- EDI Webforms
- Single Touch Payroll (STP)
- Software providers
Establish clear proceduresIt’s important to have clear contact point for your trading partners to get in touch with you about EDI-related issues they may have. The last thing you want is a colleague who knows little or nothing about EDI being asked EDI questions and not knowing where to direct the question. Work out who will take care of EDI questions from suppliers and educate your team so they understand where to direct these enquiries. Another thing to think about having is a contingency plan if something goes wrong with your EDI. You need processes in place to be able to keep operating in the unlikely scenario of an issue.
Test, test, testThere’s nothing worse than sending EDI messages to your suppliers only for them to not receive it. Or even having suppliers sending you messages incorrectly. This can lead to stock not being on shelves and invoices not getting paid. Testing before going live can make the transition to EDI much more seamless. Organise a time to send and receive test EDI messages to and from your suppliers to ensure that you don’t run into any issues when you go live. If this sounds a bit too manual, you can use our message compliance testing (MCT) service on Colladium to automatically ensure the EDI messages you’ll receive follow the correct syntax and use the right fields.
Automate as many processes as possibleBefore getting started with EDI, think about all the things you want automated – an EDI automation wish list so to speak. Think about all the areas that take up too much manual processing or add significant costs, for example not knowing if an order can be fulfilled, or not knowing when it’s going to be delivered. You can even look at the invoice payment process, which is often time consuming for your accounts team. EDI can automate matching purchase orders and other EDI documents with your invoices to ensure they are accurate and legitimate.
Be picky when choosing an EDI providerIt’ll come as no surprise that it’s important to have a list of things you expect from your ideal EDI provider. Have a think with your team about what you want in your provider. Think about:
- if they meet your technical requirements
- if their business aligns with yours
- if they have the right experience
- if their support model works for your business
- if their pricing model suits you.
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Reduce costs and errorsThe big efficiency with EDI is there’s no need for emailing or paper, which has some obvious benefits. As your number of orders grow, so does manual processing and hence, the need for more hands on deck. EDI does a lot of the heavy lifting for you through automating a lot of your processes. Studies have shown EDI can reduce the cost of a financial transaction by up to 90% and exchanging an invoice through EDI can even cost less than a cent. Automation from EDI can stop those awkward moments where your customer asks why your invoice numbers are wrong or if a supplier delivers the wrong products. EDI can result in a reduction in transactions errors by up to 40%.
Faster delivery times from suppliersFor any businesses, one of their biggest nightmares is not receiving goods when they need it. Any way to make the procure-to-pay cycle shorter is always a benefit. EDI sends trade documents directly between your software and your partners’. No more emails and manual inputting. EDI automation can speed up business cycles by 61%.
Better supply chain visibilityThe best way keep track of all processes in the supply chain is through data. Businesses using EDI can find out whether a supplier can complete a purchase order. If you use advanced shipping notices (ASNs) with your suppliers, you can find out what a supplier is sending you and how they’re sending it. This can help your warehouse teams plan ahead for deliveries, so you can save time and resources. In fact, using ASNs can reduce receiving costs by up to 40%. Have more questions? Ask our experts by getting in touch below.
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We often get companies come to us when they want to implement EDI. And one of the points of confusion is often around where EDI fits in with their business processes and software. They ask what comes first – is EDI the cart or the horse, the chicken or the egg?As a general rule, we say EDI should support your business processes, not rule them. We suggest companies map out their process, whether it be existing or what they want them to be, then insert EDI at points that it can help. For example, if you want to scan inventory in when it arrives, you’ll probably choose to use an advanced shipping notice to get the data into your software ahead of time and have your suppliers attach scannable SSCC labels to their shipments. If your software conducts two-, three- or four-way matching, you’ll need to make sure you exchange the relevant messages that are used in those checks.
The other thing is, you don’t want to make your project bigger than Ben Hur – it’s ok to phase in different stages. Start with where it’s simple to bring EDI into the process. Then if there are other pain points down the track that can be resolved with EDI, then add them into the mix. A key reason for why projects can go awry is biting off more than one can chew.
