EDI (Electronic Data Interchange) is the concept of electronic exchange of businesses documents between two trading partners using a standardized format. EDI is basically automating a process that is being done manually on paper. As a supplier if you want to a start doing business and sell your products to your trading partners, they will mandate you to exchange order-to-cash related documents via EDI based on their requirements. Whether you are just starting out or are doing EDI already, it is important to understand the EDI best practices and constantly keep improving in order to be in good standing with your trading partners and make it easier to work with internal cross-functional teams.
The most important thing during every phase of EDI implementation is to share information without any breakdown in communication between teams. This helps all of them stay on track with what is happening in the project. Even if someone from the team leaves or is out of office, there are no gaps in continuing with the project and keep it running. The trading partners will provide you their EDI requirements you need to follow in the beginning of the setup along with clear instructions and guidance. They will also inform you of any new products they might need as you develop a partnership with them. Everyone in your EDI team should not only understand their job in the overall process but their pieces affect the other members and how all the jobs together impact the outcome of the implementation. This is because it is not just one person who handles every aspect of a trading partner relationship.
Now let’s discuss the EDI best practices during every phase of EDI implementation process:
As you are getting started with planning of your EDI project, start with the evaluation of your internal infrastructure and resources to understand which solution will work best for your business. Answer questions like which business process should be supported, which type of EDI solution you should choose (managed EDI service, on-premise or cloud), what kind of skill set you have in your team and the skillset you would need externally, how much responsibility you want to take up, will a fully managed EDI provider work or you are only looking for an EDI solution and want to take care of the entire EDI operations yourself. Once you know the answer to these questions, start looking for affordable EDI solutions that fit your needs.
Have an open conversation about what they bring to the table and what your expectations are in terms of accountability, customer support, EDI project management (EDI mapping, end-to-end setups, EDI communication, EDI monitoring and query resolution). Do not get carried away by the pricing they give you. Evaluate all options best suited for your business and then decide which one you want to go with. Once you have signed a contract with an EDI provider or managed service, lay out scope, project timelines, approach, exception handling strategy, go-live dates, error monitoring support etc., assign roles and responsibilities and train the staff on the new EDI solution. Maintain a repository of documents about all trading partners’ details, their EDI requirements, transaction types, custom codes, planning documents etc. in a shared folder and share it with the entire team.
This is the phase where you deploy your EDI software and are ready to start trading with your trading partners. The repository of documents you have gathered in the planning phase includes the trading partner guidelines that will be used to take the next step. Your EDI service provider takes up the responsibility for all the mapping, translation, technical support and reporting. It is important you work out how your documents will flow from your trading partner to your EDI portal and vice versa. Your EDI service should work with you directly to onboard new trading partners once you have all the above information. They should work with your tech/EDI team to design the flow of EDI documents, ensure connections are dependable, all mappings are setup and ready to be tested.
It is now time to test all internal document flows before you go live. Before you reach out to your trading partner for setting up a date for testing, test the flow of documents from your ERP to your EDI portal (if applicable). For e.g. you might have to export a sales order in the CSV format from your accounting software and convert it into an EDI format and then think about sending it to your trading partner through the portal. Similarly, there could be multiple back-end systems you might be using that need to interact with your EDI portal. This is one of the most important stages of testing that most companies miss and are struck with surprises in production that can prove to break your implementation.
EDI testing can be an extended process depending on your trading partner and your back-end system integration requirements. You need a trained and technical staff to do all the above tasks whether in-house or skilled EDI consultants as back-up staff to carry out all activities as needed. Once you have the above basic requirements figured out, you can get in touch with the trading partner’s EDI and set up a testing date. After that, the first step will be to test the connection. The next step will be to test individual EDI documents one by one between your business and the trading partner simultaneously. The guide will tell you how long the testing process will usually take and what is expected of you as a supplier.
Once the testing is completed, there is a production date that is set from the trading partner to go-live and start sending and receiving the EDI documents. Your EDI provider and or EDI consultants should be able to handle everything and make this a seamless process.
Maintenance and Continuous Monitoring:
This is the phase where close monitoring is required to make sure there are no hiccups with any of the trading partner connections and integrations. Your EDI provider or consulting company needs to make sure the inbound and outbound documents are flowing correctly and there are no chargebacks. Make sure they respond to new trading partner requirements, track unmet needs, anticipate future requirements and triggering events.
Implement these below steps immediately if you haven’t setup an EDI monitoring process for your EDI implementation:
- Switch on your EDI system notifications or if you are monitoring manually, then check for any discrepancies at least 3 times a day
- Look for any incoming documents like rejected EDI 997s, unacknowledged documents, EDI 864s, EDI 824s.
- Check if your ERP and EDI systems have been setup for notifications or not. This is to notify you of any unprocessed documents if both systems are integrated.
- Resolve the errors- Focus on resolving the errors vs waiting for the errors to show up- Act at the right time.
Learn about the top 5 things you should know before signing EDI provider contract. When you know what to ask your EDI provider, you are more empowered to take the right decision or your business.