Unit 3: Electronic Data Interchange (EDI)

EDI is a standard format to exchange business information between two organizations electronically in -
stead of using paper documents.

EDI, which stands for electronic data interchange, is the intercompany communication of business docu -
ments in a standard format. The simple definition of EDI is a standard electronic format that replaces pa -
per-based documents such as purchase orders or invoices. By automating paper-based transactions, or-
ganizations can save time and eliminate costly errors caused by manual processing.

In EDI transactions, information moves directly from a computer application in one organization to a
computer application in another. EDI standards define the location and order of information in a docu-
ment format. With this automated capability, data can be shared rapidly instead of over the hours, days
or weeks required when using paper documents or other methods.

It is commonly used between two business partners or B2B ecommerce.

In EDI, the same process would be as follows.

--> A prepares list of items to be purchased in his system.
--> EDI prepares an electronic Version of the Purchase Order.
--> A sends the Electronic Purchase Order automatically to B.
--> B Receives the Purchase Order and updates the ledger after checking the standards automatically.
--> B automatically sends an acknowledgment back to A to confirm the receipt of Purchase Order.

How EDI works

All EDI transactions get defined by EDI message standards. It is vital to have proper governance pro -
cesses for data quality. When information is missing or in the wrong place, the EDI document might not
be processed correctly.

In general, there are two basic types of EDI transmission:

· Point-to-point or direct connections: Two computers or systems connect with no intermediary

over the internet, generally with secure protocols.
· Value-added network (VAN): A third-party network manages data transmission, generally with a
mail boxing paradigm.
EDI internet transmission protocols include Secure File Transfer Protocol (SFTP), Applicability Statement
2 or AS2, an HTTPS-based protocol, Simple Object Access Protocol (SOAP) and others. EDI data elements
include items such as sender ID and receiver ID. Data segments combine two or more related elements
to give them greater meaning. For example, FNAME and LNAME can combine to form CUSTOMERNAME.
Envelope’s structure different types of data and carry the sender and receiver address information. EDI
document flow or message flow describes the movement of EDI messages to various inbound and out-
bound addresses and departments to execute a business process or transaction.

Benefits of EDI

· EDI generates cost savings: Having the appropriate EDI data interchange solution in place can
allow companies of any size to execute workflows and processes that can significantly reduce
costs. There are many expenses that are associated with the manual processing of documents
that include printing, faxing, mailing, postage, etc. All these expenses can be eliminated by an
electronic data interchange process that allows for an easy automated flow of business informa -
tion between organizations. An efficient process such as this can aid in avoiding chargebacks, de-
lays, lost orders, and other performance inhibitors.
· EDI increases speed: Another inherent benefit associated with EDI for data interchange is a dra-
matic increase in speed to the procurement cycle. EDI documents, for example, the most com-
monly used, EDI 850 Purchase Order, EDI 855 Purchase Order Acknowledgement, EDI 856 Ad-
vance Ship Notice, and EDI 810 Invoice, are electronically transmitted between organizations,
enhancing supply chain, order purchasing, and invoice sending processes. An EDI order allows
for a much quicker process compared to a manual order process from one party to another.
Businesses that adopt EDI can expect to reduce the order to ship time by over 50%. Having an
efficient and speedy supply chain is essential for competing with other companies.
· EDI allows for order accuracy: One of the biggest downfalls of manual processing for data inter-
change is error-prone data entry. Inaccurate data cost companies time and money in addition to
possible delayed or lost orders. EDI streamlines the procurement process and allows for data ac-
curacy eliminating the need to re-key information. Having this level of accuracy allows compa-
nies to focus resources elsewhere, while increasing efficiency in data interchange processes like
order purchasing or invoice sending.
· EDI creates efficiency: The combination of EDI benefits such as speed and data accuracy, result -
ing in greater business efficiency where companies can streamline their day-to-day processes,
simplify operations, and not have to worry about error-prone data, reduce lead time, eliminate
chargebacks, delays, or lost orders. EDI is useful for an effective and efficient supply chain man-
agement with the quick and accurate exchange of business information resulting in a shortened
procurement cycle, faster ship time, cost savings, and other processes like order purchasing or
advance shipment notices. Companies can also expect to see improved communication and rela-
tionships with partners.
· EDI ensures information security: One of the biggest concerns with technology is the security of
information. Fortunately for companies, having the right EDI solution provides data security. EDI
solutions by design are meant to completely secure. Some security features of EDI include ar-
chive tracking and audit trail capabilities. This secure network provides companies the ability to
easily exchange data internally with security protocols and standards in place.
· EDI enhances strategic decision-making: The goal of any business is to continually grow. To ac-
complish this companies must utilize their time and resources to the best of their abilities. With
the right EDI solution in place, companies can shift focus from daily tasks that can be automated
and improved to make more strategic decisions that will directly correlate to business growth
and expansion.
EDI implementation
For some enterprises, EDI can be difficult to implement. One reason is the need to keep pace with shift -
ing government regulations, standards and updates. It is also inherently complex, as it needs to accom -
modate the complexities of global business needs. For example, each trading partner in a B2B network
can present individual requirements. Even though two partners may agree on which EDI document to
use, each can have unique formatting requirements that need to be supported. These factors, and oth -
ers, have led many organizations to outsource their EDI solutions.

