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Getting business buy in to your EDI project: a guide for businesses onboarding suppliers
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)
[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;}"]printing related costs
[vc_column_inner width="1/12" css=".vc_custom_1584660587092{padding-right: 10px !important;padding-left: 10px !important;}"]+
[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 onlyPartner 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?
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The benefits of EDI: an infographic
Electronic data interchange, or EDI, is widely adopted around the world by companies looking to gain efficiencies, visibility and cost savings. But if you’re new to the concept, it can seem overwhelming.
Simply put, 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!
But what are the quantifiable benefits of EDI? We’ve gathered some data to explain the benefits at a quick glance.
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EDI more than just automating your supply chain
Looking for ways to improve processes is critical to any business, particularly in the areas of efficiency and cost reduction. Electronic Data Interchange (EDI) allows the exchange of business information directly between the software of your business and your customers and suppliers. It automates unnecessary manual processes while streamlining supply chain transactions.
Companies commonly implement EDI to:
With EDI, processes are automated reducing manual errors. For example, when a buyer places a purchase order (PO), it can automatically trigger an acknowledgement to let the buyer know it’s been received, and the order can be put into the supplier’s system.
Here is an example of EDI procurement for the same process as above:
When the supplier is ready to ship the order, an advanced shipping notice (ASN) can be created and sent to the retailer to advise them of delivery. This can include information like how it’s packed, when it’ll arrive, the shipping company and more. The supplier can the raise an invoice in their software, which can be sent automatically to their customer’s software. Without EDI, all these processes would require manual creation greatly increasing the risk of errors.Through the use of EDI many areas of the supply process are completed with no additional manual inputting of information.
Want to learn more about EDI? Download our introduction to EDI whitepaper.
- Gain better visibility into the supply chain
- Reduce errors in exchanging paper or PDF documents
- Reduce costs
- Increase information security.
Gain better visibility into the supply chain
With a manual purchase order and invoice, can a buyer answer questions like:- Can the supplier fulfil my order?
- When will the goods be shipped?
- When can I expect my goods to arrive?
- What is in each package I am about to receive?
Reduce errors in exchanging paper or PDF documents
Traditional procurement has many manual processes that are prone to error. Human mistakes occur for a number reasons including:- Inputting incorrect numbers or values
- Missing or skipping key steps in the process
- Transferring the wrong purchase order information
 |
|||||
| Buyer manually enters the purchase order in their software | Buyer sends order to supplier via email | Supplier manually enters the purchase order in their software | Supplier manually enters the invoice in their software | Supplier sends invoice to buyer via email | Buyer manually enters the invoice in their software |
 |
|||||
| Buyer enters the purchase order in their software | Purchase order appears in Supplier’s software | Supplier enters the invoice in their software | Invoice appears in Buyer’s software | ||
Reduce costs
In low-margin businesses, reducing costs is critical. Think of a company that issues thousands of purchase orders a month. They’ll likely receive at least one invoice for every purchase order issued. Without EDI, that’s a lot of manual handling. Some organisations have put a price on manually processing a single invoice in the ballpark of $30. You can see how it adds up! EDI vastly simplifies the supply chain process through automation. Some examples of costs reductions are:- Manual data entry costs: EDI automates many manual data entry processes, reducing the amount of labour required.
- Transaction costs: No physical sending of documents to your partners reduces costs related to printing, postage and filing.
- Receiving and shipping related costs: By receiving shipment information from suppliers prior to delivery, you can prepare in advance for receiving goods. By streamlining the receiving process, you can achieve reductions in labour costs.
- Error correction costs: Errors in the supply chain can result in extra costs being incurred. With the elimination of manual steps in your processes, errors are reduced. If errors do occur, they can be found and corrected much faster.
Increase information security
In today’s business environment, information security is a prominent issue. Sending sensitive information through unsecure channels can add risk to your business. You could be sending these via email, post or even SMS, which can easily be sent to the wrong person or even intercepted. EDI can send this information more securely than conventional methods. Using secure message communication types such as Secure File Transfer Protocol (sFTP) or AS2 decreases your risk. EDI adds a layer of authentication to the process which is required for the information to be sent. It also limits the connection to specific partners reducing the risk of your sensitive business information being sent to the wrong recipient.Newsletter
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