The Ongoing Relevance of EDI Part 4 – EDI's Impact on Business; A Conclusion

The Revenue Impact of EDI:

Both average and best-in-class implementations of EDI have resulted in substantial revenue gains for businesses.  Revenue gains are proportional to the degree to which EDI has been implemented across all business operations, both for internal processes and processes that deal with external stakeholders and trading communities.

The cost budget analysis which we discussed in our previous post, only represents EDI implemented for the basic fulfillment (order, pick, pack & ship) aspects of a business. The basic EDI represented in our last post is related to the following base supply chain transactions; purchase order (EDI 850), purchase order change (EDI 860), product information (EDI 832), invoice (EDI 810), advance ship notice/manifest (EDI 856), the remittance advice (EDI 820) and acknowledgement(s) (EDI 997).

The additional revenue impact that an organization could expect would be in the range of 5% to 30%. So, the benefits of a good EDI program can have transformational change to an organization measured as both costs and revenue.  These benefits are only increasing with the advancements that are being made to EDI.

RESULTS OF SOME RECENT EDI SUPPLY CHAIN STUDIES:

Below are the findings of select North American studies. The study groups were formed from a large representation of organizations in the retail and CPG industry.

The two summary findings are for:

1. Industry measured statistics related to EDI/B2B improvement metrics.

2. Best-in-Class performance of companies.

Industry Measured Statistics related to EDI Improvement Metrics

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% Improvement of Core-Business Metrics in Best-in-Class EDI Implementations | Create infographics

CONCLUSION:

From this high level information, one can witness the transformational nature of a well implemented EDI program. The costs and revenue information provided in this article are only a baseline measure of an EDI program.

In order for an organization to further improve its cost and increase its revenues and service levels, an organization has to further automate and integrate EDI across all its other information, with EDI being the base technology to create an operating and service environment that is highly collaborative in nature. Without the collaborative Implementation, an organization will not operate in the most efficient manner.

In the Internet and mobile age, information is being generated and is growing at an exponential and uncontrolled manner. In order for organizations to deal with these oceans of data in a meaningful, disciplined, controlled and automated way only a robust standard such as EDI, can help properly harness this sea of data. EDI and its newer protocols and standards are truly an answer that are very comprehensive, robust and have proven the test of time.

EDI is now coming in to its true potential (which was simply not needed or even possible a decade or two ago); to address the immense, global expansion of data and information. Getting our hands and minds around this data requires a highly structured, disciplined and proven platform, which EDI will clearly provide for the use and benefit of coming generations.

The Ongoing Relevance of EDI Part 3 – A Comparative Analysis of EDI from the 1970s to the Present

In the first two posts in our series about the ongoing relevance of EDI, we’ve looked at EDI from an historical perspective, and tracked its growth from the 1960s, into the 20th century and on towards the near future.  In this post we’ll begin to take a look at why Electronic Data Interchange has not only survived, but become increasingly prominent over time. 

Proof of EDI’s Ongoing Relevance:

The notion that EDI is no longer relevant or that it has died and has been taken over by newer technologies, processes and procedures, is a completely false premise. In fact traditional EDI, since 2000, has become the single largest enabler of corporate improvements, innovation, and increased revenues due to a substantial decrease in costs (both capital and operating expenses). EDI has provided substantial productivity gains across many industries including, but not limited to, financial services, retail and consumer packaged goods (CPG), manufacturing, distribution, logistics, and healthcare.

In its present state, EDI has completely eliminated the need for capital outlay. Needless to say that the world of EDI has become ubiquitous as a core part of both supply chain operations, and non-supply-chain operations. EDI has grown into a technology that provides great value to any business, small, mid-sized or large, in all aspects of its commercialization and ongoing operations.

Let’s take a look at a comparative analysis of the impact of EDI and the benefits it promises to those that will plan and implement it to its fullest capabilities.

Comparative Analysis by Time – From the 70’s to the Present:

Summarized here are the financial, operational and service benefits of EDI encompassing all aspects of businesses. For ease of reference the table is ONLY discussing Tier 1 organizations, organizations that have an annual revenue of 5 billion and higher. The findings, however can also be extrapolated for organizations of all sizes on a relative basis.

These charts and tables represent the following TIER 1 industries:

1. Financial Services (Banking and Insurance)
2. Retail and Consumer Packaged Goods (CPG)
3. Manufacturing, Distribution and Logistics/Transportation
4. Health Care Industries

Please note that these industry sectors and their related supporting industries make up well over 70% of a country’s GDP. Hence the benefits achieved by these industries and the overall impact to a nation’s GDP, promises the continued use of EDI and its ongoing innovations. 

As we can plainly see, over time, the cost of implementing and running EDI have diminished significantly. But that hasn’t been the main driver of EDI’s continued success, nor has it been the reason for its rise to ubiquity. Cost drivers alone cannot sustain a technology over as much as 5 decades. Instead, it has been the increasingly substantial and wide spread business benefits of EDI which have enabled its prosperity. In our next post, we’ll conclude our series on the ongoing relevance of EDI by taking a look at EDI’s impact on business in more detail.