Including EDI In Your Business Integration Strategy

When data can be seamlessly integrated across the supply chain, between manufacturers, OEMs, Tier 1 and other suppliers, business processes across the board become more efficient and yield more revenue.

The goal of every manufacturing CIO is ultimately to increase operational efficiency while lowering costs. While this continues to be accomplished to varying degrees of success using a variety of methods, one area that has been largely overlooked for its potential to yield more value and use less resources is B2B integration.

When data can be seamlessly integrated across the supply chain, between manufacturers, OEMs, Tier 1 and other suppliers, business processes across the board become more efficient and yield more revenue.

However, consider the number of data sources a manufacturing plant is contending with on a daily basis. There is a wide network of external partners and suppliers, all using their own preferred file formats and data transfer methods. There are countless data sources pouring in new information from the plant floor. Not to mention, different types of information may fall under the purview of different departments within the organization, and these departments may use different formats and methods for integration.

All in all, this leads to multiple, siloed databases used to support different business functions, which in turn leads to a resource strain on IT, and ultimately results in a slow down of critical processes and business functions — in other words, major information bottlenecks. 

Manufacturers are feeling the pressure. According to IDC Manufacturing Insights’ webcast IDC FutureScape: Worldwide Manufacturing 2015 Predictions, by 2016, 30 percent of manufacturers will invest substantially in increasing visibility and analysis of information exchange and business processes, within the company and with partners.

This is no small undertaking and can quickly become overwhelming — where does the smart CIO begin?

The first step in upgrading integration systems for manufacturers should be integrating Electronic Data Interchange (EDI) with other forms of business integration being used across the organization into one, seamless, unified process.

EDI has been around for over 30 years and refers to the transfer of structured data between two organizations or “trading partners” using a set of standards that define common information formats to facilitate the exchange. By adhering to the same standards, two different organizations can electronically exchange documents, regardless of geographic location. Types of documents that can be shared include purchase orders, invoices, shipping notices and more. However, EDI is not universally implemented — some partners use it, but others may not.

In order to support business partners that do not "speak" EDI, there may be a huge volume of information that the manufacturer cannot run through their typical EDI software interface. To get these documents into a usable format, manufacturers either need to contract with a VAN, use manual processes, or write custom scripts. In each case, it means that documents are flowing through entirely different processes for EDI and non-EDI business partners, significantly complicating matters and adding unexpected costs.

Furthermore, it is often the case that EDI and non-EDI business partners are processed through different departments within an organization, further siloing the information and leading to inefficiencies. Even worse, and more common, is that EDI almost always exists as a separate island within a company and is not included within the normal business integration strategy umbrella. This happens due to two factors: first, EDI is an extremely niche and unique knowledge domain, and second, because while EDI software has traditionally performed EDI really well, it has limited capability for business integration.

In other words, both the EDI knowledge domain and EDI software tools naturally lend themselves to keeping EDI separate. Of course this isn't always the case. There are some EDI solutions that provide integration capability, and there are integration solutions that provide EDI capability. However, the EDI solutions are weak in integration and the integration solutions are usually too complex for EDI specialists to operate.

By bringing EDI into the fold with business integration, not only can manufacturers realize new efficiencies, but also reveal new actionable business insight. For example, let’s say supplier invoices were processed using EDI, but shipping and logistics were not. When all of this data can be processed through one integration solution, errors — even something as small as an order number off by one digit — can be more quickly corrected.

In order to experience the many benefits such as simplifying business processes, reducing operating costs, increasing end-to-end visibility, reducing errors, speeding up operations and responsiveness, manufacturers must invest in centralized technology that processes EDI and non-EDI partners and information streams the same way in terms of visibility, exception-handling, notifications, role-based access, etc. Otherwise, companies will still end up with siloed systems and separate processes.

At the end of the day, different stakeholders in the organization require different capabilities and features of their integration systems. Business users need access to actionable insight. EDI specialists need a platform that is easy to use and includes the features they need (such as Trading Partner Management, robust file management, automated EDI translation and a robust data dictionary of EDI standards). Integration specialists require orchestration, human workflow, bulk and real-time processing and data synchronization. As a result, manufacturing companies need to invest in a centralized platform designed to meet all of these needs.

The pressure has never been higher for manufacturers to produce more with less resources, and this includes IT resources. Consolidating integration into one seamless solution can eliminate redundancies and increase efficiency, aiding manufacturers in creating more streamlined partner networks and ultimately driving revenue to the bottom line.

Deepak Singh is the founder and CTO of Adeptia