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What is EDI Integration? How to Improve Supply Chain Management with EDI Integration Software

What is EDI?

Before we tackle the subject of what is EDI integration, let’s first understand what EDI actually is. Electronic data interchange (EDI) is a standardised communication method for organisations to share business information and documents, such as purchase orders, invoices, dispatch and delivery notes, debit and credit notes etc., in an electronic format. Replacing the traditional paper-based formats, EDI enables organisations to make supply chain management more efficient.

Widely used by distributors, food producers and suppliers, manufacturers, retailers, carriers and third-party logistics (3PLs), EDI transmissions are achieved by Direct EDI, AS2 (Applicability Statement), VAN (value-added network), Web EDI or Mobile EDI.

What is Direct EDI?

Direct EDI, also known as point-to-point EDI, is a secure, direct connection between two organisations that want to trade documents. Often used by large retailers that exchange a large amount of documents on a daily basis, Direct EDI is achieved by connecting the two trading partners via the internet using an established communication method or protocol.

This could be via SFTP (Secure File Transfer Protocol), FTPS (file transfer with added security layer), AS2, HTTP/HTTPS, SOAP API or REST API.

SFTP is a file transfer protocol that uses the SSH (secure shell) protocol (a method for secure remote login from one computer to another) and encrypted FTP commands to provide a secure way to transmit and manipulate documents via the internet, eliminating the possibility of password sniffing and man-in-the-middle attacks.

What is AS2?

One of the most widely-used methods of transmitting documents via EDI is Applicability Statement 2 (AS2), a protocol that requires two computers, a client and a server, to communicate over the internet via HTTP/HTTPS. AS2 creates an envelope for a message to be sent securely over the internet, using digital certificates and encryption. This provides the capability to deliver, validate and acknowledge data.

The only drawback with this method is that in order for AS2 to work the receiving computer must be online and available otherwise the message and information will be missed. AS2 became a standardised method within the retail and consumer packaged goods industries in 2002, with Amazon and Walmart being two of the main adopters.

What is EDI via VAN?

A VAN (value added network) is a central hub between trading partners, provided by a third-party provider, that enables them to upload, store and deliver EDI messages – exchange documents and business information. Multiple trading partners can access a VAN, each provided with a mailbox so that they can send and retrieve documents.

An organisation can connect to a VAN with whichever protocols they employ, thus not limiting the exchange of data between multiple trading partners. This reduces the complexity of EDI communication and helps increase compliance. Notifications can also be deployed meaning that organisations don’t miss any transfers.

What is Web EDI?

A more simplistic version of EDI, Web EDI replicates documents as a web form via a standard internet browser. Once the form is complete, the browser sends an EDI message to the recipient via HTTPS, SFTP, or AS2. This type of EDI is mainly aimed at smaller businesses that don’t need to transfer large amounts of data.

What is EDI Software and Services?

At the other end of the spectrum, there are now a multitude of dedicated EDI software products and services that make EDI management a great deal easier.

Some organisations, if they have the in-house technical expertise and knowledge, prefer to install and manage their own EDI environment and will therefore install EDI software.

There are a wide range of EDI solutions available, ranging from on-premises to cloud-based platforms, such as Transalis OpenEDI and TrueCommerce EDI.

Other organisations that don’t have the skills, knowledge or inclination, may prefer to outsource their EDI requirements by employing a third-party to manage the entire EDI process. These managed services remove the requirement for investing in infrastructure, instead usually offering a couple of payment methods, from pay as you go to a yearly subscription, for their skills and services.

What is EDI Integration?

A simplistic explanation of B2B EDI integration that may be stated is that it is the connection between two organisations which enables them to transfer documents. At its basic level, as we explained above, this can be achieved via Direct EDI or EDI via AS2.

However, EDI integration actually embraces much more than this, going far beyond the realms of simply connecting two organisations together.

