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.

Seek help

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!

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A real benefit that’s often forgotten when it comes to electronic data interchange (EDI) is improved reporting. We all know that EDI reduces the amount of data entry errors, but not as many people leverage that data for reporting. EDI allows you to get accurate insights to make informed, data-driven business decisions. From tracking the performance of your suppliers to seeing how many orders you’ve sent, we’ve picked three reports all retailers should be using.

Purchase orders with outstanding invoices

EDI feeds invoices directly into your software so you can easily identify which ones are yet to be paid. This data’s important to keep track of a business’ liabilities and financial position. Keeping on top of outstanding invoices will improve your business liquidity and help maintain positive relationships with suppliers.

Order to shipment lag and order fulfillment rate

Advanced shipping notices (ASNs) are sent through EDI when goods are shipped. They let the buyer know what’s sent, when and how. It’s easy to grab this data from EDI messages to measure the amount of time between a purchase order being issued and the goods being shipped, as well as how much of the order has been fulfilled. This data can be used by retailers to measure supplier fulfillment rates, so you know your in-stock position. It’ll also make it easier for you to identify trends in a company’s ability to supply goods.

Purchase order date to receipt of goods date

Having an understanding how long it takes between placing an order and goods being received is imperative for retailers. The good news is retailers can easily track this metric from the data in EDI messages (like receiving an ASN and scanning SSCC labels as goods come in) to monitor supplier delivery in full on time (DIFOT) performance and optimise order management and stock levels. If you’re interested in improving visibility and gaining valuable insights, request a call from one of our EDI experts.

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Paying invoices can be a time-consuming task, especially for retailers who pay tens of thousands of invoices a month. Before payments are made, they need to check the goods have been received and the price and quantities on the invoice are accurate. The last thing they want is to be paying for things they shouldn’t be. But sometimes mistakes happen. They can be a result of human error like data entry mistakes. Or it could be something more sinister. The accounts payable team usually compares the quantity and price on an invoice against the purchase order, as well as the stock that’s been received. Unfortunately, the more checks that are done, the more time consuming the process is. That’s where EDI can help.

What is two-way, three-way and four-way matching?

It’s where the accounts payable team checks the quantity and price of an invoice against what’s been ordered and agreed to, and what’s been received. The number of documents checked determines the type of matching (eg. two documents = two-way matching and so on). So what documents are checked?[vc_column_inner width="2/6" css=".vc_custom_1593754872084{padding-top: 20px !important;padding-right: 0px !important;padding-bottom: 20px !important;padding-left: 0px !important;}"][vc_column_inner width="1/6" css=".vc_custom_1593753592414{padding-top: 20px !important;padding-right: 0px !important;padding-left: 0px !important;background-color: #1b75bb !important;}"]

Two-way matching

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Three-way matching

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Four-way matching

[vc_column_inner width="1/6"][vc_column_inner width="2/6"]

Purchase Order (Check price and Qty)

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Order Acceptance/Response (Check Qty)

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Order Receipts and Packaging Slips (Check Qty)

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Invoice (Check price and Qty)

[vc_column_inner width="1/6" css=".vc_custom_1593753317822{padding-top: 20px !important;background-color: #f9f9f9 !important;}"][vc_column_inner width="1/6" css=".vc_custom_1593753325484{padding-top: 20px !important;background-color: #f9f9f9 !important;}"][vc_column_inner width="1/6" css=".vc_custom_1593753338153{padding-top: 20px !important;background-color: #f9f9f9 !important;}"][vc_column_inner width="1/6"]And why do businesses choose to use two-, three- or four-way matching?

• It saves money It helps businesses avoid overpaying for items, paying for duplicate items and paying for things they haven’t received.
• It safeguards the business By checking the audit trail, it decreases the risk of paying fraudulent or incorrect invoices.
• It helps you pinpoint trouble suppliers Verifying invoice amounts and price can help make sure your suppliers are not taking advantage of you. Suppliers who consistently make mistakes on invoices can cost your business and could be a sign to look for alternatives.
• Prepares businesses for audits Auditors are specifically on the lookout for financial discrepancies. Compiling these documents in advance of an audit and checking that the numbers line up using the three-way matching process is a big step in the right direction.

How can EDI be used with two-, three- or four-way matching?

