Author Jason Greenberg, Channel Partner Manager SPS Commerce

In an age where the entire retail industry is seemingly reinventing itself every second due to unforgiving consumer expectations, retailers need a secret sauce to keep the lights on.

If you take a deep look into common elements of successful retailers, you will almost always find some form of electric data interchange or “EDI” as it’s known on the streets. As un-heroic as “EDI” sounds, it’s actually pretty cool in terms of what it can do for retailers.

At a basic level, EDI allows companies to exchange data electronically rather than by paper. At a deeper level, EDI serves as a driver of efficiency, common language in retail, cost and time reducer and all-around catalyst for explosive growth.

EDI won’t solve all your problems but it will ensure:

• E-commerce orders are fulfilled rapidly
• All participants in the supply chain engage in fast, reliable and accurate communications
• Your customers won’t experience late deliveries, stock outs or backorders
• End to end visibility for the consumer, retailer and vendor
• Human error is nearly eliminated
• Manual data entry is almost non existent
• Automation of the three-way match can drastically improve shipping and receiving

Here’s a small example of EDI working like it should:

So a consumer walks into a bar…and places an order from their mobile device. A few days later, their order arrives on the doorstep in a branded box from the retailer. This is the experience every consumer wants but not every retailer can deliver. On the back end, once the consumer placed the order, a purchase order, or an 850 as it’s called in EDI format, was sent from the retailer to the vendor to fulfill the order. The vendor was then able to immediately fulfill the order and send out an 856 (advance ship notice) to the retailer. The retailer can then let the consumer know the order was successfully shipped.

In this example the retailer was able to verify the inventory of the item, have the vendor ship the order in a timely manner and provide end-to-end visibility with the vendor and consumer. Without EDI, this order could still be fulfilled but it would have taken much longer due to manual data entry and no guarantee of a timely delivery.

EDI is not anything new but it’s becoming more and more of a critical step in meeting today’s consumer expectations. Think about it – have some of your vendors already asked you to begin using EDI? If so, you probably wondered how to get setup. Most retailers either do it themselves or have an outside provider take care of it. Outsource, or, keep in-house? That is the question.

In-house:

• Requires software
• Requires hardware
• Requires knowledgeable resources in-house
• Requires ongoing support within the organization to preserve EDI capabilities
• Must develop and maintain maps and requirements for each trading partner connection

At a glance: In-house EDI is more common with larger retailers since it requires a large investment upfront with a dedicated, full-time team to run, manage and update.

Outsourcing:

• Outsourcing takes most of the IT work off your shoulders.
• An online EDI solution requires no hardware.
• An online EDI solution requires no additional software.

At a glance: Outsourcing is typically more popular with smaller to mid-sized retailers since EDI documents can be sent within an existing ERP or retail management software like Celerant, accounting software or content management system. The trick is getting an EDI provider who can affordably integrate these systems to work seamlessly.

To summarize: EDI increases efficiency, strengthens your supply chain and provides seamless communication between you and your trading partners. These improvements can noticeably help you execute online orders and better satisfy consumer expectations. At the end of the day, EDI is fuel to retail success.

Are you ready to add rocket fuel to your business? Get started now with SPS Commerce and Celerant!