From EDI B2G to B2B, the leap towards efficiency

EDI B2G to B2B

Relations between companies and the public sector are getting increasingly closer. Efficiency and tax control are the main trigger driving governments to promote e-management systems for services procurement, payments to suppliers, submitting VAT information, etc. This growing trend worldwide is pushing companies to adapt their internal information management processes to a new digitized environment, based on EDI (Electronic Data Interchange) systems.

The obligation imposed by governments has prompted many businesses to take the technological leap to comply with legislation in their relations with Public Administration, for example by rolling out an e-invoicing solution. For many companies, this switch is the first step towards the digital transformation, not only in the B2G scope but also in all their business relations.

The aim is to leverage the investment and technology, applying it to the rest of the company’s in-house processes and commercial transactions in the B2B area. The higher the number of trading partners (customers, suppliers, logistic operators, etc.) and EDI messages exchanged, the more profit there is to be made.

The advantages for a company of addressing digital transformation are summarized in one: cost savings. But there are other benefits derived from the competitive edge honed by working with EDI solutions:

  • Automation of transactions
  • Quicker response times
  • Minimizing errors
  • Increasing productivity
  • Integrating all business and trading partners
  • Providing information on process status
  • Improving service to end users
  • Optimizing financial ratios
  • Enhanced security and confidentiality in communications.

According to the latest “Billentis” report, by 2020, 60% of companies will be forced, either by legislation or by important trading partners, to exchange their invoicing in electronic format only. This scenario poses challenges in the mid- to long-term for businesses of all sizes and sectors. Larger companies already using EDI systems play a crucial role in extending the use of B2G to B2B, encouraging the global dematerialization of business communications.

EDICOM, customized solutions

Although the biggest obstacle that companies see in approaching digital transformation of their internal processes is the economic cost involved, in many cases it is actually more to do with overcoming a cultural barrier and fostering a change in business mentality.

EDI system providers currently offer different rollout models, adapted to the reality of each type of company (size, sector, turnover, etc.). The great initial advantage of working with a partner like EDICOM is, firstly, that it provides an outsourcing service that lets you delegate all the resources required to implement your EDI communications project. Secondly, that all the solutions required by the client take place in the cloud through the EDICOM B2B Cloud Platform. This means saving on infrastructures.

The integrated EDI solution lets you easily manage all your e-transactions and documents from your company’s own ERP (internal management system). This is a multi-sector, multi-standard and multi-protocol solution, which integrates with any ERP on the market (SAP, Oracle, Baan, Navision, etc.). Likewise, it is ready to issue e-invoicing in compliance with the requirements of more than 60 countries around the world, allowing multinationals to centralize their transactions in a single platform.

The EDICOM Web EDI manual solution is a low cost and highly reliable option for B2B Cloud-based electronic interchange. When message volumes are low, EDICOM deploys low-cost models that can be quickly rolled out for sending and reception of messages through web interfaces. This model is suitable for small and medium-sized companies that need to do EDI but lack the necessary resources to implement an integrated solution.

As occurs with any EDI solution, the main benefit of this technology is that it allows a smooth and secure exchange of messages between companies. This boost efficiency, simplifies transactions and increases the economic saving.

“Time for financial sector businesses to invest in EDI”

Today, the Brazilian financial sector is one of the most technologically advanced worldwide. Investments in IT are seeking, above all, to ensure data integrity in an area which is particularly sensitive. In this sense, EDI has emerged as an ideal system for banks, insurance policyholders and companies working with finance to optimize communications and exchange their files more securely.

 “Financial EDI meets the four basic requirements for a relationship in this sector: integrity, security, confidentiality and traceability. But it also provides other competitive advantages that companies should not overlook. We’re talking about process automation, immediacy and efficiency, among others”, explains EDICOM’s expert in financial EDI, William Pascheti.

The use of financial EDI is a useful ally for many companies in routine procedures such as salary payments to employees or social security contributions to the Public Administration.