EDI (electronic data interchange) 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! So how does EDI work with verifying invoices? EDI gets all the data you need in your software – purchase orders, purchase order responses, shipping notices and invoices. It doesn’t require a person to type them in, they just appear. Once all the documents are received, a workflow can match each invoice with the corresponding purchase order, purchase order response and shipping documents. It’ll automatically check that the invoice price is what was agreed on, and the invoice quantity is not more than the amount of stock you received. It saves your accounts payable team time by automating the process. The benefits of using EDI with two-, three- or four-way matching are:

• automated document matching
• reduced time to make payments
• reduced labour costs
• more time for your accounts payable team to work on value-adding tasks
• less human errors.

Implementing two-, three- or four-way matching

There are few things to think about before you start using two-, three- or four-way matching in your business.

Decide what you want to achieve

You can take verification to different levels of details, these could be:

• Making sure you’re not paying for more than you ordered
• Making sure you’ve received what you’re paying for
• Or something else.

This will determine what level of matching is best to achieve your goals.

Decide what messages and fields to match

Depending on what you want to achieve will determine what messages and data you’ll compare: Two-way matching You’ll probably match:

• the price in the purchase order (PO) with the price on the invoice and
• the quantity in the purchase order with the quantity on the invoice.

Three-way matching In addition to the checks in two-way matching, you’ll probably match:

• the quantity of the goods shipped by the supplier.

This information can be found on the advanced shipping notice (ASN) or despatch advice. Four-way matching In addition to the checks in three-way matching, you’ll probably match:

• the quantity of the goods confirmed from your supplier. This information can be found in the purchase order response (POR), which you can ask your suppliers to send to you through EDI.

Decide what messages and fields to match

Once you know what messages you will be using you can get started with implementing EDI. Working with an EDI provider The first thing is choosing an EDI provider, check out our blog to learn more about what to think about. After that, your EDI provider will build out your business rules to automate the checking of EDI messages. When your business rules are set to your requirements then you are able to go live. Onboarding your suppliers Suppliers can only start sending you messages (i.e. POs, invoices, ASNs and/or PORs) once you have onboarded them.

• Your EDI provider can easily connect to suppliers that already have EDI capability.
• For the suppliers who aren’t EDI compatible, it may be worth providing them with a portal option to start sending messages quickly and easily to you. For MessageXchange customers, we offer a free portal, Colladium, to help onboard suppliers.

If you’re interested in learning more about two-way, three-way or four-way matching, fill in the form below and one of our experts will get in touch.

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Increased pressure for high margins has made more retailers look to alternative business models. One of these is drop-shipping. Retailers are moving away from just physical stores and warehouses to drop shipping. This is often coupled with e-commerce stores. As retailers adopt drop-shipping, they’re also starting to look at ways to make fulfilment fast and accurate. This is where EDI comes in.

What is drop shipping?

Drop-shipping involves retailers asking their suppliers to ship products directly to the customer. This means the retailer doesn’t have to invest in warehousing and logistics. The process typically looks like this:

1. The customer places an order
2. The retailer sends that order to the supplier
3. The supplier prepares order
4. The supplier ships the goods to the customer

There are a number of benefits of drop-shipping for retailers:

• It’s easier to get started It can be as simple as setting up an ecommerce website and sending orders to your suppliers.
• It lowers costs and capital investment There’s no need to hold excess stock so overheads are reduced. Logistics costs are also reduced or eliminated.
• It allows you to sell a wider selection of products You don’t have to hold stock, so you can sell as many product lines as you like. And there’s no limitation on how many suppliers you work with.
• It’s easier to scale your business As your business grows, you don’t need to think about increasing your store locations. Your costs vary according to the orders you make. This significantly reduces risk for your business as your fixed costs are reduced.

Why use EDI with drop-shipping?

Automate ordering processes

Drop shipping can bring a lot of benefits for retailers but it’s only successful if it’s done efficiently. Retailers typically need to submit orders through a supplier portal or by email or post. It’s time consuming and can cause errors, leading to slower delivery times and low customer satisfaction. But EDI can automate the ordering process. Retailers can send orders directly to suppliers’ software from their software, reducing the time to get the orders out, as well as costs.

Real-time visibility of orders

Another issue manual drop-shipping can present is a lack of visibility. Retailers can receive little to no information once they place an order – they’re often in the dark about the status, including whether the order has been sent to the customer. With EDI, suppliers can send advanced shipping notices or despatch advices to let retailers know when an order is being shipped. This often includes tracking numbers and other shipment information, which the retailer can use to update their customer.