Despite the ability to connect directly via EDI methods, organisations are also realising the benefits of deploying EDI middleware to integrate other business applications, systems and services with their EDI solutions, which enables them to automate a broader range of business processes.

Many organisations use numerous business systems and services, such as ERP, CRM, accounting, eCommerce, WMS, courier and shipping, and therefore need EDI integration software to enhance the capabilities of their overall EDI strategy.

Common EDI integration requirements tend to include:

  • ERP EDI integration: SAP Business One, SAP Business ByDesign, SYSPRO, Epicor, Sage 200 / Intacct, Microsoft Dynamics NAV, Microsoft Dynamics Business Central, Access Dimensions etc.
  • CRM EDI integration: Salesforce, SugarCRM, HubSpot CRM, Zoho CRM etc.
  • eCommerce EDI integration: Amazon, Magento, Shopify, WooCommerce etc.

Whilst some of these integrations with EDI are necessary to actually automate the transfer of data, it’s the overall integration and automation strategy of the organisation that also needs to be considered to streamline processes and improve efficiency.

Deploying dedicated EDI integration software will enable the organisation to join all the different, disparate systems and applications together, helping to reduce the number of data silos and streamline the flow of information.

An EDI middleware solution will be able to connect to any EDI set up, whether this is Direct EDI, EDI via AS2, EDI via a VAN, Web EDI or dedicated EDI software and services – many of which will provide APIs (application programming interface) to facilitate the connection.

It can then integrate with all the other applications, systems and services used within the organisation to help synchronise data and documents to improve supply chain management processes.

EDI Integration Software diagram

Image: EDI integration software can connect ERP and CRM systems with EDI solutions to automate data and document transfers

Why do you need EDI integration software?

The simple answer is to increase efficiency, and thus costs, by reducing the resources required to process EDI documents and data.

This is especially significant for organisations that are using a direct connection, VAN or self-managed EDI software, and are processing a lot of transactions – sending multiple purchase orders, invoices, dispatch and delivery notes, debit and credit notes etc.

The majority of these documents will be generated and stored within an ERP or CRM system and need to be transferred to the EDI solution to be distributed to the trading partner in the correct format.

Without an EDI integration software in place to automate this process employees will have to manually collate the documents, format the documents or messaging, and then transmit or upload them, which is time-consuming and could potentially lead to errors.

The other end of the data exchange is also applicable, with the organisation receiving the documents needing to push them into their own business systems. Again, the data will possibly need to be converted into a file that the ERP or CRM system can read and understand.

For example, the EDI integration tools in Codeless Platforms’ BPA Platform can automate the creation and back up of important XML files and also monitor key EDI data, enabling employees to concentrate on value-added tasks.

This is demonstrated by Bob Martin, a manufacturer and food distributor for pets and wild animals, which required an integration and BPA solution for the bi-directional transfer and conversion of files from customer systems in the grocery, independent and other pet speciality sectors to a format that its SYSPRO ERP system could read. Files now get dropped onto a secure FTP Server for BPA Platform to pick up, convert and transfer into SYSPRO.

“BPA Platform facilitates the integration between SYSPRO and TrueCommerce, depending on the site location, and converts files from the customer’s system. For example, when we receive an order from a major grocer through EDI BPA Platform converts them into a file that SYSPRO can read, sends an order acknowledgement, dispatch note and credit adjustments where necessary,” explained Andrew Cooke, CFO/COO Bob Martin and CFO Pets Choice Limited.

“BPA Platform checks for new transactions continuously, ensuring we’re efficient in our processing timeframes to keep customers happy. This data transformation and automation element is used by us for at least fifteen of our customers, including all major UK grocers.”

Download Bob Martin Case Study

With EDI integration in place, it is possible to automate numerous business processes, such as:

  • Sending and receiving purchase orders, invoices, advance shipping notes etc.
  • Converting files into required formats
  • Pushing data back into ERP and CRM systems, with rules-based workflow approval if required
  • Monitoring transactions and essential EDI data
  • Sending business alerts via email or SMS to company decision makers
  • Backing up important files

Grant Westfield, the designer and manufacturer of Multipanel®, a leading brand of waterproof wall panelling, utilises BPA Platform to automatically process 150 to 200 orders per day via TrueCommerce EDI.