“One of our customers in Brazil, the big retail fashion outlet Marisa, managed to automate the work that used to be done by 10 people simply by rolling out an EDI solution. Now, those ten employees have set aside these financial operations to pursue other tasks that really add value to the company”, adds Pascheti.

Although Brazil is currently in a time of political and economic crisis, the EDI expert from EDICOM maintains that “it’s time for companies in the financial sector to invest in EDI solutions that enable them to improve internal working processes.” As Pascheti notes, “the financial sector should be geared up and ready to be competitive when acceleration picks up again.”

 

How does EDI work in the financial sector?

In the domestic scope, all EDI messages exchanged between banks, businesses and other stakeholders in the financial sphere use the CNAB standard, created by the Brazilian Banking Federation (Febraban).

However, in international operations the process is conducted through the Society for Worldwide Interbank Financial Telecommunication, better known as SWIFT, using the XML ISO 20022 standard. This is a global outreach network used by 11,000 financial institutions in more than 200 countries around the world.

 

How is security guaranteed?

Security and confidentiality are indispensable in financial transactions. Before engaging in any process, the parties involved need to make sure that the service provider charged with transmitting the data all the necessary requirements to ensure data encryption.

 “At EDICOM we have three certificates which ensure that the process will take place securely and confidentially. First of all, ISO 27001 on information security; second, ISO 20000 on IT service quality IT and, finally, ISAE 3402, which sets up barriers to prevent fraud or economic corruption”, explains Pascheti.

The ISAE 3402 standard is especially relevant given its relation with the well-known American SOx law, which came into being due to the Enron scandal. Like the other regulations, the ISAE 3402 promotes comprehensive internal control in order to ensure financial transparency.

The EDICOM experts explains how “rolling out financial EDI requires certifications like this which ensure compliance and make corporate governance possible in larger companies.” This is what is designated e-governance. In other words, application of the technology not simply to automate processes and optimize communications, but also to prevent undesirable practices.

 

Why EDICOM?

 “Companies in the financial sector that decide to adopt EDI have to look beyond the development of the transmission process. What is really important is choosing a provider with a robust service”, says Pascheti. With EDICOM, that service is assured in a signed SLA guaranteeing 99,9% availability. This is possible thanks to our high-performance Data Processing Center (DPC).

In addition to these features, “corporations should also assess the support, commercial facilities and value-added services provided.” In a rapidly evolving world, the capacity to adapt is crucial for companies to maintain their competitive edge.

 

Which EDI message types are used in the logistics sector?

In the supply chain, fluid communication between all those involved is essential if the product is to reach the end customer in good time. However, one of the most significant parts in this process is undoubtedly the logistics. Operators and carriers have to make an extra effort to achieve an optimum exchange of information with suppliers, distributors, customs authorities, final recipients of goods, etc. And they need to do it in record time and without any errors occurring. This explains EDI technology’s high penetration in the sector.

In this post we discussed the different types of messages that make it possible to use this system in the logistics world and explained how each of them is composed.

 

  1. ORDERS

This message is issued by the client and the manufacturer is the recipient. It is used to place an order for goods.

  1. INSDES

The manufacturer issues this message to make the request to prepare a new order and sends it to the logistics operator, so that they can get ready in advance.

  1. DESADV

This is the most widely used message in the logistics sector. On one hand, it is used by logistic operators to send the despatch advice notifying the customer that the goods are ready to be shipped. On the other, the manufacturer may send it to the logistics operator to give notice of procurement in store.

  1. OSTRPT

With this message, the logistics operator reports the order status to the manufacturer. As a result, it is possible to have a real-time record of the phase the process is in and estimate times in the supply chain of products to the final customer. In other words, traceability is guaranteed.

  1. INVOIC

This designates the e-message used by the manufacturer to send the bill to the customer. Including this message in our B2B communications significantly shortens payment collection times.

  1. PRICAT

This message lets the manufacturer inform the operator of their product catalogue in real time: references, product features, logistics information … all relevant data are kept updated. This way, alignment of the master product is achieved.

  1. INVRPT

The aim of the Inventory Report is to provide the manufacturer with information on the quantity of the product in stock available from the warehouse.

