EDI implementation worldwide: Europe, USA, Latin America

Electronic Data Interchange (EDI)

Electronic Data Interchange (EDI) is conceived in a different way in each world region. Europe, the United States and Latin America have adopted this technology in their businesses with quite different aims. The outcome is that the uptake rates and, especially, the way EDI is perceived, vary a lot from one place to another. For some, it is an indispensable tool in the corporate arsenal; for others, a cost generator. In this post, we analyse how each implementation model has evolved.

EDI in Europe

From the outset, the aim of EDI rollout in Europe was to achieve equal optimization among all participants in the supply chain. The idea was that this tool would allow an integral, secure, reliable and agile communication flow in provisioning and distribution transactions.

This view led to the spread of EDI technology in companies. In fact, today it is a tool forming part of the culture for suppliers and retailers in their day-to-day operations.

  • How does EDI work in Europe?

Unlike what happens in Latin America, in Europe each retailer has a single EDI provider and a single connection. Nevertheless, this does not mean that all their suppliers have to work with the same technology partner to be able to connect with their customers. What happens is that the distributor’s VAN communicates with the supplier’s VAN through interconnections (gateways).

As in Latin America, new suppliers can decide to work with any of the VANs approved by the retailer. However, although the distributor may acknowledge these other networks, their entire operation will be unified in a single VAN. This lowers the costs and the number of people responsible for carrying out the transactions.

Another difference is that in Europe a larger number of messages are exchanged, which enables all stakeholders involved in the supply chain to achieve benefits from EDI:

  • Distributor information
  • Price catalogue
  • Purchase orders
  • Order responses
  • Order modifications
  • Despatch advice
  • Despatch advice responses
  • Invoice
  • Sales reports
  • Inventories

EDI in the United States

In the United States, the perception of EDI is more akin to the European outlook. This is a mature market, traditionally driven by the retail sector, pharmaceutical industry, publishing and the automotive industry.

This technology is currently growing in the logistics area. And, as occurs in other regions, suppliers recommend their logistic operators to adopt EDI in order to lower costs and improve communication flow.

Meanwhile, small businesses largely remain outside the system. Instead of implanting EDI, they go for other intermediate technology solutions, such as web portals.

  • How does EDI work in the United States?

The US market is an open one, in which each business can decide which technology partner they want to work with. Even so, companies draw up a list of recommended suppliers, which often have to be previously certified to ensure trustworthiness.

As regards the messages, unlike in Latin America, where they are more focused on tax compliance, here they seek to benefit the company. The aim is to lower costs, improve working processes and achieve the return on investment.

In recent years, the trend is leaning towards exploiting data mining to provide more information for partners about the messages, such as average payment times.

EDI in Latin America

The spread of EDI in Latin America was kick-started by retailers. In the early pilot projects in the region, the structured communication flow was one-way. In other words, the suppliers only participated passively.

This approach was largely maintained until now, so that EDI is based on benefits for the distributor, but not for the supplier. To the latter, the tool is seen as a ‘cost generator’ that their customers oblige them to accept.

In this region, Mexico stands out in the use of EDI, driven by the country’s advanced development in the area of e-invoicing. The sending and reception flows of e-invoicing are EDI flows, so the mandatory nature of the CFDI allowed businesses to extend their EDI projects into B2B, with the aim of optimizing their supply chains and making internal processes more efficient. The retail sector is one of the most developed in this country, although the logistics and automotive sectors are not far behind.

  • How does EDI work in Latin America?

The most common practice is for retailers to approve the main EDI companies in the country so that they can link up with their systems to take care of transmitting orders to their suppliers. The suppliers can then choose which VANs accepted by the retailer they want to work with.

So, in this model, the entire weight of managing the connected VANS lies with the distributor. This way of working calls for an excessive workload in terms of staffing and tasks.

In Latin America, these are the three messages exchanged by EDI:

  • Purchase orders
  • Order modifications
  • e-Invoices

What hampers EDI uptake in Latin America?

Edicom is working on the expansion of EDI in Latin America based on the European and US models. The aim is for businesses to achieve greater advantages by adopting this tool, which enhances security, reduces errors and maximizes cost savings.

However, in order to progress in this direction, it is necessary to overcome four challenges.

  • Cultural aspects.
  • Lack of a holistic view.
  • Little interaction between supplier and retailer.
  • Lack of understanding of EDI as a key tool in supply chain transactions.

Get to know more about EDI with our blog series on EDI Academy.

Technological Solutions for the Retail Industry

Retail Industry

The United States is a global leader in the retail industry, a sector that, today, faces important challenges as the immediacy demanded by the final consumer or the globalization. In this sector, retailers are increasingly relying on the use of technological solutions, such as electronic data interchange. In fact, the retail industry is by far the most advanced when it comes to the incorporation of EDI into company operations.

Why is EDI technology an ally in the retail industry?

Although only in recent years have retail companies had to optimize their technological processes to be competitive, EDI technology has been tied to this industry for decades. This is due to the specific characteristics of the sector, such as the high volume of commercial transactions, the heterogeneity of products or the communication between partners with very different characteristics.