Whether in-house or outsourced, there are some basic conditions, capabilities and resources needed to
implement EDI effectively. In addition to factors such as agreement on document types, secure trans-
mission methods, and requisite hardware and software, an effective EDI implementation should con-
sider:

· Translation or mapping software

This type of transformation software takes fields such as names, addresses, currency amounts,
part numbers and quantities, and maps them from business application formats into standard-
ized documents and vice versa.

· Batch enveloping or de-enveloping capabilities

These capabilities support large EDI message batches by enabling senders and receivers to wrap
and unwrap transactions. The transactions can then be grouped from or split into several divi-
sions or areas of a trading associate’s business.

· Message routing mechanisms

After a message is de-enveloped, routing mechanisms are required to sort the messages for dif -
ferent groups and deliver them to the appropriate targets. Message transformation may also be
required to get the message into the correct format for its destination.

· Trading partner agreements (TPA)

TPA clarifies terms and conditions, establishes standards for business documents and defines
communications and business protocols between trading partners.

AS2

AS2 which specifies how to connect, deliver, validate and acknowledge data, and creates an envelope
for a message which is the sent securely over the internet. An implementation of AS2 involves two ma -
chines, a client and a server, communicating with each other over the internet using HTTP/HTTPS proto -
col.

Traditional Vs EDI

A Traditional Document Exchange of a Purchase Or-
der
This process normally takes between three and five
days.
Buyer makes a buying decision, creates the purchase
order and prints it.
Buyer mails the purchase order to the supplier.
An EDI Document Exchange of a Purchase Or-
der
This process normally occurs overnight and
can take less than an hour.
Buyer makes a buying decision, creates the
purchase order but does not print it.
EDI software creates an electronic version of
the purchase order and transmits it automati-
cally to the supplier.
 Supplier's order entry system receives the
Supplier receives the purchase order and enters it purchase order and updates the system im-
into the order entry system. mediately on receipt.

Buyer calls supplier to determine if purchase order Supplier's order entry system creates an ac-
has been received, or supplier mails buyer an ac- knowledgment an transmits it back to confirm
knowledgment of the order. receipt.

Components of EDI
Computer-to-Computer
Computer-to-computer EDI replaces postal mail, fax and email. While email is also an electronic ap-
proach, the documents exchanged via email must still be handled by people rather than computers.
Having people involved slows down the processing of the documents and also introduces errors. In-
stead, EDI documents can flow straight through to the appropriate application on the receiver’s com-
puter (e.g., the Order Management System) and processing can begin immediately. A typical manual
process looks like this, with lots of paper and people involvement:

The EDI process looks like this — no paper, no people involved:

Business documents

These are any of the documents that are typically exchanged between businesses. The most common
documents exchanged via EDI are purchase orders, invoices and advance ship notices. But there are
many, many others such as bill of lading, customs documents, inventory documents, shipping status
documents and payment documents

Standard format

Because EDI documents must be processed by computers rather than humans, a standard format must
be used so that the computer will be able to read and understand the documents. A standard format de -
scribes what each piece of information is and in what format (e.g., integer, decimal, mmddyy). Without
a standard format, each company would send documents using its company-specific format and, much
as an English-speaking person probably doesn’t understand Japanese, the receiver’s computer system
doesn’t understand the company-specific format of the sender’s format.