  1. RECADV

Along with the DESADV message, this is one of the most widely used in this area. The logistics operator uses it to confirm to the manufacturer that the order has been received. This avoids the bill being rejected later.

The use of these messages automates communication flow in the supply chain and reduces the number of errors. In addition, transactions are optimized, thanks to the traceability provided by EDI technology and the option of implementing validation processes.

 

How can I adopt EDI in this sector?

EDICOM has developed different technological solution specifically designed for logistics, such as the EDICOMNet B2B communications infrastructure, the CRP Flow tool or the EDICOMData electronic catalogue. Thanks to these, large companies in this sector worldwide have simplified and enhanced their day-to-day management. This is the case, for example, of DHL, Logista, Grupo Carreras, FCC or Kuehne & Nagel.

EDICOM joins GS1 organization in UK

EDICOM is now part of international organization GS1 in the United Kingdom. The association, founded in 1974, is dedicated to development and implementation of global standards. The aim is to simplify and automate communications between companies from all production sectors. This improves supply chain performance and operability, as well as supply and demand.

Until now, EDICOM was already an active member of GS1 in other regions such as France, Portugal, Spain and the United States. In fact, the company has taken part in many international initiatives to improve communications systems in the B2B sphere. Notable among them is development of the EDICOMData e-catalogue, which, through the GS1 GDSN network, enables suppliers and distributors worldwide to share real-time information on their products and services.

Joining GS1 United Kingdom is yet another proof of EDICOM’s commitment to the creation and use of international standards to facilitate interoperability. This is one of the main challenges facing electronic communications in the 21st century, when companies tend to have an increasingly globalized nature.

In this drive to maintain a robust and global communications network, in addition to being a GS1 partner, EDICOM collaborates with other world-leading organizations. Among them Odette, Amexipac, XFT, or the IATA. In fact, this year Edicom has also been certified as Access Point provider by OpenPeppol, one requirement of the e-procurement strategy in the United Kingdom healthcare sector, where compliance with GS1 standards will be compulsory.

EDI, a key technology to ensure traceability

The European Union is increasingly calling for greater traceability in production and distribution processes for consumer goods, with a view to ensuring food safety and consumer information. Good examples of this are the two new regulations rolled out since December 2014 governing meat and fish labelling.

Regulation 1379/2013 came into force on 1 January. In it, the European Council lays down common marketing standards to be applied by individual Member States in the sale of fish. The commercial designation of the species and its scientific name, the production method, the capture or farming zone and whether the product has been frozen are some of the mandatory specifications that must now appear on the labelling.

Similar indications have also been mandatory for meat products since April. That was when Regulation 1337/2013 came into force, governing the traceability of fresh refrigerated meat from swine, sheep, goats or poultry. In this case, it is essential to know the country where the animal was raised and where it was slaughtered.

 

What do these regulations entail for the logistics sector?

Compliance with these regulations means that traders are required to ensure traceability at all production stages of the foodstuff, as well as its distribution. This is why producers, freight forwarders, logistics operators and distributors rely on technologies like EDI, which not only automate procedures, but also provide total traceability of transactions.

“The number of companies adopting EDI solutions is growing, especially in terms of the DESADV message”, explains EDICOM Sales Manager Luis Molina. This message, which contains all the information on the goods, is now equipped with the appropriate fields to suitably comply with European regulations. This way, we are aware of the product features at all times and the correlation between the label and the packaged food is assured.

 

Other regulations driving EDI

Beyond the food sector, European legislation encourages electronic systems in other fields mainly affecting logistics companies. “Consider, for example, the EMCS or the measures implemented by Portugal and Hungary to control goods movements”, adds the EDICOM Sales Manager.

The ease of complying with these regulations, along with its operational and economic advantages, make EDI “an indispensable system for all supply chain stakeholders: producers, carriers, logistics operators and distributors.” Bear in mind that thanks to this technology it is possible to link up with any trading partner automatically and simplify the receipt and delivery of goods. This is why so many companies have already implemented EDI solutions developed by EDICOM.