What is EDI Software?

EDI Software Definition

EDI software, or Electronic Data Interchange, facilitates the exchange of information and documents between business partners.

For the electronics industry, companies can use EDI software to transmit key component data in a paperless environment, eliminating the need for documents to be sent using inefficient methods, like faxing or mailing.

What is EDI software

While transmitting information electronically, like the common practice of emailing RFQs and spreadsheets, is faster and more convenient, companies put themselves at a security risk by sending attachments instead of securely transferring data directly into a system or platform for managing component orders, pricing, and inventory. The manual element of updating data and sending attachments through email also increases the possibility of human error.

Beyond asking “What is EDI software?” it’s also important to ask what you can achieve by using EDI software. EDI software serves as the direct connection between platforms to intake and transmit key data in real-time and helps to eliminate the need for manual intervention or entry to keep records and databases accurate and up to date.

The benefits of EDI software are enormous. They include:

  • Streamlined processes. Automating the processing of business transactions means that business cycles can move up to 61% faster, leading to a shortening of order processing and delivery times. Automation helps improve customer service and allows for reduced inventory levels for cost savings. Additionally, with fewer hours devoted to manual, paper-based tasks, staff can focus on strategic objectives and increase productivity. Find out more about electronic component processing
  • Improved information flow. Data sent and tracked in real time reduces errors up to 40% compared to errors caused by manual data entry, lost or damaged faxes/mail, and illegible handwriting. Improving the order-to-cash cycle, in addition, helps to strengthen the relationships between business partners and improve overall cash flow.
  • Lower Operational Costs. EDI can help to save expenses including paper, printing, storage, filing, and document retrieval, lowering transaction costs by an estimated 35%. Human errors are reduced, leading to savings in costly error correction activities including investigation, negotiation, returns, restocking, and reconciliation in addition to potentially damaging your relationship with your customers.

Related: EDI Software Benefits: The Pros, Cons and Alternatives

While EDI is a better alternative to manual processes like emailing RFQs and POs, traditional EDI software also has its drawbacks, namely cost.  

EDI software can also be expensive to purchase, install and maintain. Not only must the system be compatible with business partner EDI systems, it also must work within the existing company network, communicating with accounting, inventory and warehouse, sales, and production applications that are in use in other areas of the company.

EDI systems can be complicated to use, requiring intensive and costly training. There is no one standardized format, so all partners must use the same system, or a single company’s EDI system must incorporate expensive translation parameters so that different systems in different formats can speak to one another.

The ideal EDI system would allow for:

  • Scalability. As your company grows, the system that is used to exchange information must grow with it. It doesn’t make sense for a small-to-medium enterprise to purchase a system intended for an extremely large corporation. However, it also doesn’t make sense to undertake the daunting process of changing over an EDI that your company has outgrown. It’s important to find a solution that can grow with you.
  • Compatibility. Ideally, EDI software would be able to take data from an electronic format and translate it to a standard format; and then reverse the translation when sending information back to the business partner. Don’t limit your company’s potential by its ability to exchange data in a specific required format – you should be able to do business with any organization large or small. Having an EDI system that is format-agnostic is crucial to that goal.
  • Security. Many methods of information exchange, although widely used, are unsecured. Data sent by fax, mail, or email is vulnerable to being lost, misplaced, or intercepted. It is imperative to be proactive in securing all proprietary data so that it does not fall into the wrong hands.

If you are looking for EDI software alternatives or a solution that is scalable, platform-agnostic with unparalleled security and most importantly, cost-effective, consider Orbweaver Connect.

Orbweaver Connect is a universal integration and translation engine built for the electronic industry that streamlines the bulk intake of data from disparate systems. Connect can intake diverse input types, like API, EDI, Excel and more, from any system and translate that data into a single easy-to-use, cost-effective platform for real-time communication between multiple formats or programs.

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With Orbweaver Connect, inefficient and outdated processes become a pain of the past. The Orbweaver Connect system can help your company to take charge of business data, offering all the benefits of traditional EDI without the headaches.

Watch our video on Orbweaver Connect below and reach out to request a free consultation or demo with a member of the Orbweaver team today.

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