Visibility of suppliers’ stock

With drop-shipping, retailers don't need to hold the inventory themselves, so it’s important to keep tabs on suppliers’ stock levels. Having no visibility of it can lead to long delivery times or even having to let a customer know that the item is no longer available. Using EDI, retailers can request suppliers’ stock levels so they always know what’s available.

How to get started

There are a few steps to go through to get set up with drop-shipping and EDI. You’ll probably have existing relationships with your suppliers, so your next steps might be to:

1. Establish a drop-shopping arrangement with your suppliers Work with your existing suppliers to see which ones are willing to enter drop-shipping arrangements. You can also discuss the opportunity with new suppliers who can add a wider range of products to your offering.
2. Move to EDI integration with your suppliers Speak to an EDI provider, like MessageXchange, to get you connected to your suppliers. EDI providers have different experience and pricing so it's important to review all your options. Check out our blog for things to think about when looking at EDI providers.
3. Test connectivity and messaging Once you've chosen your provider you'll need to test the connectivity and messaging to make sure everything is working correctly. You'll also need to test with your suppliers to make sure they can send and receive messages correctly. Check out our message compliance testing (MCT) tool for fast and accurate supplier onboarding.
4. Go live! You're ready to get started and start selling!

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Onboarding your suppliers to EDI is an exciting time, but it can be challenging, particularly when it comes to EDI message testing. If you’ve undertaken an onboarding exercise before, you’ll know that suppliers rarely get it right the first time around. Testing EDI messages often involves lots of effort from your team to process messages and communicate back to the supplier after each test. We’ve onboarded thousands of companies to EDI and our team have seen first-hand how resource-intensive it is. The good news is we now have a message compliance testing (MCT) tool. It simplifies the testing and compliance process to get you up and running with your suppliers faster. Your team will never have to let a supplier know that they’ve missed out a field again. Just think of the time and cost it could save!

What is message compliance testing (MCT)?

MCT is a service that allows companies onboarding to EDI to test their messages automatically before moving to a production EDI environment. It helps your suppliers to start trading via EDI as efficiently and effectively as possible.

How does it work?

Traditional EDI testing is a manual and resource-intensive exercise. Whether you do it yourself or outsource it, it usually involves sending suppliers all your EDI documentation (like your MIGs) and then testing each message type with each supplier to ensure they adhere to your requirements. This involves a lot of back-and-forth communication which is time consuming for everyone.

Define and setup your process

Our MCT tool lets you define a step-by-step process for your trading partners to test against your EDI requirements. The tool can replicate the different day to day business scenarios that you experience in your supply chain and then replicate them in your testing. For example, this could be:

• Receive a purchase order
• Send back a corresponding purchase order response accepting the order in full
• Send back a corresponding purchase order response rejecting the order in full
• Send back a corresponding purchase order response with a different quantity for one line
• Send back a corresponding despatch advice
• Send back a corresponding invoice

The syntax and business rules will be setup in the background for your suppliers’ messages to be validated against. For example, if you need the date in a particular format or a POR to include the reduced quantity. The process is designed to meet your business requirements and can be as simple or complex as you need.

Invite your suppliers

Once you’ve invited your suppliers to join, they can start the certification process.

Start the certification

They’ll be taken through your process where they can generate messages that they would receive (like a purchase order) and confirm that it can be processed on their side. Then they’ll be prompted to upload their messages to be validated against your syntax and business rules. Unlike manual EDI testing, our software will identify each error and feed the information back to your supplier in plain English. They can fix up the errors and try again.

Watch suppliers’ progress

Our reporting lets you monitor where each supplier is in the process and will let you know if anything needs actioning on your side.

Move to production with confidence

Once the whole flow is completed, you can move them to production with your mind at ease that their messages, business processes and rules will be compliant.

What are the benefits?

For those onboarding large communities to EDI:

• Reduce costs and less internal resources Automating your testing reduces the need for internal or outsourced resources.
• Easily monitor progress Our dashboards and reports make it easy for you to track the progress of your community.
• Increase testing capacity You’re not limited by how quickly your team can support your partners. All your suppliers can test at once.
• Faster problem resolution Your suppliers can find issues in messages and fix them straight away.
• No additional software required Our MCT service is accessible through a browser, anywhere with internet.
• 24/7 access It’s online and can be accessed at any time.

