Benefits of EDI

According to research from GS1 UK, the grocery sector saves £650 million every year from its use of EDI. The research also suggests that the grocery sector could save a further £200 million each year from the automation of one single business document – the Advance Ship Notice. From a financial perspective alone, there are impressive benefits from implementing EDI with your trading partners and each additional document that you implement can increase that savings. But cost savings is far from the only benefit of using EDI.

But let’s start with cost savings anyway:

• Research has consistently shown that EDI costs at most one third of its paper-based equivalent
• One report put the cost at 70 times less. A major American company reported a reduction in its order processing costs from $38/order to $1.35/order with EDI
• The EU has reported that by taking 10 minutes less to process electronic invoices it saves 120 euro per invoice every year
• GS1 UK found that UK grocers saved £14 on every electronic order

The major benefits of EDI are often stated as speed and accuracy:

• Transactions that used to take 5 days by paper can be completed in under an hour. An American automotive corporation reduced a key cycle time by 97% – a 30-day process was reduced to 24 hours. And a major retailer reduced order cycle time by 75% from 24 days to 6 days
• Research has shown that with paper-based processes often as much as 5% of the data on an invoice is inaccurate
• More accurate data means that the entire supply chain is more efficient. Some estimates suggest that EDI can result in 30% faster delivery time to customers

However, the increase in business efficiency is also a major factor:

• Automating paper-based tasks frees staff to concentrate on higher-value tasks. It provides them with the tools to be more productive. Research reports as much as a 50% savings on human resources from the use of EDI
• The prompt processing of accurate business documents leads to less re-working of orders, fewer stock outs and fewer cancelled orders
• Buyers can take full advantage of better payment terms and discounts
• Sellers benefit from improved cash flow and reduced order-to-cash cycles
• Shortening the order processing and delivery times means that organisations can reduce their inventory levels – research suggests by an average of 10%, a major benefit when you consider that inventory often accounts for 90% of product costs

In many cases, the greatest EDI benefits come at the strategic business level:

• EDI enables real-time visibility into transaction status. This in turn enables faster decision-making and improved responsiveness to changing customer and market demands, and allows businesses to adopt a demand-driven business model rather than a supply-driven one
• Shortens the lead times for product enhancements and new product delivery
• Streamlines your ability to enter new territories and markets. EDI provides a common business language that facilitates business partner onboarding anywhere in the world
• Promotes corporate social responsibility and sustainability by replacing paper-based processes with electronic alternatives. This will both save you money and reduce your CO2 emissions

EDI at Work – Read about companies that have successfully deployed EDI solutions