For EDI-implemented companies, integrating transaction processing with ERP is the single biggest saver in improving process efficiency and reducing errors. Reaching the ultimate connection means minimizing keystrokes and eliminating duplicate effort through electronic, system-to-system updates of information.

ERP (Enterprise Resource Planning) is a system to facilitate the flow of information throughout all the business functions within the company as well as interactions to outside partners. EDI takes charge of transmitting documents between organizations.

The importance of an EDI system is that computers can read and understand EDI messages whereas when you receive an order by emails or faxes, you then have to key the order into your accounting software. With EDI, you can read messages and convert them into sales orders or other documents directly without human intervention.

EDI replaces traditional methods of business communication, i.e. telephone and fax, with electronic means of document transmission. Using computers to electronically exchange communication and documents has greatly decreased administrative costs.

Systems are integrated when they are programmed to do automated, two-way exchange of transaction data between EDI and ERP. Importing and translating computer-readable data that entails manual file handling is a partial form of integration. Embedded EDI is used by some EDI vendors to describe automated, two-way transaction processing with ERP using standard, supported connections supplied by the vendor as opposed to custom-coded integration.

Suppliers using email, FAX, and/or webforms with trading partners must read and key everything separately into their ERP system and have no integration. While those who import and translate files with some manual effort have achieved partial integration, only suppliers with direct connections to EDI systems or directly interfaced to managed EDI cloud services are truly integrated.

Suppliers with automated shipping, barcode scanning, warehouse management systems and Third Party Logistics (3PL) providers are in the loop too. Full integration requires EDI and ERP communication among all back office, warehouse, 3PL, and shipper feeds.  Eliminating paper, FAX, or webforms in these critical processes is essential to maximize the benefits of EDI-ERP integration.

Ready for more information on connecting EDI and ERP? See how ERP, CRM and SCM fit together. Understand the importance of EDI in the automotive industry.