For those being onboarded to EDI:

• Move to production faster You don’t have to wait for anyone to get back to you with your results – see them on screen as you go. Fix the issues up straight away and try again. Once you’ve completed the testing, you’re ready to move to production.
• Troubleshoot errors straight away Errors are shown quickly once a message is sent – no need for back and forth communication.
• Test whenever it suits you It’s online, so all you need is a browser.

How do you get started?

We’ve made the process as easy as possible.

1. Get in touch with us.
2. We’ll document your messages, workflow and business rules.
3. We’ll go away and configure it.
4. You’re ready to roll it out to your suppliers.

We can configure your setup to any file format (including UN/EDIFACT D01B, UN/EDIFACT D96A, ANSI ASC X12, cXML, GS1 EDI and more) and business rules; it’s completely customisable. Click here to find out more. Or if you’re interested in learning more about our MCT tool, request a call back from one of our team.

Getting buy in to your EDI project from others in your business can be a challenge. But it’s a crucial step. Having the buy in from others will give you have support along the way and help make your EDI implementation smoother. We have extensive experience in helping businesses achieve success with their EDI projects. As a result, we’ve come up with some things to think about when engaging with various parts of your business to help you get their buy in. When going through the business, show your colleagues that you’re prepared. And remember to show them what’s in it for them.

Management

Often management is the first part of the business you need to get onboard. So, if you haven’t already been asked by management to undertake your EDI project, here are some things to think about:

Building your business case

It can be difficult to know where to start with your business case for EDI. When calculating your cost savings make sure you include: Orders Calculate the cost of sending a purchase order to your supplier.[vc_column_inner width="1/4" css=".vc_custom_1584660745420{padding-right: 0px !important;}"]

(time it takes to put together email or postage x orders sent x hourly rate)

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+

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printing related costs

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+

[vc_column_inner width="1/4" css=".vc_custom_1584660687060{padding-right: 0px !important;padding-left: 0px !important;}"]

postage costs

The cost of suppliers processing the orders incorrectly.[vc_column_inner width="1/4" css=".vc_custom_1584660745420{padding-right: 0px !important;}"]

number of orders incorrectly processed

[vc_column_inner width="1/12" css=".vc_custom_1584660555829{padding-right: 10px !important;padding-left: 10px !important;}"]

X

[vc_column_inner width="1/4" css=".vc_custom_1584660670420{padding-right: 0px !important;padding-left: 0px !important;}"]

time it takes to rectify the incorrect entries

[vc_column_inner width="1/12" css=".vc_custom_1584660587092{padding-right: 10px !important;padding-left: 10px !important;}"]

X

[vc_column_inner width="1/4" css=".vc_custom_1584660687060{padding-right: 0px !important;padding-left: 0px !important;}"]

hourly rate

Invoices Costs of processing an invoice for payment.[vc_column_inner width="1/4" css=".vc_custom_1584660745420{padding-right: 0px !important;}"]

time it takes to enter invoices into software

[vc_column_inner width="1/12" css=".vc_custom_1584660555829{padding-right: 10px !important;padding-left: 10px !important;}"]

X

[vc_column_inner width="1/4" css=".vc_custom_1584660670420{padding-right: 0px !important;padding-left: 0px !important;}"]

number of invoices

[vc_column_inner width="1/12" css=".vc_custom_1584660587092{padding-right: 10px !important;padding-left: 10px !important;}"]

X

[vc_column_inner width="1/4" css=".vc_custom_1584660687060{padding-right: 0px !important;padding-left: 0px !important;}"]

hourly rate

Costs of fixing incorrect invoice payments.[vc_column_inner width="1/4" css=".vc_custom_1584660745420{padding-right: 0px !important;}"]

Time it takes to fix errors in invoices

[vc_column_inner width="1/12" css=".vc_custom_1584660555829{padding-right: 10px !important;padding-left: 10px !important;}"]

X

[vc_column_inner width="1/4" css=".vc_custom_1584660670420{padding-right: 0px !important;padding-left: 0px !important;}"]

number of invoice payment errors

[vc_column_inner width="1/12" css=".vc_custom_1584660587092{padding-right: 10px !important;padding-left: 10px !important;}"]

X

[vc_column_inner width="1/4" css=".vc_custom_1584660687060{padding-right: 0px !important;padding-left: 0px !important;}"]

hourly rate

Warehouse Costs of updating incorrect data[vc_column_inner width="1/4" css=".vc_custom_1584660745420{padding-right: 0px !important;}"]

