Order Processing

Does Your Company Need an EDI?

As your company begins to grow and your employees are processing more orders, it might be time to rethink how you conduct business.

The manual issuance of purchase orders, invoices, packing slips, advanced shipping notices (ASNs), and other documents associated with ordering and shipping merchandise has its benefits, but only to a certain point. For a relatively small number of orders, using your staff to handle all the paperwork makes sense: it is cost-efficient, and they can catch errors before bigger problems occur.

But it is essential to be aware of both the number of orders, as well as their value. When the number of orders your firm is processing hits a critical mass, the possibility of human error outweighs the benefits of doing things manually. Also, the time it can take to process a massive number of orders can quickly become not worth it. If all your employees are doing is data entry from an order processing standpoint, you might consider freeing up their time to work on other matters that do require the human touch. Also, if/when the typical order is valued at less than the time to process it, it is time to adjust that process, or reevaluate your pricing structure.

For companies that are at a crossroads and are looking for solutions when it comes to logistics, transferring to an EDI (Electronic Data Interchange) might be a very real option. [According to Union Pacific, an EDI is the electronic interchange of business information using a standardized format; a process which allows one company to send information to another company electronically rather than with paper. Business entities conducting business electronically are called trading partners.]

There are several providers out there, and it’s just a matter of finding the one that is an appropriate fit. But some questions to consider before pulling the trigger are:

  • Is it cheaper to pay for an EDI service than it is to pay an employee to process orders?
  • Has human error, due to the high volume of orders, become a noticeable issue?
  • Do we need a full-service EDI provider, or one that just handles portions of the process?
  • Do we have any customers that require EDI or do we have any target customers that will require it?

EDI providers can do as much or as little as your company needs. They can manage the transfer of information for everything from POs, invoices, packing slips, and shipment notifications, and interface directly with vendors and 3PLs (third-party logistics/warehouses). A great EDI provider can prevent problems before they even occur, rather than solve problems once they have arisen.

While the investment in an EDI might not be right for your company at this time, it is something to constantly assess as your business grows.