As a universally accepted cross-industry standard format, EDI is the cornerstone for the supply chain in this day and age, but not anyone can implement and manage it effectively on their own, given the significant investment that only a few can sustain. Whether an organization is unfamiliar with EDI or unhappy with their in-house system, many ultimately decide to outsource their EDI. Still, to make the decision, companies need to do their due diligence before settling on an EDI solution.
What is EDI outsourcing?
In its simplest form, EDI outsourcing is the act of seeking the service from a third-party provider to carry out, manage and maintain your EDI operations. Those responsibilities include:
Providing the hardware and software systems to handle EDI transactions
Managing the communication network
Offering IT and technical support
With an in-house environment, you are the one responsible for managing all of the tasks listed above. While this gives you full control of your data and information, there is a catch. It is more burdensome and is much more expensive. However, to make a more informed decision, you should take a deeper look to understand the benefits of outsourcing before giving the final verdict.
Top 5 reasons to outsource your EDI operation
Reduce operating costs
One of the biggest problems when it comes to EDI in-house is the significant upfront investment required to procure the necessary hardware and software, including:
Software - for the mapping and translation process
Licensing - for each EDI format, must be purchased annually
Hardware - for servers, backups, etc.
Other technical-related costs such as VAN, FTP, AS2, etc.
It is a daunting task to manage these on your own. Businesses also need to have their own IT team to focus purely on maintaining and updating the EDI system. This is a part of the ongoing cost of in-house EDI which is often overlooked. In fact, labor costs can account for up to 70% of total operating costs.
By outsourcing EDI, businesses only have to pay only for what they need and can easily change and scale according to business demand, which is impossible for EDI in-house. This unique pricing model can save businesses thousands of dollars on monthly EDI costs.
Focus on your core businesses
As the business grows, so does its customer base and networking requirements. While expanding brings new opportunities, it also presents new challenges. Every software update, system glitch and new demand for integration can become a headache. Moreover, debugging and solving incompatibilities with your partner’s EDI systems will cause even more delays. Faced with such a difficult challenge, it is near impossible for small and growing companies that are not experienced with EDI to effectively manage them.
With the outsourced EDI option, you are free from those burdens to focus on core business activities while a third-party team of specialists handles your complex EDI operation.
Avoid Penalties and chargebacks
One of the misconceptions about EDI is its format remains the same regardless of the retailer. In reality, each retailer can use EDI in their own way depending on the requirements and situation. As a result, EDI can be a complex process, and some trading partners are unforgiving of mistakes such as late transmissions, missing data, and other errors. In those situations, businesses may be hit with a penalty or chargeback.
Improve responsiveness to new customers
Businesses can gain the advantage of professional and timely EDI compliance while being able to implement new trading partners and exchange documents in real-time by outsourcing EDI. They can tap into a centralized network of existing partners that already used the provider EDI service. Thus ensuring immediate compliance without the time-consuming process of updating and maintaining individual integrations.
Third-party outsourcing firms can also handle your trading partner's special requirements, including:
Implementing and maintaining EDI changes
Meeting customers’ global EDI requirements
Upgrading infrastructure to handle the increased transactions and partners
Constantly monitored and 24/7 customer support
In this day and age, businesses often join global supply chains to find new potential customers and expand their reach. To keep the operation running seamlessly and build up the trust with partners and customers, businesses need a robust EDI system capable of running 24/7 with minimal downtime. In other words, using outsourced service from a reliable EDI provider such as Dicentral will not only identify problems in real-time but will fix them before they create disruptions in the supply chain.
In a highly competitive market, even minor mistakes can cause significant damage to your business. If EDI is not your expertise or an on-premise system is not practical, then outsourcing should be the best solution. By choosing a reliable EDI provider for a customized solution, your business can be ready to take on the next level.