There are several EDI standards in use today, including ANSI, EDIFACT, TRADACOMS and ebXML. And,
for each standard there are many different versions, e.g., ANSI 5010 or EDIFACT version D12, Release A.
When two businesses decide to exchange EDI documents, they must agree on the specific EDI standard
and version.

Businesses typically use an EDI translator – either as in-house software or via an EDI service provider to
translate the EDI format so the data can be used by their internal applications and thus enable straight
through processing of documents.

Business partners

The exchange of EDI documents is typically between two different companies, referred to as business
partners or trading partners. For example, Company A may buy goods from Company B. Company A
sends orders to Company B. Company A and Company B are business partners.

Types of EDI
EDI Type 1: Direct EDI/Point-to-point

Direct EDI, also known as point-to-point EDI is the oldest and most traditional form of EDI. It ’s often de-
ployed on-premise and delivers a direct line of communication between two businesses through an EDI
software package that utilises agreed-upon protocols, including AS2, OFTP or SFTP.

Benefits & drawbacks of this type of EDI

· When you use on-premise EDI, you are in full control. You can service the platform yourself,
which means you do not need to wait around for third-party support teams. There are also no
additional costs. By comparison, if your EDI is not on-premise, you will usually pay for data and
hosting services.
· For many businesses, the downside to communicating individually with each business partner is
managing potentially hundreds or thousands of separate connections. Throw different commu -
nications protocols into the mix and things can grow even more complicated, as your system
must be able to support each of these protocols. Remember, you need to accommodate every
EDI standard used within your supply chain — e.g, EDIFACT, VDA, X12, to name just a few.
Managing these inevitable complexities requires a competent team with the right skills. However, find -
ing and maintaining such a team can be challenging due to EDI skill shortages — as many as 29% of busi -
nesses state they lack the resources to build and maintain integration in-house. It’s important to note
that Direct EDI requires the most in-house expertise of any of the options on this list.

Who should use this type of EDI

Direct EDI is most commonly used between larger customers and suppliers with significant numbers of
daily EDI transactions. These solutions are best suited for businesses with in-house expertise and a lim -
ited number of stable supply chain relationships. If you do want a Direct EDI system, consultancy ser -
vices like those offered at Data Interchange could help you set up a point-to-point solution. But, ulti-
mately, you are left in charge of managing your own system — unless the system is part of a managed
solution, which we’ll elaborate on a bit later.

EDI Type 2: EDI via VAN

Probably the most common type of EDI used today is EDI via Value Added Networks (VAN). EDI via VAN
is a cloud-hosted solution that deploys private networks provided by EDI specialists (or VAN providers)
to connect you and your trading partners. The VAN provider manages the network and provides organi -
sations with ‘mailboxes’ where you can send and receive EDI documents, such as purchase orders and
invoices.

Benefits & drawbacks of this type of EDI

As compared to a Direct EDI solution, a VAN is much more flexible, particularly when it comes to manag -
ing a large number of different relationships or turnover within your supply chain. Fundamentally, EDI
via VAN can reduce your risks, minimise your costs and increase your efficiency.

However, using a VAN does not eliminate all of your problems. You lose some degree of control over the
flow of your data once sent into the VAN, and are effectively adding another step in the chain that is re -
ally just a middle man. You still need to ensure effective connection to the VAN, and its use by your sup -
ply chain partners. It’s also worth remembering that your customers will each have their preferred B2B
data communication methods — once again, this means many different standards and communication
protocols. Depending on the VAN in question, these may or may not be supported, and you need to en -
sure that compatibility.

