As the backbone of the supply chain, EDI solutions and ERP systems are fundamental to the success of many businesses. The former enables seamless communication with trading partners, while the latter serves as a system of record to manage internal processes.
With advancements in integration technology, connecting data streams between EDI and ERP solutions has become easier and more efficient.
While many ERP providers now offer EDI services as part of their package, integrating the two systems can still pose significant challenges.
When done correctly, complete EDI to ERP integration can provide immense benefits in terms of increased efficiency and visibility.
However, an improper configuration can result in a complicated web of custom integrations that hinder business operations.
Before delving deeper into the importance of EDI and ERP integration, understanding each component’s meaning is essential.
What is EDI?
EDI refers to the electronic exchange of business documents in a standard format between different business partners, eliminating the need for paper-based documentation.
What is an ERP?
An ERP (Enterprise Resource Planning) system is a suite of integrated applications that collect, store, manage, and interpret data from different business activities. It tracks resources such as cash, raw materials, production, and capacity and commitments like orders, purchase orders, invoices, and payroll.
Despite the integration challenges, combining EDI and ERP can significantly benefit businesses in the supply chain industry. In the following sections, we’ll explore why EDI ERP integration is crucial for your business and how you can leverage it to gain a competitive edge.
The Benefits of Automated EDI and ERP Integration
To stay competitive in the supply chain industry, businesses must have both EDI and ERP systems to streamline their operations. However, integrating these two systems can be challenging and can result in custom integrations that are difficult to manage. By enabling automated ERP and EDI integration, businesses can experience several advantages that will help them streamline their supply chain operations.
Accurate Data
Integrating EDI and ERP systems can help eliminate the need for manual data entry, which often results in data entry errors. Even a small percentage of errors can result in significant issues, such as missed orders, incorrect invoicing, and shipping delays. By automating the data exchange between EDI and ERP systems, businesses can significantly reduce the likelihood of data entry errors and improve overall data accuracy.
Faster Business Processes
Manual data entry can also result in slower business processes, ultimately affecting the entire supply chain.
With automated EDI and ERP integration, businesses can complete business cycles faster by reducing processing times. This enables businesses to exchange EDI transactions with their trading partners in minutes instead of days.
Enhanced Supply Chain Visibility
Automated EDI and ERP integration gives businesses greater visibility over their trading partners. By having access to accurate, automated data that is easily accessible within the ERP system, businesses can focus on how their EDI partners affect their entire business. This means less time spent chasing missed orders or failed EDI transmissions and more time spent growing the business.
Understanding the Relationship Between ERP and EDI
When companies decide to implement EDI, they often face a critical decision of whether to use their existing ERP software for EDI or to utilize separate applications.
No matter the decision, it is crucial to be aware of the potential risks associated with integrating ERP and EDI solutions.
EDI migration is a major IT modernization project that often has a high failure rate. According to industry analysts, up to 75% of EDI migrations fail because companies are unprepared for the complexity of the process and the EDI integration.
Unfortunately, ERP solutions like Epicor, IQMS, and Oracle provide patched-on EDI solutions that are only intended to complement and integrate with their primary ERP components. This leaves out the other important aspects of EDI, such as transmission and translation.
By linking EDI and ERP systems through an ERP vendor, organizations may be exposed to greater risks. These risks include exposing the company to data breaches or significant revenue loss.
To avoid these risks, it is important to seek a separate, dedicated EDI solution, like HubBroker, that can fully integrate with the ERP system. HubBroker offers integration for all popular ERP’s including:
- EDI For Uniconta
- EDI for Visma economic
- EDI for Microsoft Business Central
- EDI for SAP
- EDI for Oracle
and many more.
Why Separating Your EDI and ERP Solutions is the Way to Go
In the world of EDI migrations, companies face the decision of whether to use their ERP software or separate applications.
While using an ERP system for EDI integration may seem like a good idea, it can pose significant risks for your organization.
