Electronic Data Interchange (EDI): Resurgence past due?

A much maligned often overlooked technology is Electronic Data Interchange or EDI as it’s often commonly referred to. During the 1970’s and 1980’s it was seen as the solution to all business to business communication although high costs and many interpretations of so called standards lead to its stagnation. When all’s said and done though, EDI can drive tremendous savings and efficiency improvements throughout a supply chain and/or trading community…

For those of you still to discover what this acronym actually refers to, here’s an overview from Wikipedia – Electronic Data Interchange (EDI) is the structured transmission of data between organizations by electronic means. It is used to transfer electronic documents from one computer system to another, i.e. from one trading partner to another trading partner. It is more than mere E-mail; for instance, organizations might replace bills of lading and even Cheques with appropriate EDI messages. It also refers specifically to a family of standards, including the X12 series. However, EDI also exhibits its pre-Internet roots, and the standards tend to focus on ASCII (American Standard Code for Information Interchange)-formatted single messages rather than the whole sequence of conditions and exchanges that make up an inter-organization business process.

Now whilst this may sound technically complicated, it really isn’t. Long gone are the days where you had to employ teams of technical people and invest in expensive technology. Electronic trading relationships with customers, suppliers or partners can now be setup within hours and the business benefits reaped within days.

Imagine if you will a company sending all of its invoices electronically, properly matched and guaranteed to reach its customers computer systems within seconds. This is what EDI can do and it has a major effect of reducing average days of debt, streamlining accounts departments, improving cash flow and decreasing operating expenditure.

Wal*Mart, Tesco and many other retailers have effectively used EDI for many years although there are still many industries that have yet to experience its benefit. The Pharmaceutical industry for example is a market awash with paper documents, data and information that needs to flow up and down complex supply chains. Furthermore, due to regulatory and compliance issues, a lot of this data needs to be stored for retrieval on an as required basis.

Were this industry to embrace EDI and using structured messages and exchange these electronically in real-time with its partners, customers and suppliers, much of the cost and complexity of doing business would be eradicated.

EDI is certainly not the panacea of computing but is a well grounded methodology and proven way to drive significant supply chain improvements. Almost in secret, a small group of vendors have been addressing the pitfalls that blighted its uptake during the 1980’s and dare I say it “resurgence is just around the corner”.

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