EDI in the Digital Age

Are you familiar with the term “legacy system“? It is an IT term that describes an old, well-established system in a corporate software environment, which, while still in use, largely isn’t state of the art anymore. This also happens in the field of Electronic Data Interchange (EDI), where small and medium-sized businesses often use decades-old EDI systems and find themselves caught in this legacy system cycle. This contrasts with the fact that just recently a BVL study found that digital expertise and correct handling of data are increasingly becoming a competitive advantage. In order to capitalize on the opportunities offered by the digital transformation, businesses need to have a more intuitive approach to all things IT as well as a certain degree of willingness to innovate and to take risks.

Especially SMEs often show a certain reluctance when it comes to introducing a new EDI system. That is because they subscribe to a “status quo” mentality paired with a lack of strategy, even though this is an essential requirement for extended data integration. What makes SMEs especially reluctant is the technical and organizational implications as well the expenses that this effort entails. This is mostly related to the fact that existing ERP systems are not (yet) ready for EDI. More often than not, these “technical teething problems” can be resolved easily and quickly with expert assistance and pro-active support by an ERP provider in collaboration with an EDI partner. When implementing a state of the art EDI system, the first step should be the analysis of the company’s needs. Subsequently, all options should carefully be considered. This is both a challenge and an opportunity to identify optimization potential.

This remains unchanged in the new “EDI generation,“ since the main goal is still to achieve the highest possible degree of process automation via integrated data interchange and thereby avoiding manual and paper-based business processes. Among many other purposes, EDI is used to exchange order information between retailers and manufacturers as well as for invoicing (think e-Invoicing). In addition, several other business processes can be mapped with the help of EDI, including master data management. In addition, electronic delivery orders can be sent to logistics service providers. Customized e-commerce fulfilment processes also benefit from the use of EDI. State of the art EDI systems are a basic requirement for controlling complex merchandise flows, increasing productivity, meeting specific client needs and ultimately being prepared for the challenges of the digital age.