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.

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Does Your Company Need an EDI?

In our previous post on the topic, we covered some important things to remember when setting up your company in the U.S. market. Beyond operations, sales, and marketing, a manager would be remiss not to focus on how cultural differences might impact the success of a subsidiary.

The U.S. is not homogenous

Unlike several other countries, the U.S. is vast – and not just in its size. Americans tend to break up the country into its East and West coasts, and the Midwest. But there are even more segments, like the South, Pacific Northwest, the Northeast, Florida, and Texas – all of which differ greatly from each other. There are several big cities, countless medium-sized markets, and even more rural or suburban areas. Interacting with people living in big cities will differ greatly from interacting with people in smaller towns. While it would be unwise to generalize, it is best to understand the culture of the part of the U.S. in which you are doing business before having expectations.

Patience is not always a strength among Americans

When in negotiations or conducting business, Americans tend to want to just get the deal done. While many other cultures take their time, get to know everyone involved, and move along at a comfortable pace, those in the U.S. do not always see a need to drag things out. Get ready for what looks like impatience, when in reality it is just a desire to be efficient and effective.

Don’t plan on in-person meetings 

At least not all the time. The tendency for Europeans and Asians to conduct most business in person is not the same in the U.S. Phone calls, emails, and now even video conference calls are the norm. Businesspeople like to work efficiently, and don’t gather in person unless it is necessary. First meetings, larger negotiations, and important topics are generally discussed in-person. Otherwise, don’t be offended or surprised if many of your interactions are taking place remotely.

Open-minded over traditions

A positive aspect of Americans in general is their ability to have an open mind. Many other cultures rely heavily on traditions, and act in certain ways because history dictates that they should. That is not the case in the U.S. Americans tend to welcome new ideas and concepts perhaps more freely than their foreign counterparts.

That being said, Europeans tend to rely on strongly forged bonds in which trust is paramount. Loyalty is key. Americans tend to be looser and more pragmatic when it comes to doing business. They don’t necessarily need to have known someone for years to begin working with them. At the end of the day, it’s about getting the deal done.