How EDI Might Improve Supply Chain Efficiency?


EDI is short for ‘Electronic Data Interchange’. It is the intercompany exchange of commercial records in a common format. That means, it is basically an information system that provides functioning for smooth and automated exchange of data between various business partners that engage in trading. This exchange of data takes place in a very standard form that can easily be read by the machine and shared through a communication chain that connects businesses to other businesses. EDI can be said to be an efficient way to manage the supply chain as it provides quite a lot of benefits.

Supply chain businesses make good use of EDIs. Some might only use them for basic functions while others might make use of modern EDI softwares that provide more benefit in the current era where everything is going digital and thriving in an online setup. Modern EDI softwares can help in transformation by e-commerce channels. They can help companies in providing consumers and users with better services as they bring about transparency which builds consumer trust. It also makes the work easier for the business using it. This is why a business should try to get edi services that can help in making the supply chain more efficient.

Some other benefits of EDI that might help in improving supply chain efficiency are:


1. Its cost-saving feature

One of the most attractive features of EDI softwares is that it is cost-effective. As EDIs use more of a streamlined process, such documentation helps in keeping the company’s documentation in compliance with the EDI service standards. This in turn helps in avoiding fines that can be attracted due to SLA violations or any other performance gaps like delays.

Moreover, it also helps in cutting extra costs like those done on paper, printing, documentation as well as storage of these documents. It also helps in cutting the administrative costs as less staff is needed if the software does this work. This also cuts down the maintenance costs.

2. It is accurate

EDI is a great tool that actually helps companies in avoiding silly errors as well as huge mistakes as it eliminates the need for manually entering every piece of data. When this task of entering values and other information is done by hand, there are usually chances that one can make some mistakes. Then the ERP or Enterprise Resource Planning software might process the wrong figures itself. Hence, an automated system makes more sense to use for the purpose of accuracy.


3. It is faster

Having and using an EDI makes the process of processing data much faster as it is all automated. This eventually helps in speeding the business cycles. Its order processing can substitute the traditional method of cycle starting from order to the complete shipment and hence can lead to a reduction of about 50% to 60% with respect to the amount of time taken up in comparison. Time is also taken up when all the data entered into the system is done manually, using a software that enters and processes data automatically helps in cutting down the time taken for each task.

4. It is secure

One of the most important things for a business or company to work effectively is the security of data and inner function.  Businesses that opt for EDI models are safe and secure. Moreover, the solutions that are designed by EDI softwares ensure security and strictly only allow certain actions to be taken by authorised users only. These softwares also engage in archive tracking and auditing trail capabilities.


5. It is efficient

Most importantly, this software is efficient. This is due to the two main features it provides, that is, it is fast as well as accurate. This is the reason it has become very popular among different supply chain based businesses. It also helps in enhancing the overall efficiency of a business as well, this is because if such a task is automated then employees can pay their attention to more critical value-adding jobs rather than mundane and repetitive chores.

6. It has wide usage

The growing popularity of this software helps in making it seem more reliable and as almost everyone in the supply chain based business uses it, it has gained quite a reputation and has become accepted widely. Hence, using this software has become more efficient in the way that it allows good relations between different companies as they can easily compare and share needed data in a standard form that can easily be read, compiled, compared and understood.



In EDI transactions, information is transferred directly from one organisation’s computer programme to another’s computer application. It is a common electronic format that substitutes paper-based documents like purchase orders and invoices. Organisations can save time and reduce costly errors caused by human processing by automating paper-based operations. The location and arrangement of information in a document format are defined by EDI standards. Data can be shared quickly with these automated capabilities rather than over the hours, days, or weeks necessary with paper documents or other ways.

This is why in the current times, supply chain channels can be aided by modern EDI software. They can assist businesses in providing better services to consumers and users by increasing transparency, which fosters consumer trust. It also aids in reducing unnecessary expenditures such as those associated with paper, printing, paperwork, and document storage. EDI software also contributes to a company’s overall efficiency.

EDI software also aids in strengthening data security and internal function. It ensure security by allowing only authorised users to do specified tasks. This adds to the overall efficiency of EDI softwares, that is both quick and accurate and hence answers the question as to why it should be preferred for supply chain channels currently.

For bigger enterprises, EDI allows standards to be used across trading partners to provide consistent benefits. Adherence to EDI allows smaller enterprises to better integrate with larger firms with enormous budgets and clout.