Different industries, and even different businesses or different software all operate in their own ways. And there’s good reason for that. It’s important that you get your processes in a place that suit your business needs. EDI should ideally be used to bring in automation and to reduce your team’s workload.
Here at MessageXchange, our software can help with the EDI portion, but our powerful business process management layer can help fill gaps between EDI and your processes and software. MessageXchange is flexible enough, and smart enough, to cater to processes regardless of their complexity. For example, two-way matching can be conducted within MessageXchange itself by taking the EDI order and invoice and reconciling them against each other, then sending the result on. It can do the same with three-way matching by including the shipping notice too. It can even enhance the data in your message. For example, if you find it’s difficult for you or your suppliers to include a supplier number or GLN, MessageXchange can insert that into messages for you.
Looking for more information on this topic? Get in touch with us below.
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- Engaging suppliers Letting them know you’ll be onboarding them to EDI.
- Getting them familiar with requirements (MIGs) All requirements are normally shared via a message implementation guide (MIG)
- Schedule in testing Set up a time and deadline for testing of messages to start
- Test Send and receive EDI messages from your suppliers to ensure they are sending the correct data.
- Go live!
Testing is the most time-consuming processTesting is time consuming because it requires a lot of back and forth checking and communication with your suppliers. This takes time and puts more pressure on you to keep things moving along. A more efficient solution is to use a message compliance testing tool (MCT), like Colladium. It allows suppliers to test their EDI files, often through an online portal, without your team needing to check them. This means you don't have to wait for your EDI team to match up availability with theirs. In fact, your resources don’t need to be involved at all. This also allows the supplier to fix up any issues with their mapping or EDI file generation so that when they go live, you're not scrambling to resolve issues.
Make templates for your communicationsThis makes it easy for anyone in your team to communicate with suppliers consistently and accurately. The templates should include who your suppliers should contact, the expectations and requirements to onboard and their scheduled time for testing. Just be aware it is pretty normal for these templates to evolve over time as you and your suppliers learn. These templates can also be tailored to the supplier’s knowledge and readiness for EDI.
Communicate internallyIt’s key that everyone within your business is on the same page when it comes to onboarding. A step by step process should be finalised and communicated to your EDI team. This process should establish the roles for each part of the process and who to contact. Have more questions? Ask our experts by getting in touch below.
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What is mapping?A mapping translates a file from one format to another. For example, if your software exports an XML file but your customer requires an EDIFACT message, the mapping process transforms the XML to EDIFACT. The way MessageXchange work allows the mapping process to also incorporate business rules. For example, it can be used to enrich data, perform calculations and more. This is particularly helpful for those companies whose software doesn’t export all the information that a customer requires. A mapping is setup once and then it just runs. There’s no intervention needed when a new message comes in, the whole process of mapping a file is automated.
When would I use it?As I mentioned above, mapping is typically used when software isn’t able to export the file format required by a company’s trading partners. It’s the way to mediate between your software and that of your trading partners. It can even cater for your trading partners who have different requirements – logic can be setup to use certain mappings for certain customers. Mapping cover all message types too – so if you receive an order, the purchase order can be mapped from XML to EDIFACT, but the POR, ASN and INV can be mapped from EDIFACT to XML, for example.
What are the benefits of mapping?
It allows a company to easily comply with their trading partners’ requirementsThere’s no changing your software or investing in additional staff or other resources to manage this.
It automates processesIt’s ‘set and forget’. It just runs.
It’s scalableThere’s no extra work to do if your message volumes increase. Once the mapping is setup, any new messages that are exchanged automatically go through this process. If you're needing help with your mapping get in touch with our EDI experts by filling in the form below.