What to look for in this type of EDI solution

When looking for a Web EDI solution, you’ll want to find a product that offers intuitive dashboards, sim-
ple upload tools and fully integrated functions. Our Web EDI software, Darwin Hub, delivers these, as
well as the core functionality required to enable your suppliers to exchange standardized data with only
a web browser. Darwin Hub also seamlessly integrates with your internal business systems, tailoring the
EDI environment to meet with your business rules, processes and specifications. Darwin Hub can help
your business:

· Drive efficiency, with supplier data automatically integrated into your internal systems.
· Simplify order processing and increase accuracy.
· Streamline on-boarding processes for suppliers, increasing adoption of EDI across your supply
chain.
· Remain flexible and future-proof by making it easy to add more suppliers to the web portal.
Who should use this type of EDI

The simplicity of WebEDI beings brings a number of benefits to businesses throughout a supply chain.
The install-and-go nature of web tools make them a great choice for businesses working with less tech-
savvy partners or those in countries/regions where EDI and other IT skills are in short supply. For any or -
ganisation with supply chain partners that have limited EDI expertise, WebEDI can be an essential tool
for integrating those partners within a complete EDI system.
Fundamentally, Web EDI is a critical tool for any business with limited EDI expertise — consider how it
can benefit you and your supply chain partners.

EDI Type 3: Web EDI

Web EDI takes the simplicity of a VAN solution one step further. WebEDI can be used in tandem with al -
most all of the other strategies here. Still, we’re separating it out here, as the term represents a growing
number of tools that operate from web browsers and dramatically reduces the learning curve for effec-
tive deployment of EDI.

Benefits & drawbacks of this type of EDI

The primary benefit of Web EDI tools is simplicity — they offer more automation and a simpler interface.
For example, a lot of Web EDI tools are defined by browser-based duplicates of paper-based forms — al -
lowing users with no EDI experience to input details. Those forms are then used to automatically gener -
ate an EDI request and automate all of the backend technical processes.

The fact that Web EDI is browser-based is central to the simplicity it offers. It also removes any installa -
tion configuration process to minimise challenges with integration. Effectively, Web EDI works like a
SaaS tool in so much as it delivers, as-a-service, over the internet. Although you could make a similar
comparison for EDI via VAN.

Who should use this type of EDI

The simplicity of WebEDI beings brings a number of benefits to businesses throughout a supply chain.
The install-and-go nature of web tools make them a great choice for businesses working with less tech-
savvy partners or those in countries/regions where EDI and other IT skills are in short supply. For any or -
ganisation with supply chain partners that have limited EDI expertise, WebEDI can be an essential tool
for integrating those partners within a complete EDI system.

Fundamentally, Web EDI is a critical tool for any business with limited EDI expertise — consider how it
can benefit you and your supply chain partners.

Pro tip: Web EDI can form one part of a “hybrid EDI model” that pulls on different types of EDI within an
integrated solution. This is a great option when partnering with many different suppliers and customers,
all with different EDI requirements. However, you need to make sure that each component of a hybrid
solution is able to work seamlessly together in order to avoid manual or ad-hoc processes that could un-
dermine the effectiveness of the system as a whole.

EDI Types 4: Managed EDI service

In a new global and digital era, the most responsive and digitally advanced supply chains will inevitably
come out on top. EDI-as-a-service is a direct route to harnessing this competitive advantage. When EDI
is delivered as a service, it can bundle different types of EDI and deliver that bundle as a seamless out -
come for you.

Benefits & drawbacks of this type of EDI

As a methodology, EDI has always promised to take the challenge and pain points out of supply chain
management. However, as pointed out in previous sections, the complexity of the EDI ecosystem often
works against this goal. Different types of EDI need to be deployed for different reasons — and engaging
with multiple EDI standards and protocols is essential.
Partnering with a managed service completely removes all complexity — even where different EDI pro -
tocols are used. A managed service will configure your implementation, promote business continuity
and ensure risk-free outcomes. This frees you up to focus on your core business.

Partnering with a managed service also solves fundamental EDI problems by enabling your system to:

Scale up or down to meet demand: chains must be built with continuous changes and exogenous shocks
in mind. Managed services help you create responsive, flexible routes within the network to mitigate
risk.

EDI in-house skill shortages: EDI is a fundamental technology required in the marketplace, but it is also a
niche technology. As a new generation moves into the industry, an EDI skills gap will inevitably emerge,
making it more difficult to recruit and retain EDI experts. Cloud-based tools and mobile EDI apps can
help reduce the learning curve, but you will need to spend time and money training new staff. However,
partnering with a managed service guarantees that you will have the experts you need on-hand.

