How to optimise your EDI and ERP system integration

Electronic Data Interchange (EDI) and Enterprise Resource Planning (ERP) systems have reformed how businesses function and communicate with each other. The EDI market is set to hit a revenue target of $58.98 billion by 2030 while the ERP market is projected to grow to $71.34 billion the same year.^{1 2}

In the face of this growth, businesses are increasingly realising how valuable it is to integrate the two systems. In today’s fast-paced and competitive market, integrating your EDI and ERP systems isn’t just a good idea — it’s a necessity.

With the right approach, EDI and ERP integration can vastly streamline operations, simplify your supply chain, and boost overall business efficiency. But doing it well can be easier said than done.

In this article, we’ll give you strategies on how to optimise this integration and how best to implement them.

Need a recap on EDI and ERP? Our explainer on Integrating EDI With Your ERP covers why this process is so important for your business.

The cost of poor EDI-ERP integrations

While EDI enables front-end connectivity between partners, ERP is crucial to single-source data storage and analysis, making both critical elements of how your business operates and communicates with partners.

The dangers of poorly integrating your EDI and ERP systems shouldn’t be overlooked. Some of the risks include:

• Data silos and inconsistencies leading to flawed decision-making
• Increased chance of human error due to manual data entry
• Delays in order processing costing timely deliveries
• Inefficient operations resulting in unnecessary costs
• Inability to scale operations effectively

Avoiding these requires a systematic, strategic approach to EDI-ERP integration. Let’s dive in.

Data mapping

At the heart of any successful EDI and ERP integration is data mapping. This is the process of linking fields from the EDI message to the corresponding fields in the ERP database.

It also plays into choosing the right EDI format. Different industries have different format preferences, and using the wrong format may lead to compatibility issues. For instance, the X12 format is common in North America’s transportation and logistics industry, while the EDIFACT format is more popular on a global scale.

What’s more, ERP systems are not tailored to any particular industry, unlike EDI, which is often associated with supply chains and logistics. This means that there are a number of critical EDI industry standards that your ERP system won’t inherently know, including EDIFACT, TRADACOMS, and PEPPOL.

Here’s how to approach data mapping:

• Identify data elements: Determine the data elements that need to be mapped from the EDI message to the ERP system. This could involve invoice details, order quantities, shipping information, etc. 
• Draw connections: Define how data elements in your EDI message correlate with the fields in your ERP system. 
• Regularly test: Run several tests to ensure that the correct data is being transferred and that no information is lost or misinterpreted during the process. 
• Review and make adjustments: Regularly review your data mapping setup to ensure it continues to meet your business requirements as they evolve. 

Suggested reading: For more information on how data mapping works, check out our in-depth guide: What is EDI Mapping?

Enhanced security measures

When integrating your EDI and ERP systems, it’s essential to employ robust security measures to protect your business and customer data. An EDI system that isn’t properly maintained is already vulnerable to data breaches. But if those breaches happen when it’s integrated with your ERP, you risk your entire network being compromised.³

Security is also critical to maintaining your reputation and customer trust. When you’re regularly dealing with sensitive information like shipping details, tracking numbers, and invoice details are constantly exchanged, securing your data exchange is non-negotiable.

• Data encryption: All data being transferred between the EDI and ERP systems should be encrypted to prevent unauthorised access. 
• Controlled access: Implement strict access control measures. Only authorised personnel should have access to sensitive data. 
• Regular auditing: Conduct regular security audits to identify potential vulnerabilities and address them promptly. 
• Data backup and recovery: Regularly back up your data and have a recovery plan in case of a system failure or breach. 

Ensuring scalability

You have to make sure that your EDI and ERP integration is scalable. As your business grows, you want your systems to be capable of handling increased data volumes without compromising performance. Scalability can be achieved through: 

• Infrastructure reviews: Regularly assess your system infrastructure to ensure it can handle the increasing data load. 
• Flexible design: The design of your EDI and ERP integration should be flexible enough to accommodate changes as your business evolves. 

System monitoring techniques

System monitoring forms a crucial part of optimising EDI and ERP integration. It is through this that you can gain real-time insights into data flow, and processing time, and see if any components of the system are underperforming. Effective system monitoring involves:

• Regular system health checks: These checks help identify anomalies, if any, in the system’s activities. They can be automated and scheduled periodically.
• Tracking performance metrics: This allows businesses to track the efficiency of their EDI and ERP systems by measuring parameters such as data processing time and transaction completion time.
• Error reporting: A robust error reporting mechanism can help identify issues early before they escalate into more significant problems.
• Data leak monitoring: This ensures the security of sensitive data passing through the EDI and ERP systems, alerting you to any potential leaks.