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Choosing an EDI standardThere are different EDI message standards used around the world. Once you choose a standard it will be used as the base for your MIG. Here are a few of the common ones and where they’re most used:
|UN/EDIFACT||Standard coined by the United Nations and the most commonly used worldwide, and heavily used in the Australian retail supply chain industry.|
|ANSI X.12||Commonly used in North America|
|EANCOM||Commonly used in the European retail industry|
|ODETTE||Commonly used in the European automotive industry|
|EbXML||Global standard developed by United Nations body for Trade Facilitation and Electronic Business Information Standards (UN/CEFACT) and Organization for the Advancement of Structured Information Standards (OASIS ).|
|TRADACOMS||Commonly used in the UK retail industry|
|HIPAAhow||Commonly used in the North American Healthcare industry|
|SWIFT||Commonly used by financial institutions worldwide.|
Choose the message types you want to use with your suppliersThis comes down to what your objectives are as a business. Here are some of the common messages and what they do:
- Purchase order Sent from buyer to supplier to order goods or services
- Purchase order change Sent from buyer to supplier if the original purchase order has changed
- Purchase order acknowledgement Sent from the supplier to the buyer to acknowledge receipt of the order
- Purchase order response Sent from the supplier to the buyer to let them know how much of the order can be fulfilled, and any discrepancies from the original order
- Advance shipping notice (or despatch advice) Sent from the supplier to the buyer to let them know when and how the goods will be shipped
- Invoice Sent from the buyer to the supplier for payment of the goods or services
- Recipient created tax invoice (RCTI) Sent from the supplier to the buyer for payment of the goods or services
- Remittance advice Sent from the buyer to the supplier to confirm payment
- Price/sales catalogue Sent from the supplier to the buyer with up-to-date product and pricing information
- Product activity data Sent from buyer to the supplier with the number of units sold and units on hand
- Transport instruction Sent from a buyer to a transport supplier (and related parties) to communicate transport arrangements
- Transport response Sent from a transport provider to confirm instructions
- Functional acknowledgement An automated response sent from a receiver of an EDI message to confirm receipt of the message.
Find out what data your ERP system requires to process your message typesThis is important because it’ll determine what fields and values you need from your partners. This includes things like:
- character limits
- whether only integers are allowed
- if it needs to be number
- how many decimal places
- whether the field is dependent on another field (conditional)
- whether a field is used for particular use cases only
- how calculations are made.
Putting your MIGs togetherThis is where you take everything from the previous steps and document it. Writing MIGs can involve a bit of work and so you can get an external party to help. This where an EDI provider, like MessageXchange, comes in. We can assist or lead the MIG writing process, developing it from scratch or upgrading your MIG. Find out more here. Have more questions? Ask our experts by getting in touch below.
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Purchase orderThis is sent from a buyer (retailer) to its supplier. It will tell the supplier exactly what they want supplied. It will tell the supplier where to ship the goods to, and it might even tell them when the retailer expects the goods by. A purchase order typically starts the procurement process. In the EDI world, you might see a purchase order referred to as ORDERS (EDIFACT) or 850 (ANSI X12).
Purchase order responseA purchase order response is sent from the supplier to the buyer (retailer) to let them know whether or not they can fulfill what’s been requested on the order. Typically, there are three scenarios – the supplier accepts the order in full (if they can fulfill everything as requested), the supplier rejects the order in full (if they won’t fulfill any of the order), or the supplier proposes changes to the order. Changes on the order response are typically changes to the quantity, the price or the delivery date. In the EDI world, a purchase order response can be called ORDRSP (EDIFACT) or 855 (ANSI X12).
Purchase order changeA purchase order change comes after a purchase order or purchase order response. It’s sent from the buyer (retailer) to the supplier. As the name suggests, it can be used to make changes to the original purchase order. Or if the supplier sends a purchase order response, some retailers send a purchase order change to confirm the supplier’s changes (response).