Here are four reasons why you should consider using separate EDI and ERP solutions:
Risk to Partner Relationships
When you use a bolt-on EDI solution from an ERP vendor, the process of completing software infrastructure changes can take months.
In contrast, an independent EDI provider, like HubBroker, can set up partner connections in just a few hours or days.
ERP systems tend to prioritize improving underlying product values like order management and product inventory over improving EDI partner onboarding.
Thus, adding a critical EDI feature may come at a cost.
While some ERP software vendors claim that their EDI services are “fully integrated,” EDI migrations and integrations involve more than just linking systems.
Setting up trading partners and testing interchanges is where the real work occurs.
EDI systems with modern designs and advanced mapping tools make EDI onboarding more efficient, reducing the effort required to manage and set up trading partners.
HubBroker offers pre-packaged EDI maps ready to deploy and experience connecting to thousands of trading partners, making the process quicker than using ERP solutions.
ERP Limitations
Installing a new EDI system from an ERP vendor can double the risk of system failure.
EDI vendors structure their platform around delivering real-time status updates, precise error resolution, and tracking of business processes, providing levels of visibility that an ERP application cannot equal.
In contrast, an ERP vendor without a proven EDI interface cannot compete, adding multiple risks to schedule, cost, scope, and quality.
ERP systems have functional strengths and weaknesses, which means a good ERP application with “integrated” EDI capabilities may limit your ability to respond to new standards and customer requirements.
Users often lose options within tightly coupled systems that lack agility or flexibility.
To achieve the desired business result, businesses may end up spending unplanned dollars writing custom code outside of the EDI component. ERP limitations can lead to high ongoing maintenance costs, known as “technical debt.”
In contrast, HubBroker’s modern EDI solution provides advanced visibility tools to perform complex EDI alterations within a single, well-defined platform. HubBroker
Integration goes beyond EDI and ERPs
As a supply chain company, it’s crucial to integrate multiple applications besides EDI and ERP.
TMS, WMS, CRM, and eCommerce solutions all require integration for streamlined operations.
TMS platforms assist in planning, executing, and optimizing the flow of physical goods while ensuring shipment is EDI compliant.
WMS systems provide real-time information on inventory levels, enabling companies to track products and resources, especially for warehouse functionality and distribution centers.
Integrating EDI data flows with WMS and ERP is essential for complete integration visibility, especially for 3PL companies.
Your CRM manages customer data, purchases, and contact information. Integrating your CRM and ERP eliminates data duplication, enabling automated, single-source information for sales and marketing teams.
eCommerce has drastically changed the supply chain landscape. For logistics companies, eCommerce has increased demand for final-mile logistics and shipping visibility. Many manufacturers are considering eliminating the middleman and shipping directly to consumers, while wholesalers are expanding into new distribution channels using eCommerce.
Adopting an eCommerce strategy involves integrating EDI, ERP, and eCommerce solutions. eCommerce integration enables a smoother, more streamlined process.
There’s tremendous value in connecting all applications with front-end processes, but integration is more than just connecting applications.
The EDI implementation infrastructure for EDI to TMS to ERP connection can be extensive and requires in-depth EDI and API knowledge. Integrating multiple trading partners and various applications with custom integration requirements are best done with a true EDI integration platform like HubBroker.
Modern EDI Systems are already designed to integrate with ERP
HubBroker’s Modern EDI solution is already designed to integrate with your ERP and can handle inbound and outbound transactions for front-end trading partner relationships.
Conclusion
ERPs manage back-end processes as universal records systems, while EDI was created to manage front-end trading partner relationships.
The most efficient and cost-effective solution is to keep both separate, allowing each software system to perform its intended function.
ERP cannot replace your EDI solution if your business values real-time supply chain visibility, faster trading partner onboarding, and automated ingestion of EDI documents to your ERP.
HubBroker’s Modern EDI solutions offer unmatched B2B integration expertise and platform capabilities, unlike an ERP with a simple EDI tool bolted on. Contact us today to achieve seamless EDI integration with your ERP system.