Benefit from 24/7 support: Again, many businesses struggle to find and retain any EDI talent, much less
enough talent to provide 24/7 support. Partnering with a managed service gives you instant, around-
the-clock access to the expertise you need when you need it.

Benefits and drawbacks of EDI

Benefits of EDI

· Expedite Transmission

Information is transmitted from one organization to another organization efficiently and swiftly.

· Automated Data Entry

Data is entered automatically by EDI software. For instance, when purchase order (PO) from one
company is received by another company. Sales order (SO) is automatically generated at other
company’s system with the help of EDI software.

· Receipt Verification

Receipt verification can easily be done with help of EDI software. No human intervention is in -
volved so there are minimal chances of error or delay.

· Data Validation

Data validation is automatically done.

· Availability of Free Software

Free software is available depending upon the EDI format for example- In TRADACOMS EDI for-
mat, Price Information file and order files are available for free.

· Low Cost

Lower administrative, resource and maintenance cost.

· Faster Processing
 With the help of EDI, business processes can be executed at a much faster rate as compared to
the traditional method sending information.

· Building long-term Relationships

EDI helps in building long term relationships with trading partners and hence helps in business
growth.

· Reduction in Error

EDI has discarded manual data entry and paperwork. So, there are minimal chances of error.

Drawbacks of EDI

· Expensive

Setup and maintenance of some of the formats of EDI is expensive.

· Initial Setup is Time Consuming

Initial cost to setup EDI is time consuming.

· EDI Standard Changes

The business process depends on EDI standard format. If any of the standard format changes
then the business process has to be changed accordingly.

· System Electronic Protection

An EDI enabled system needs electronic protection from viruses, hacking, malware and other
frauds.

· Staff Training Cost

Staff needs training in order to run EDI enabled software. Investment has to be done in training.

· Proper Backup

Proper backup should be maintained as the whole data depends on EDI. In case of any crash of
EDI system, proper backup has to be maintained and extra cost is required for

· Limit Your Trading Partners

Some organization stops doing business which don’t use EDI. For instance, Wal-Mart prefers to
do business only with those organization which uses EDI.

E-mail

Short for electronic mail, e-mail or email is information stored on a computer that is exchanged between
two users over telecommunications. More plainly, e-mail is a message that may contain text, files, im -
ages, or other attachments sent through a network to a specified individual or group of individuals.

The first e-mail was sent by Ray Tomlinson in 1971. Tomlinson sent the e-mail to himself as a test e-mail
message, containing the text "something like QWERTYUIOP." However, despite sending the e-mail to
himself, the e-mail message was still transmitted through ARPANET.

By 1996, more electronic mail was sent than postal mail.

How does email work?

Email messages are sent from software programs and web browsers, collectively referred to as email
‘clients.’ Individual messages are routed through multiple servers before they reach the recipient’s email
server, similar to the way a traditional letter might travel through several post offices before it reaches
its recipient’s mailbox.

Once an email message has been sent, it follows several steps to its final destination:

· The sender’s mail server, also called a Mail Transfer Agent (MTA), initiates a Simple Mail Trans-
fer Protocol (SMTP) connection.
· The SMTP checks the email envelope data — the text that tells the server where to send a mes -
sage — for the recipient’s email address, then uses the Domain Name System (DNS) to translate
the domain name into an IP address.
· The SMTP looks for a mail exchange (MX) server associated with the recipient’s domain name. If
one exists, the email is forwarded to the recipient’s mail server.
· The email is stored on the recipient’s mail server and may be accessed via the Post Office Proto -
col (POP)* or Internet Message Access Protocol (IMAP). These two protocols function slightly
differently: POP downloads the email to the recipient’s device and deletes it from the mail
server, while IMAP stores the email within the email client, allowing the recipient to access it
from any connected device.
What are the parts of an email?

An individual email is made up of three primary components: the SMTP envelope, the header, and the
body.

SMTP envelope

The SMTP “envelope” is the data communicated between servers during the email delivery process. It
consists of the sender’s email address and the recipient’s email address. This envelope data tells the
mail server where to send the message, just as a mail carrier references the address on an envelope in
order to deliver a letter to the correct location. During the email delivery process, this envelope is dis -
carded and replaced every time the email is transferred to a different server.