Advanced shipping noticeThis can sometimes be referred to as a despatch advice. It’s sent from the supplier to the buyer to let them know what’s being shipped and when. There are a couple of ways that retailers use a despatch advice. The first is a relatively simple one – it basically tells them how many of each product is being shipped, to where and when. It just gives retailers a bit of visibility. The second one is much more detailed. The retailer requires the supplier to tell them exactly what’s being shipped, how, to where and when. These ASNs have SSCC, or serial shipping container code, details on them. SSCCs are unique numbers that identify a unit. This can be a pallet, carton or something else. The supplier tells the retailer how many of each product are going into each pallet, for example, and what the corresponding SSCC number is. The retailer may also require the supplier to tell them the batch number, best before and expiry dates of the products in that pallet. The supplier then prints labels, with the SSCC number represented as a barcode and sticks it onto the pallet they’re sending. This information is sent to the retailer on the ASN ahead of the goods being sent. When the retailer receives the goods, they can scan the barcode to know exactly what’s on the pallet. In the EDI world, this message is called DESADV (EDIFACT) or 856 (ANSI X12).
InvoiceAn invoice is sent from a supplier to a buyer to let them know what to pay them for the goods or services they’ve supplied. Unlike invoices that you might send and receive by email, EDI invoices don’t typically have bank details on them, because these are usually agreed on as part of the supplier agreement. The EDI invoices generally just outlines the total to be paid, the breakdown of what’s to be paid and sometimes the payment terms, although these can also form part of the supplier agreement. In the EDI world, you might see the invoice referred to as INVOIC (EDIFACT) or 810 (ANSI X12).
Product catalogA product catalog gives the retailer details of the products you’ll be supplying to them. It can be as simple as supplying them with the GTIN or item number, product description and unit price. In the EDI world, this is called a PRICAT (EDIFACT) or 832 (ANSI X12).
Functional acknowledgementUnlike the other message types we’ve discussed here, functional acknowledgements aren’t your typical procurement messages. These are usually handled behind the scenes. They tell the sender of the message whether it’s been received and if it’s A-OK or why it might have been rejected. In the EDI world, these are called CONTRL (EDIFACT) or 997 (ANSI X12).If you have any questions or need help getting started, just get in touch!
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Get to know the ins and outs of eInvoicingThe last thing you want is to be unprepared. Getting to know the basics of eInvoicing makes this process much easier. Make sure you get to know what eInvoicing is and how it works. Learn about the use cases, the benefits, what it will mean for each of your teams (like accounts payable, accounts receivable, IT and others), what it will mean for your customers and suppliers, find out how others have used it as a start.
Get to know what eInvoicing providers provide beyond just eInvoicingJust like most industries, there are some eInvoicing providers who merely pass the invoice from A to B. But there are others who have capability to do much more. Here at MessageXchange, our powerful software can insert missing information, check the information you require is on the invoice and perform complex lookups, workflows, rules and more. This functionality is particularly useful for organisations who have complex business rules, automated payments and integrations with multiple systems.
Have a clear view of how eInvoicing will fit into your architecture and processesFor smaller organisations, it can be as simple as eInvoices coming in and out of your software. Even in this simple case, you’ll need to know how they will come in and out – through an API, can it drop and pickup files from an SFTP folder or does it need to use another method – and what format they will come in and out in – will it be an XML format, a CSV or something else? For larger organisations, accounts receivable invoices may come out of one system and accounts payable invoices may go into another. You may have a single integration point for any data coming from the outside world, rather than connect to your systems directly. Be very clear on what this process will look like for your company. On the accounts payable side, many organisations have automated matching against an order, or checking the vendor number or ABN or other data. Make sure you know how eInvoices will fit into this process.
Get familiar with your company’s IT policies for external vendorsSome companies require IT vendors to have backup, redundancy and service SLAs. Make sure you’re familiar with what your company requires so you can be clear about this in your tender.
