In tough times, like now for a lot of businesses, we scramble to find cost savings. We search for the lowest hanging fruit. Easy wins. The things that’ll give us the best bang for our buck. One thing to look at is automating your procure to pay processes. This is where electronic data interchange (EDI) can help.
What is EDI?
Simply put, EDI is the exchange of business information directly between business software. Think of a purchase order being created in one company’s accounting package, and it ‘magically’ appears in the supplier’s software; no email, no PDF, no manual data entry. Well, it’s not magic, it’s EDI!
New to EDI? Learn the basics in our whitepaper, an introduction to EDI.
What are the benefits of EDI?
There are a few reasons why more and more businesses are shifting to EDI especially during tough times. These include:
- cost savings
- reduced errors
- greater visibility into your supply chain
- improved efficiency
- automated processes
- easier supplier reporting.
The key to EDI: getting your suppliers onboard
It all sounds fantastic, right? But it only works when your suppliers are onboard too.
There are a couple of important reasons why:
- It maximises your ROI
Every business wants to make sure they’re getting the most out of their investment. The best way to do that with EDI is to ensure your suppliers are trading through the same method. The cost savings you’ll see from EDI are per supplier. The reduced savings you’ll see are per supplier. And it’s the same with the other benefits.
- You use one process with all your suppliers
Businesses that don’t onboard all their suppliers have different processes for each. All this does is stop your team from eliminating errors and saving time. This is especially the case when receiving invoices. If you still receive email and PDF invoices your accounts payable team still need to manually input the figures into your system
You’ll face pushback. But that’s ok!
Onboarding to EDI has long been an issue of contention between companies and their suppliers. We’ve seen it all; their systems aren’t capable, they don’t have the knowledge, they can’t meet your deadline or it’s too expensive. We haven’t been involved in one onboarding project where all suppliers get onboard without any pushback. But that’s ok…
Have options ready
That’s ok… As long as you have options. This is where it’s really important you have a great EDI provider. Their experience and tools in this space can help you overcome all of this.
Consider staging your onboarding
This’ll make it more manageable. Plus, you’ll learn as you go. You could segment by:
- Those who you send the largest order volumes
This’ll get you the some of the biggest benefit straight up.
- Your most troublesome suppliers
If you’re spending lots of time rectifying these mistakes, think about onboarding this group first.
- Suppliers who can get going quickly, or who have experience in this area
They’ll likely be able to get onboard fastest.
- Or something else!
You can tackle each type of supplier within each of your stages. Each group will require a tailored communication so make sure it’s clear on what they need to do and by when. Once you’ve sent out your communications, you’ll need to do some testing. This will vary between suppliers using a portal and those who are integrated with their software.
If you’ve chosen the right EDI provider, they’ll be able to help you and call on their experience to get your suppliers onboard. If you’re interested in learning more about onboarding your suppliers to EDI, check out our free webinar!