Header

Like the SMTP envelope, the email header provides critical information about the sender and recipient.
Most of the time, the header matches the information provided in the SMTP envelope, but this may not
always be the case. For instance, a scammer may disguise the source of a message by using a legitimate
email address in the header of an email. Because the recipient only sees the header and body of an
email — not the envelope data — they may not know the message is malicious.

The header may also contain a number of optional fields that allow the recipient to reply to, forward,
categorize, archive, or delete the email. Other header fields include the following:

· The ‘Date’ field contains the date the email is sent. This is a mandatory header field.
· The ‘From’ field contains the email address of the sender. If the email address is associated with
a display name, that may be shown in this field as well. This is also a mandatory header field.
· The ‘To’ field contains the email address of the recipient. If the email address is associated with
a display name, that may be shown in this field as well.
 · The ‘Subject’ field contains any contextual information about the message the sender wants to
include. It is displayed as a separate line above the body of an email.
· The ‘Cc’ (carbon copy) field allows the sender to send a copy of the email to additional recipi-
ents. The recipients marked in the ‘To’ field can see the email address(es) listed in the ‘Cc’ field.
· The ‘Bcc’ (blind carbon copy) field allows the sender to send a copy of the email to additional re -
cipients. The recipients marked in the ‘To’ field cannot see the email address(es) listed in the
‘Bcc’ field.
EDI vs Email

EDI
Email:
(i) EDI is an acronym of Electronic Data inter-
change (i) E-mail is an acronym of electronic mail

(ii) E-mail system is basically used for sending

(ii) EDI is the inter-organizational exchange of message electronically to individuals or group of
business documentation in structured, machine individuals in an inter and intra office environ-
processable form. ment. It requires network to connect them.

(iii) EDI provides communication between trading

partners that agree to exchange EDI transactions. (iii) No such need.

(iv) EDI eliminates the paper documents associ- (iv) One of the advantages of E-mail is that if gives
ated with common business transactions. users ability to review, respond message quickly.

(v) EDI message can be immediately processed by

receiving computer without any human interven-
tion or interpretation or re-keying (v) No processing of the message received.
(vi) One other advantage of EDI is that it gener-
ates the functional acknowledgment whenever an
EDI message is received, and is electronically
transmitted to the sender. (vi) No such facility
Applications of Electronic Data Interchange EDI

1. Retail Sector – In the retail sector profit margins usually depend upon efficient inventory man -
agement. EDI provides a structured way to maintain and replenish goods stocked at a retail out -
let. Retailers use a common model stock for each shop location and the point-of-sale stock posi -
tion is updated continuously and data in fed via EDI enabled SCM (supply chain management)
network. The EDI software monitors all the logistics and makes updates in the original stock.
2. Manufacturing Sector – EDI ensures effective and efficient management of materials required
for production of a commodity. In manufacturing sector EDI facilitates Material requirement
planning and just in time manufacturing. The Inventory position of OEM is constantly updated
through EDI and the supplier is notified about shortage of materials. This helps the supplier to
plan and schedule supply according to requirements of the manufacturer. The suppliers respond
via EDI with an ASN to identify the parts/materials to be delivered and the approximate delivery
time and as soon as the shipment is delivered at the production plant the inventory is updated
again.
3. Automobile Sector – In automobile sector EDI is used to keep customers updated with the cur-
rent product and pricing information during the purchase cycle. An advance shipping notice is
transmitted through EDI to the customers to prepare a loading schedule and to ensure proper
receipt of the product. The customer may also make payment on receipt of goods via EDI to
speed up the payment process.
4. Financial Sector – In the financial sector EDI replaces the labor-intensive activities of collecting,
processing and dispersing payments with an electronic system. It facilitates the flow of payment
between the bank accounts of trading partners without requiring any human intervention. A
payee`s bank account is electronically credited and the payer`s account is electronically credited
on the scheduled day of payment; such an exchange is known as electronic fund transfer (EFT).

