5 Most Common EDI Implementation Issues
and how to solve them
If you’re considering an EDI (Electronic Data Interchange) rollout in 2021, you aren’t alone. Last year’s disruption left a lot of businesses pondering ways to improve their supply chain management. EDI is a critical tool that brings stability, visibility and optimisation. But only if done right. An effective EDI implementation requires planning. You need to:
To help, we’ve put to use our three-plus decades of EDI experience at Data Interchange to compile a list of the five most common mistakes we’ve seen in action — and provided answers about how you can avoid them. We can fix EDI implementations that have gone wrong. But making sure that you get started on the right foot will improve ROI and ensure an effective outcome from day one. Let’s get started.
EDI is a great way to overcome complexity and improve supply chain management. But underestimating your supply chain can derail a project from the start. Remember, “EDI” isn’t just one thing — or really a “thing” at all. It’s a methodology encompassing many sets of standards and transmission protocols. Your solution needs to align with the requirements of your business, and all of the businesses within your supply chain.
Globalisation has resulted in larger supply chains — magnifying both the challenges and benefits of EDI implementation. A rigid EDI system won’t be able to connect all of these stakeholders, and could leave you struggling with manual inputs and ad-hoc procedures that will undermine the entire point of your investment.
The type of EDI you deploy has a large impact on your ability to manage complexity. Managed services and cloud-based software can resolve and simplify a lot of the integration challenges — more on that in the next section.
In addition to industry- and region-specific standards (for example, VDA in the German Automotive Industry), there are three common standards you will definitely need to incorporate:
You also need to make sure that your system is able to accommodate a number of different transmission protocols. These include repurposed protocols such as FTP, SFTP, and HTTP, and EDI-specific protocols like OFTP, X.400 and AS2.
High transaction volumes, global partners and relationships that span multiple industries are all likely complicating factors that need to be planned around. But complexity can take many forms. For example, don’t underestimate the challenge of onboarding a supplier with little experience using EDI.
“EDI types” are different approaches to exchanging information, and each has pros and cons. Choosing which one is right for your business is a critical early decision that will impact your entire experience with EDI. The main types of EDI are:
Each of the above strategies can be executed through self-service options or as a managed service. Managed services are a great shortcut to sidestepping implementation issues, and can help deliver seamless outcomes long-term. Particularly if you want to build a hybrid solution that deploys multiple EDI strategies, managed services can significantly simplify that process for your business.
Suggested reading: 10 Things to Look for in an EDI Managed Service Provider.
Strategies to help:
Modern EDI developments have focused on simplifying engagement with EDI. Web EDI is a great example of this, and the simplicity of using cloud-based tools (both from a management and user standpoint) make them critical to effective EDI implementation and long-term execution. If cloud-based tools and Web EDI capabilities are not delivered “as-a-service”, they are important to build in-house.
Fundamentally, if you don’t have the right skills in-house, a direct EDI solution is not the right choice. And don’t forget about your supply chain relationships. Your solution not only needs to match the technical requirements of your suppliers and customers, but also their EDI expertise and maturity. In every EDI solution, you should look for intuitive dashboards that filter reporting, simple upload tools that enable inexperienced users to submit data, and fully integrated solutions that minimise or remove manual steps.
Getting started with EDI will put your existing data to the test, and requires putting systems in place that will simplify the creation of data over time. A lot of EDI formats, for example EDIFACT, were not meant for humans to read or understand. That means catching and fixing errors is challenging and requires specific (and increasingly uncommon) skill sets. Even where possible, manual error detection is time-consuming and expensive — and can still result in transaction errors.
Strategies to help:
Bad data often originates at the order level. Typically, you will see incorrect prices, out-of-stock items and/or duplicate orders. The benefit of EDI on data quality is that you’re directly integrating systems, removing human error. But that data needs to be correct in the first place. The best place to check and improve the quality of your data is at the source — your ERP, or your trading partner’s. It’s then valuable to have error detection tools within your EDI system.
EDI brings you into closer contact with your supply chain partners. But by sharing information, you also expose elements of your internal system to those partners — and vice versa. International relationships can further complicate matters by adding different legal frameworks, privacy and data protection rules, and cultural expectations.
Strategies to help:
The security risks posed by EDI are partially physiological. Realistically, you were already sharing a lot of the information transferred by EDI with your supply chain partners — you are now just doing so in a new format. However, you need to ensure that encrypted transfer protocols are used, and proper data storage is undertaken on both ends. That means openly discussing security policies with your partners, and making sure everyone is comfortable with a set of best practices.
It’s also important to understand the sensitivity of your data. For example, order data isn’t very sensitive at all. Whereas, invoices potentially reveal commercially sensitive information. However, if you are managing very sensitive data, like healthcare information, more stringent precautions need to be taken.
Ultimately, EDI is about cost savings. An effective EDI solution will streamline your logistics and supply chain relationships — delivering process, workflow and cost efficiencies. But getting started can be expensive, and if you are plagued by implementation issues, a negative side effect will be additional costs. At the very least, this will increase your payback period.
Possible additional costs can be incurred at near every stage:
You also face reputation costs if your EDI implementation doesn’t go well. A lot of manufacturers will penalise suppliers if they get EDI wrong because of its impact on production lines.
Strategies to help:
Avoiding cost overrun comes down to planning. You need a clear understanding of your goals, in-house skills and supply chain relationships. You then need to make choices that will deliver a system aligned with the right outcomes.
Internally managed systems have the potential to generate the lowest direct costs. However, if that system fails, or requires significant changes or additions to your organisation, the benefits of an in-house solution can quickly disappear. EDI via VAN and/or Web-EDI are invaluable assets for a business looking to create a more flexible solution and simplify elements of implementation.
Critical to effective EDI implementation is a clear set of goals and a solid understanding of your supply chain. Be honest about your in-house expertise and remember to consider the requirements of your suppliers and customers — their technical requirements, and their level of EDI expertise.
Fundamentally, you should look to simplify the use, management and flexibility of your EDI system at every turn. You need a hybrid-outcome that is able to accommodate the full spectrum of formats, standards and protocols, and be used by people with limited EDI experience. Likely, that means using a combination of EDI via VAN, Web-EDI tools and managed services.
Lastly, stay focused on the business outcomes that EDI can deliver. Part of that benefit is supply chain efficiency. But a better understanding of your supply chain relationships can upgrade your strategic and tactical decision-making, helping you become a more supply chain centered business.
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