Identifying and resolving bottlenecks

Another critical part of optimisation is locating and resolving bottlenecks. These can be physical (like insufficient system resources), logical (like inefficient data processing algorithms), or operational (like uncoordinated activities between different business units). It’s important to employ a systematic approach to identifying bottlenecks, which includes:

• Profiling: This involves analysing the system to spot where delays are occurring. Profiling can be done at different levels, from studying individual components to assessing the entire system.
• Load testing: This simulates high levels of user activity to see how the system copes under stress. This can highlight performance bottlenecks that would not be noticeable under ordinary conditions.
• Identifying the root cause: Once a bottleneck has been identified, it’s then a matter of diagnosing the root cause. This could involve evaluating code, hardware, or even organisational practices.
• Solving the problem: Finally, measures must be taken to eliminate these bottlenecks. This could involve system upgrades, reprogramming, or even retraining staff.

Optimising your database

The database is the heart of any EDI and ERP system, storing and managing all the data that drives your business processes. Unoptimised databases can lead to slow response times, increased processing times, and system slowdowns. Here are some strategies to consider:

• Regular maintenance: Regular database maintenance, such as defragmenting and rebuilding indexes, can help keep your database performing at its best.
• Data partitioning: This involves dividing your data into smaller, more manageable pieces, each stored separately. This can significantly improve query performance.
• Caching: By storing frequently accessed data in memory, you can speed up data retrieval and reduce the load on your database.
• Database tuning: This is the process of adjusting various parameters and configurations to make your database work more effectively.

Efficiency assessments

Optimising your EDI and ERP integration isn’t a one-time project. Regular integration efficiency assessments can ensure that your system continues to function at peak performance. These assessments should focus on:

• Reviewing system performance: Regularly review how effectively your data is moving between your EDI and ERP systems.
• Evaluate costs of integration: Assess if the cost of maintaining your system is delivering a good return on investment.
• Ensure compliance: Keep up with industry standards and regulatory requirements changes as violations could result in fines or loss of business

Consider an EDI partner

While managing EDI-ERP integrations in-house might seem like the easiest choice at first, it can often lead to unnecessary costs and complications down the road. This is where dedicated EDI software and services come in.

By partnering with an EDI service provider, you can streamline your EDI-ERP integration, improve data accuracy, increase operational efficiency, and focus on your core business operations. Plus, the right one will assist you with regular monitoring and testing to ensure that everything is running smoothly.

• Consider your business’ best fit: Depending on your specific requirements, you may require a provider that offers self-service or managed solutions. The ideal to strike is one that offers both, leaving you to redirect your efforts to core business operations.
• Assess their product offerings: Don’t just aim for solutions that are specific to EDI-ERP integration. Check if your service provider of choice offers a range of products that can address your various EDI needs.

Optimise how your business functions with Data Interchange

The journey to seamless EDI-ERP integration can seem daunting. But with the right practices, a strategic approach, and a trusted EDI partner, this challenge can become a growth opportunity.

At Data Interchange, we offer comprehensive EDI and ERP integration solutions designed with your organisation in mind. With 35+ years of industry experience, a range of satisfied clients, and a commitment to state-of-the-art technology, we bring the expertise you need to optimise how your business addresses EDI.

• Seamless API integrations: Our Value Added Network (VAN) DiNet combines EDI and API connectivity to enable smoother exchange of data and integration between your systems — and your partners.
• Powerful mapping capabilities: XE is our answer to businesses searching for a mapping solution that can support all common EDI formats and is fully integratable with your systems and your partners.
• Managed file transfer (MTF) platform: Our best-in-class integration platform Epic offers B2B integration and Managed File Transfer capabilities, bridging gaps between your business’ systems, processes, and your partners. 
• Ongoing support: We have a dedicated team of experts in EDI that are ready to help you match your specific needs and demands with the best-fit solution(s).

Don’t put your operational efficiency at risk – get in touch to talk to one of our experts.

₁ Electronic Data Interchange (EDI) Market worth $58.98 Billion by 2030 – Exclusive Report by The Insight Partners

₂ Enterprise Resource Planning [ERP] Software Market Size, 2030

^₃ Why Using EDI Can Pose Cybersecurity Risks For Your Organization: A Guide To Making The Best Data Decision