwilling to correct this very serious issue. In the retail world, such transgressions would not be tolerated and the perpetrator would suffer financially as confidential information between competitors could be involved. 

That is why all internal processes involved in handling Customer data have been developed to ensure at every step that the data is correctly formatted, correctly routed and correctly delivered to destination.  If an issue is found, the application involved immediately alerts Support and the issue is addressed within minutes.  For over 30 years, Commport has ensured that retailers and their vendors or customers get the correct data.

However, the traffic involved is Healthcare related which means not just money but patient safety is involved, and that is serious business.  In one three month period, traffic from one manufacturer experienced a 60% misroute issue with EDI destined for one hospital misrouted to another.  The costs to find and correct this issue at the hospital, at Commport and at the manufacturer are significant, but just as importantly the trust is beginning to wane for the trading partners involved.  Patient safety becomes the major concern.

In general, it is not nice to hang a competitor’s dirty laundry out for all to see, but we repeat, Patient safety is a major concern. To learn more on how  Commport can protect your EDI, visit here.

Ready to find out more about Commport EDI Services?

Drop us a line today for a free quote!

Complete EDI Guide

This is one of the most up to date EDI guide you will find on the internet with over 11,500+ words. It covers topics like history of EDI, EDI stats and market growth, benefits of EDI, EDI transaction types, EDI standards and more

How Do I Start Doing EDI?

How Do I Start Doing EDI?

How Do I Start Doing EDI - Commport Communications

EDI or Electronic Data Interchange is a method of exchanging business transactions between parties, electronically. Based on internationally recognized standards, EDI is used to support a diverse range of  important business processes such as supply chain management (purchase orders, shipment notifications, invoicing), business reporting (sales volume, payment status) and healthcare management (insurance claims). In fact, every time your dentist files your visit claim with your insurance company, they do so using EDI!

Most organizations embark on an EDI journey in response to an identified business problem or opportunity. Many times a large customer will ask to exchange their supply chain transactions using EDI and that is oftentimes the starting point. Other times, organizations find themselves in the position that they don’t have the information they need, when they need it, which leads them to the use of EDI to help solve that problem.

So, you have found yourself embarking on an EDI journey… but you aren’t sure what path you should take.

10 Questions to Ask Yourself Before Getting Started,

         o    What do you like about it?

         o   What don’t you like about it?

         o   What would you like to see changed?

  • Are you responding to a customer mandate?

         o   How much business do you have with that customer?

         o   Do you have other customers who have requested an EDI connection with you that you haven’t actioned?

         o   How much business do you have with that (those) customer(s)?

  • What resources do you have available to spend on EDI?

         o   In terms of the initial selection of a solution or provider as well as on a day to day basis?

  • What systems and business processes are you already using?
  • How will engaging with an EDI process affect your operations?
  • Should you consider integration?
  • Are you getting the information you need to operate your business, in a timely fashion?
  • What kind of timeline are you working towards?
  • How much an EDI solution costs?

Ready to find out more about Commport EDI Solution?

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EDI Costs – Hard Vs Soft EDI Costs

EDI Costs - Hard vs Soft Costs

EDI Costs - Commport Communications

When problems arise with your EDI, it’s not only the compliance charges from your trading partner that ends up costing you money.

EDI is supposed to streamline your business by enabling documents to flow from your trading partners across the internet or a private network to your system and vice versa, without human intervention.  When this doesn’t happen … there are costs.

Hard EDI Costs

Hard EDI costs, which have an immediate impact to your bottom line, can come in the form of compliance charges if the problem you’re having means your outbound documents aren’t meeting your trading partners’ requirements.  Often charged per document, these can add up quickly if the problem is a systemic one that isn’t caught, and the mapping process that translates data from your ERP, Accounting or other business system into the EDI document that is sent is not corrected.  Seemingly one-off problems can be easily caught by a conformance checking process, if that’s something your EDI system enables.

Other hard costs can arise as a result of either missed orders that get lost in ‘the cloud’, or invoices that are never delivered to your customers.  Missed orders may not only mean that you miss out on that specific revenue, but can also aggressively sour your customer relationship, which in turn can contribute to declining sales.  Invoices that don’t make it to your customers on time can have a serious impact on your cash flow, as payments become delayed.

Soft EDI Costs

Soft EDI costs are those that you don’t see on your monthly expense reports, but chew up your resources, distracting them from contributing to your business growth.  These costs result from problems that take employee time to identify, work around, and/or resolve, such as performing track-and-trace with your provider or VAN, manually matching functional acknowledgments (aka 997s), and manual steps involved in ‘doing EDI’ if your system isn’t fully automated.  These issues are tedious and time-consuming for employees, meaning that energy is misallocated here opposed to being spent on building customer relationships, processing orders and other functions that ultimately helps the business thrive.