“The orders we receive via EDI generates an XML file. BPA Platform processes and validates that file and loads it into Epicor. It is also processing files the other way – sending invoices out via email or by EDI. When BPA Platform is reading an XML file for an EDI order, if the EDI order doesn’t have all the information I need to load into Epicor, it’s searching for and retrieving that additional information. I then do a little bit of validation, as some of our customers are not great at using things like part numbers, which makes it a challenge to load as an order,” explained Mark Yates, ERP Specialist, Grant Westfield.

Download Grant Westfield Case Study

What are the benefits of EDI integration?

EDI integration tools combined with business process automation can increase operational efficiency, reduce costs, improve data accuracy and streamline performance.

Integrating EDI solutions with back-office systems, such as accounting, CRM and ERP, helps speed up data exchanges. This leads to vastly improved supply chain management, as transactions can be processed in real-time without any bottlenecks or delays due to employee inactivity holding the process back.

It also eliminates the possibility of any errors from manual data entry, thus improving data accuracy and providing both organisations with access to real-time business data. All systems across the organisation will be completely up to date, helping to improve decision making and increasing operational efficiency.

Removing the need for manual data entry, as well as generating and sending documents, enables an organisation and its employees to concentrate on value-added tasks that can help the business grow. Productivity can be increased across the organisation with employees having the time and resources to explore new opportunities.

Jackson Industries, a manufacturer of industrial power applications and portable power solutions, has automated many processes surrounding its EDI solution (GXS BizLink) using BPA Platform as manually performing the tasks used to take up a huge amount of man hours.

All sales orders are now imported from external sources (primarily GXS BizLink) into SAP Business One and order confirmations are exported from SAP Business One to the EDI solution. Resulting invoices are then synchronised between systems to eradicate unnecessary data entry. For customers with complex requirements, BPA Platform is also used to generate documents, such as recurring sales orders.

“We trade electronically with the bulk of our customers, mainly using an EDI package to import orders and export confirmations and invoices. Over 90% of our transactions use some form of electronic link. It would be impossible for us to realistically trade without this [BPA Platform] in place,” Thomas Jackson, Group Operations Manager, Jackson Industries.

A competent EDI integration solution can also help reduce EDI project times and costs by reducing the amount of coding and development time that is often required for integration. If the solution also provides business process automation capabilities this will further improve efficiency, reduce costs and help streamline performance.

For more information on how BPA Platform can help your business improve EDI transactions and supply chain management, download the brochure below or call us on +44(0) 330 99 88 700.

Frequently Asked Questions

Electronic data interchange (EDI) is a standardised communication method for organisations to share business information and documents, such as purchase orders, invoices, dispatch and delivery notes, debit and credit notes etc., in an electronic format. Replacing the traditional paper-based formats, EDI enables organisations to make supply chain management more efficient.
Many organisations use numerous business systems and services, such as ERP, CRM, accounting, eCommerce, WMS, courier and shipping, and therefore need EDI integration software to enhance the capabilities of their overall EDI strategy and to automate a broader range of business processes.
EDI integration software helps increase efficiency, and thus costs, by reducing the resources required to process EDI documents and data.
Integrating EDI solutions with back-office systems, such as accounting, CRM and ERP, helps speed up data exchanges. This leads to vastly improved supply chain management, as transactions can be processed in real-time without any bottlenecks or delays due to employee inactivity holding the process back. It also eliminates the possibility of any errors from manual data entry, thus improving data accuracy and providing both organisations with access to real-time business data.

BPA Platform Brochure

BPA Platform Brochure

The Business Process Automation (BPA) Platform enables you to quickly and easily build automated processes unique to your organisation through an intuitive drag and drop graphical user interface.

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