- Document your setup and key information like:
- The software you use (and go into detail if your setup isn’t straightforward, for example if you have multiple systems)
- Whether you want to send and/or receive eInvoices
- How many eInvoices you expect to send and/or receive
- Break it down into sections. Example:
- Company information
- Technical requirements
- Business process requirements
- Procurement requirements
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Keep up to date with all that’s new and get some helpful tips about eInvoicing
1. What types of EDI solutions are available for me?There are two main types of EDI that are available:
Integrated EDI (EDI Gateway)An integrated solution allows you to exchange EDI messages directly from your software. When an order is sent to you, it’ll go to your VAN (value added network) then straight into your software. There’s no need to re-key it or anything. Then when you create the order confirmation, despatch advice or invoice, it will go directly from your software to your VAN and onto your customer. This option has the least impact on your current process and requires minimal manual processing.
Web portal/EDI WebformsThe simplest solution for EDI compliance is a webform solution. This allows you to logon to a web portal to view purchase orders and respond by sending back the required information such as purchase order responses, advance shipping notices and invoices. The information input into the web portal is sent directly to your customers’ software.
2. How much does EDI cost?The cost will depend on the product you go with:
EDI GatewayThe price to setup an EDI Gateway is determined on a few factors, including how many customers you trade with, your customers’ testing requirements, the complexity of your setup and more. After implementation, our pricing is based on your data consumption (file size) so you only pay for what you use.
EDI WebformsThere’s no setup fee to use our EDI Webforms (which we sometimes call FormXchange). You can get started from just $99 a month, which allows you to exchange as many messages as you like with one of your customers. Plus you can add an additional trading partner for just $49 a month.
3. How long does it take to implement EDI?The implementation time varies with every solution.
EDI GatewayThe implementation time varies depending on your requirements, complexities, the amount of testing you require, the amount of testing your trading partners require, your availability and more. It can take anywhere from a day or two, through to a month or more to get started.
EDI WebformsFor EDI Webforms, you simply register on the platform and you’re good to go. Some retailers require you to go through a testing and accreditation process, but our team are here to help you through that.
4. What does my customer mean by ‘accreditation testing’?Accreditation requires you to test your EDI messages before they’re sent to your retailers’ production systems. This just makes it more likely that you won’t have issues when you’re sending and receiving EDI messages. The testing checks your files and ensures fields are correctly formatted.
5. Do l have to make changes to my ERP system to get the EDI message?No, you shouldn’t need to – as long as your software can export and import files, your EDI provider will do a lot of the work connecting to your ERP system and mapping, or translating, the files to EDI messages. However, if your ERP software doesn’t handle certain EDI messages, like advanced shipping notices, you might need to use another bit of software to do that. We provide our EDI portal, Colladium, to our customers to help them send and receive EDI messages that might not be compatible with their ERP system.Have more questions? Ask our experts by getting in touch below.
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Educating themselves about eInvoicingGetting your head around eInvoicing – what it is and what it means for your business – is one of the most important steps. It’s a new concept for a lot of people, but there are some fantastic resources out there. The Australian Taxation Office (ATO) and New Zealand’s Ministry of Business, Innovation and Employment (MBIE), as the Peppol authorities, have some great information aimed at businesses and Government explaining eInvoicing and its benefits:
- ATO eInvoicing: https://www.ato.gov.au/Business/eInvoicing/
- MBIE eInvoicing: https://www.einvoicing.govt.nz/
- An introduction to eInvoicing: https://home.messagexchange.com/resources/whitepapers/an-introduction-to-e-invoicing-whitepaper/
- A guide to adopting eInvoicing: https://home.messagexchange.com/resources/whitepapers/a-guide-to-adopting-e-invoicing/
Getting internal teams on boardYou might be the one in charge of implementing eInvoicing, but there’s no doubt that it involves a number of teams from IT to accounts payable and accounts receivable and beyond. It’s important you get all the relevant teams involved to make sure their needs are met, so they know how it will impact them and so they can answer any questions they get from others internally or even customers and suppliers. Here are a couple of resources that might help:
- Getting your IT department ready for eInvoicing: https://home.messagexchange.com/blog/getting-your-it-department-ready-for-e-invoicing/
- Getting your accounts payable department ready for eInvoicing: https://home.messagexchange.com/blog/getting-your-accounts-payable-department-ready-for-e-invoicing/