These types of EDI problems aren’t just an inconvenience – they also impact your businesses earning potential immensely – and if you are experiencing these issues, it’s likely a sign that your EDI ‘solution’ isn’t doing its job.  An EDI solution should be reliable. Documents should not go missing or be delivered late. Outbound documents should be validated, and you should be confident that you won’t receive rejection notices or compliance charges from your trading partners.  A service provider should be ready and willing to answer questions quickly and clearly, and should understand how ‘EDI problems’ translate into real-world business problems.

Ready to find out more about Commport EDI Solution?

Drop us a line today for a free quote!

Complete EDI Guide

This is one of the most up to date EDI guide you will find on the internet with over 11,500+ words. It covers topics like history of EDI, EDI stats and market growth, benefits of EDI, EDI transaction types, EDI standards and more

Total Cost of Ownership and Cloud EDI

If you are using a Cloud EDI solution you should consider your total costs of ownership. All the direct and indirect costs might be adding up and it may be time to consider moving to an integrated solution.

Cloud EDI Solution - Total Cost of Ownership

Like many businesses you probably faced the requirement to do EDI with one of your customers at some point.  At the time you were probably looking for a “cheap and cheerful” solution with low-up front setup costs and minimal on-going rates to keep the total costs of doing business with that customer as low as possible.  Makes sense.  If this sounds familiar, you probably went with an on-line or ‘Cloud EDI’ solution.  Using a Cloud EDI system, you login to a web application to retrieve your orders, create shipment notices, key in invoices, print reports and trade any other documents your customer has asked for.

In talking to our customers we have found that businesses often make this choice initially and then never revisit it.  Who’s got the time look into such a small thing and “if it isn’t broken, don’t fix it”, right? If you look a little closer at it you will probably find that over time your business with that first EDI customer has grown.  You’re receiving many more orders than you originally were, you’re invoicing them regularly, and maybe you’ve even had other customers start up with EDI.  If so, it’s probably time to start thinking about the ‘total cost of ownership’ for the solution you are using.

 

What is “Total Cost of Ownership”?

Cloud EDI Solution Costs - Commport Communcations

It’s an accounting concept that looks at all of the direct and indirect costs of a product or system.  For a Cloud EDI solution, direct costs would include a monthly account or access fee, any transaction charges, support fees, etc.  All of those line items that show up on your monthly bill.  Indirect costs are everything else that costs you time and/or money to use and support the system.  That means all of the time spent logging into a web application, printing out orders, building the shipment document and creating the invoices.  Plus any time your staff spends on the phone or emailing the provider to resolve issues as well as any time spent dealing with rejections from your customer or missing transactions.

When you start accounting for all of those things, the expense and related pain of what was once a “cheap and cheerful” solution can really start adding up.  For most businesses in this situation, ‘doing EDI’ results in a replication of work which further compounds the costs.  You already have an accounting system or an order management system that you have to deal with in order to manage your internal supply chain procedures.  So now you’re not just processing an order once, but twice.  You’re not creating an invoice once, but twice.  More than just a waste of time, this increases the chance of human error, and creates the need to reconcile and manage the two systems.

With one customer on EDI and only a handful of orders, these indirect costs aren’t significant.  As your business grows these costs start to impact your bottom line.  They also distract from business development activities.

Is there a better way to do EDI?

There is.  You see, EDI was designed as a common language between machines.  Its supposed to be automated so that one system can talk directly with another.  For example, your customer's ERP talking to your accounting or order management system (or both), without any human intervention.   That means it’s not supposed to be you, or your staff, logging into a Cloud EDI system to print out your orders or create your invoices.

In a better system, your orders come in and are fed directly into your business system.  No printing it, no keying it in, they are just there!  There is a lower risk of human error, faster processing speeds, and fewer delays.  You are  afforded the convenience of creating the shipment information  and invoices that should be sent out to your customer without needing to separately create the EDI documents.

How would that work?

With an integrated solution.  An integrated solution will feed orders directly into your system, whatever that system may be.   Ensuring you’ve got all of the details you need to fulfill and ship that order.  It will take a copy of your shipment details and convert it into the EDI documents that your customer wants.  It will do the same with your invoices.  The reports you need will be delivered to you automatically via email or in another format, so that you don’t need to go find it.

Going Integrated will give you the tools you need to track your documents in real time and access to reports that will help you reconcile your documents as well without the need to rely on your EDI provider or customers for verification. Simple and easy right?

It will cut out all the duplication of work that a Could EDI solution creates.  This means it will bring down the total cost of ownership and free up time so you can get back to focusing on your business.