Time it takes to update inventory in system

[vc_column_inner width="1/12" css=".vc_custom_1584660555829{padding-right: 10px !important;padding-left: 10px !important;}"]

X

[vc_column_inner width="1/4" css=".vc_custom_1584660670420{padding-right: 0px !important;padding-left: 0px !important;}"]

number of orders with incorrect data

[vc_column_inner width="1/12" css=".vc_custom_1584660587092{padding-right: 10px !important;padding-left: 10px !important;}"]

X

[vc_column_inner width="1/4" css=".vc_custom_1584660687060{padding-right: 0px !important;padding-left: 0px !important;}"]

hourly rate

Once you’ve done that you can use these figures to work out your expected ROI.[vc_column_inner width="1/4" css=".vc_custom_1584660745420{padding-right: 0px !important;}"]

Savings

[vc_column_inner width="1/12" css=".vc_custom_1584660555829{padding-right: 10px !important;padding-left: 10px !important;}"]

÷

[vc_column_inner width="1/4" css=".vc_custom_1584660670420{padding-right: 0px !important;padding-left: 0px !important;}"]

(establishment costs + running costs)

* These calculations are to be used as a guide only

Partner onboarding plan

Getting partners onboard to EDI is critical for the success of any EDI project. Providing a plan to management can often provide assurance to them that ROI will be maximised. Make sure to include how you intend to segment and onboard suppliers. Check out our guide, 10 steps to successful community onboarding.

Information technology (IT)

Your IT team will be one of the impacted groups when you implement EDI. To get their buy in, and to make their lives easier, think about these things:

• Will they need to buy or install any new hardware or software? Some solutions require new hardware or software to be installed. Here at MessageXchange, we don’t require our customers to install any new hardware or software. We simply connect to your existing software.
• Will they need to additional resources to implement EDI? This is dependent on the EDI solution you use. With our technology, your software only needs the ability to import and export messages and exchange them via a secure connection protocol. Check with your IT team whether they can currently do this. If not, what resources will they need?
• Does the provider adhere to your security policy? IT teams are often aware of security risks to your internal systems. Put their mind at ease by showing what measures your EDI provider takes to keep your data secure. MessageXchange is ISO 27001 certified and having developed the software from inception, owns its intellectual property.

Finance

Another area of the business that you need buy in from is the finance department. Costs on the business are a big factor so it’s important to show the savings that will be gained from EDI. Finance teams will also benefit from the use of EDI. It greatly reduces the amount of manual inputting required and can automate a lot of their processes, leading to:

• improved efficiency, allowing staff to work on higher value tasks
• fewer errors: less time and costs to fix mistakes
• reduced costs: no need to printing and archive paper invoices.
• more accurate data for decision making.

Accounts payable

EDI can simplify accounts payables through two- or three-way matching. Rules can be put in place to check the invoice, delivery information and/or purchase order information for accuracy. This saves the accounts payable team time manually looking for documents before approving payments. Some suppliers offer early payment discounts for paying invoices early.

Accounts receivable

An added bonus for your accounts receivables team is reduced payment times. Studies show that EDI can reduce payment times by as much as 20%. This means improved cashflow for your business.

Buying/procurement

One concern for the buying and procurement teams is the impact it may have on their ordering process. EDI uses your existing software to produce and send the purchase orders to your suppliers. Usually the only change to your existing procurement process is that you won’t need to put together PDFs and emails or send purchase orders via post. Plus, through the use of purchase order responses and despatch advices, your teams will have more information at their fingertips like what can be fulfilled and when the order will arrive. And EDI orders can reach your suppliers almost instantly, so you’re more likely to get the stock faster.

Warehouse

Once you’ve implemented EDI, your business operations teams will be able to get the most out of the data received through EDI. Advanced shipping notices (ASNs) or despatch advices will get your warehouse teams delivery information before the goods arrive so they can organise the warehouse crew for receiving goods. This information can then be used to update your inventory levels in your warehouse management systems. The data from EDI can also be used to monitor your suppliers’ performance against KPIs with more accuracy.

Planning

EDI will mean some change for businesses so it’s often best to have a training plan for all departments. This should cover what's being changed in processes, such as:

• how accounts staff will process payments to suppliers?
• how buying teams raise purchase orders?
• how warehouse staff process deliveries?

On top of having a training plan, a contingency plan in place will also improve buy in and trust throughout the business. This assures departments of what to do if, in the unlikely scenario, something goes wrong.

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