Save Time and Streamline Operations With EDI for Retail
The conventional method of manually ordering and receiving products from vendors is a time-consuming and tedious process vulnerable to errors. Retailers are all too familiar with contacting their sales representatives to place inventory orders via phone or email. In contrast, tech-savvy retailers have adopted Electronic Data Interchange (EDI) to simplify ordering and receiving. EDI for retail is a system or method that streamlines the exchange of business documents with trading partners.
According to Digital Commerce 360, EDI facilitated 76.5% of digital B2B sales in 2021. With increased EDI adoption, B2B trading partners are beginning to expect system-to-system automation in ordering and fulfillment. Discover how EDI works and the benefits many retailers experience.
How Does EDI Work?
It’s common for small retailers to ask what is electronic data interchange and why companies within the retail supply chain use it. EDI allows retailers and their trading partners to speak the same language, replacing manual processes.
EDI optimizes business operations by replacing manual data entry processes with electronic exchanges of business documents like shipping details, invoices, receipts, and payment information. The process starts when a business creates an electronic document based on information from business systems, spreadsheets, or related transactions. EDI software uses specific transaction codes to transmit data between computer systems in a standard format. Then, data can be automatically sent to a retail management system—no retyping required.
The Benefits of EDI for Retail
Customer demands for good quality products, competitive deals, and low prices have grown enormously. As a result, many retail industries can benefit from EDI, such as hardware, convenience, and grocery, to keep up with supply demand. We’ll cover the three most common benefits retailers experience when implementing EDI.
Traditional ordering involves time-consuming manual processes. For example, some retailers may use phone calls, emails, or faxes to submit a purchase order, which can take hours to complete due to back-and-forth correspondence. EDI cuts the ordering process down to a few clicks, which shortens lead times and ensures rapid fulfillment to help you keep items stocked. Plus, retailers can set up automatic reorders if inventory levels drop below a certain point to further automate processes.
In addition, EDI streamlines receiving processes so retailers can get items on the shelves faster. Without EDI, retailers must decipher what items have been shipped, check if the number of items in each box matches the packing slip, and manually update all inventory quantities. EDI for retail simplifies receiving by automatically updating inventory quantities in the POS when a shipment arrives, so retailers can immediately get items on shelves.
Once items are out on shelves, continually comparing your current costs against the amount vendors charge is tedious. For vendors that support EDI, a single click can update prices across every system in seconds, allowing retailers to maintain margins and remain profitable while saving time.
Along with ordering and receiving efficiency, EDI eliminates error-prone manual processes. Mistakes can happen when someone is tired, distracted, or can’t read someone’s handwriting. Even the best employees can make errors in manual processes like data entry.
For small businesses, human errors can have a more considerable effect due to limited staff and a more difficult time absorbing costs than bigger enterprises. With EDI, retailers don’t have to worry about keeping track of all the moving parts that go into ordering and receiving. The solution will keep all communication in one spot, leading to fewer documents to chase down and re-key in multiple systems for improved accuracy.
In addition, with all information in one system, historical data will become more accurate over time, so retailers can begin tracking new metrics. For example, operations can track data such as which employee received a shipment or detailed receiving reports. Tracking these new data points allows retailers to identify problem areas and fix them in a matter of hours or days, not weeks or months.
Better Partner Relationships
If you’re a small retailer working with prominent vendors, there’s a good chance they have an EDI system, and they’d love it if you’d use one as well. EDI makes doing business with your trading partners easier and more cost-effective for better retail vendor management. The benefits of EDI can be experienced by both you and your partners, ultimately leading to better relationships. In addition, if you want to access new vendors, EDI will position your business to appeal to large renowned operations requiring strict compliance.
Get Started With Hardware, Convenience, and Grocery EDI
Every retail business can benefit from general time-saved and streamlined processes, so EDI is a must-have for growing businesses. Even the most basic EDI system can significantly help businesses increase agility, minimize errors, and build better vendor relationships. If you want to learn more about electronic data interchange, contact us, and our team can walk you through how the solution can work for your store.