The Advantages of EDI in E-Commerce:

The past twelve months have seen an explosion in eCommerce, with the industry’s share of global trade
rising from 14% in 2019 to 17% in 2020.
Whilst these trends represent a largely positive development for the industry there are some new areas
for concern. eCommerce has become even more cutthroat and fast-paced than before, and in the con-
text of increasingly globalized supply chains, a large increase in orders represents the potential for dis-
ruption and previously unforeseen challenges to business.

Electronic Data Interchange (EDI) is a pivotal tool which can be used to address unique challenges in
eCommerce which have been exacerbated by the recent boom and some of the more long-term obsta -
cles the industry faces. Not all EDI solutions are the same, however, and it ’s important to understand
these specifics in order to take full advantage of the benefits EDI is equipped to deliver.

The unique challenges of eCommerce

Even before the unprecedented events of 2020, eCommerce had its own list of inherent and unique
challenges. These include:

· Global supply chains: A reliance on supply chains which stretch across numerous countries can
create issues for eCommerce’s business as a result of long-range logistics, delays, numerous
time zones and accountability.
· High growth: The increase in internet access in developing countries, as well as the rise in web
traffic generated by smartphones and tablets across the world, continues to drive eCommerce
sales, forcing industry leaders to adapt to constant growth.
· Complex return processes: A ‘buy online, return in store’ policy can create unexpected costs for
eCommerce businesses, with physical store space and staff capacity required to process returns.
Difficulties can also emerge from the development and integration of IT systems to cope with
demand for online returns.
The eCommerce landscapes

Following the boom within the industry during the last twelve months, which saw the UK ’s eCommerce
sector enjoy its highest online sales growth in 13 years, eCommerce faces a new series of challenges in
2021 and beyond:

· A more competitive marketplace: A rise in sales and an increased scope for the industry means
that fierce competition for customers and accelerated demand looks to be inevitable.
· Increased customer demand and expectations: The recent sharp increase in eCommerce trade
brings with it both higher demand and enhanced expectations, necessitating a clearer focus on
maintaining high levels of customer satisfaction.
· Supply chain pressures: Lockdown restrictions across the world in 2020 demonstrated the need
for supply chain flexibility. Moreover, the accelerated growth of eCommerce observable during
the past year, coupled with a reliance on speedy production, increases the strain on supply
chains.
How EDI delivers eCommerce solutions

EDI was developed to simplify supply chain management. By automating the exchange of information,
greater visibility, improved efficiency, and streamlined workflows can all be achieved. Fundamentally,
effective EDI implementation is one of the most efficient ways for eCommerce businesses to mitigate
and overcome many of the challenges the industry faces traditionally and those which have emerged
more recently.

The advantages of EDI implementation within eCommerce include:

 · Increased speed: Business cycles can benefit hugely from EDI, as waiting times and reliance on
postal services is severely reduced/eliminated.
· Cost savings: As manual processes are scaled back post-EDI implementation there is a reduced
reliance on paper documents, and as a result opportunities to reduce costs.
· Greater accuracy: By removing the need for paper documents, electronic data interchange sig-
nificantly reduces the room for human error in supply chain management.
· Time-saving for staff: A reduction in manual processes also creates additional capacity for staff
to focus on higher-value tasks within the business.
· Increased efficiency: The combination of enhanced speed and accuracy enables more focus to
be placed on other areas of business activity.
Using EDI to Create a Competitive Advantage

When utilized effectively, EDI is a tool which can significantly improve supply chain management. But
what does EDI actually offer businesses in terms of competitive advantage in the market?

· Visibility: Through standardization and digitization, businesses are able to gain better visibility
over supply chains by developing a single-source-of-truth. This can add some much-needed per -
spective, a necessity when making strategic decisions and long-term plans based on supply
chains specifics.
· Competitive pricing: Given the implementation of an effective EDI solution enables the reduc-
tion of costs related to manual supply chain management processes, businesses have the oppor -
tunity to develop a competitive price strategy and focus on increasing profit margins.
· Reinvestment: Higher margins also create the possibility of reinvestment throughout the busi -
ness. This then opens the door to a virtuous cycle, thereby allowing businesses to reinvest, cre-
ate further efficiencies and drive growth.
Whilst the above advantages are clearly appealing to businesses across the eCommerce industry they
have one common theme — they require the implementation of an effective and modern EDI solution
before they can become a reality.