The main reason EDI and technology have become allies of retailers is that they can solve all the aforementioned situations. As well, they have the following advantages:

  • Automation of commercial transactions
  • Increased productivity
  • Economic savings
  • Reduced errors
  • More agility and efficiency in the supply chain management
  • Fluid communication with suppliers and customers at a global level
  • Increased safety during processes

EDICOM’s Technological Solutions for Optimizing the Retail Industry

EDI Platform:
The retail industry has a variety of players, ranging from large distributor chains to small suppliers. That is why EDICOM has developed different EDI solutions, which are adapted to the needs of each type of profile:

  • Ediwin XML / EDI Server: This is a software that allows companies to integrate electronic data interchange with their management system, so that transactions are automated. With this platform, the retail industry streamlines operations, increases security and adds traceability to all processes.
  • Ediwin Viewer: This is a low-cost, quick-start alternative designed for companies that exchange low volumes of documents, as with certain suppliers or small retailers. The EDI Web solution does not require companies to implement any systems; they need only an internet connection.
  • Ebimap: This application is a data mapper, which is a module that integrates into the EDI solution to automatically translate any message to the standard required by the owner or the recipient. It is essential to establish fluid communication between partners of all kinds.
  • Business@Mail: Occasionally, retailers send messages to recipients who do not have an EDI solution. To avoid duplicating work, this solution integrates with the EDI platform of the issuer and automatically publishes the electronic documents in a secure web portal, through which the recipients can access with a username and password.
  • VMI Flow: This solution is based on VMI (Vendor Managed Inventory) technology that aims to improve the management of the supply chain. This system submits the information exchanged between partners through complex mathematical analysis to synchronize supply and demand to the maximum. The goal is for the final customer to receive greater value, better service and a greater variety of products.

Cortefiel, Grupo Gigante, Toys R’Us and Harrods are some of the big retail companies that already use these solutions to optimize their B2B communications and their work procedures. You can learn more about their success stories here.

EDI Academy – How to Send Electronic Documents to Partners Without an EDI Solution?

EDI Academy BusinessMail

Previous articles for EDI Academy talked about the advantages of electronic document exchange between different partners in a business relationship. But what happens when the recipient doesn’t have an EDI platform? Should we go back to traditional delivery methods? Fortunately, this common problem has a solution and it’s called Business@Mail.

What is Business @ Mail?

Business@Mail is a service designed by EDICOM that allows sending electronic invoices and other documents, structured or not, to partners who do not have a technological solution to receive files.

Its operation is very simple. The issuer performs the necessary electronic transactions from its B2B EDI solution just as it does in the usual way. Automatically, the platform detects that the receiver of this data does not have an EDI platform and publishes them securely in the portal Business@Mail.

Next the recipient receives a notification that he or she has received documents that have not been consulted yet. From then on, the recipient can access the documents by connecting to the web portal using the username and password set beforehand.

In order to have greater control over the delivery of the document, the issuer periodically receives updates about the status of the documents sent to its partner. There are four possible statuses:

  • Confirmation that data has been published
  • Notification to recipient
  • Documents processed / consulted by the recipient
  • Documents not addressed by the recipient

What are the advantages of Business@Mail?

The main advantage of Business@Mail is that it allows companies 100% electronic communication regardless of the technological level of their partners. This avoids the heterogeneity of digital and paper documents, which entails complicated management and hinders the ability to store information correctly.

However, this is not the only benefit of Business@Mail. Its use also offers these advantages:

  • Immediacy and security. The documents are published on the web portal instantly and maintain all the security guarantees of any EDI relationship, which is something that would be lost when using email or physical documents.
  • Traceability. The issuer controls the information that it sent to its partner at all times.
  • Electronic storage. The files are stored in the solution for as long as the law requires and is controlled with an advanced electronic signature. In the case of invoices, for example, this prevents printing and physical storage, as they remain available for consultation at any time with the same legal validity as a paper document.
  • Publication of all types of data. Business @ Mail is prepared to send documents in four formats: standardized with a digital signature, structured without a signature, graphics (pdf, jpg, etc.) and mixed (standardized with a digitally signed pdf).
  • Free for the receiver. This service has no cost to recipients, which is especially important for the small partners as well as partners who cannot afford to use an EDI solution.

EDI Academy – Despatch Advice

EDI Academy – Despatch Advice

The use of electronic data interchange in business transactions has led to the creation of a plethora of different messages over the years. From all of them, today we dedicate this issue of EDI Academy to one of the most relevant, for both suppliers and distributors: the Despatch Advice.

 

What is 856 ASN?

The 856 ASN designation is the name given to the EDI shipping note message in X12 standard, the language most widely used in the US market. The letters ASN stand for Advance Ship Notice. However, this is not the only terminology used to define waybills or shipping notes. In the EDIFACT standard, widely used in Europe, it is known as DESADV or Despatch Advice.

In any case, all these designations refer to the same concept. The EDI despatch advice message serves to verify that the goods received by the customer match the purchase order. 856 ASN displays the contents of the package and some added shipping information. This includes the order data, item description, product features, packaging type, markings, freight operator information and the layout of the goods within the transport equipment.

One peculiarity of the despatch advice is that it can be as simple or as explicit as required by the business transaction being carried out. For example, a brief version includes reports on the sender of the package, the receiver, delivery time, products shipped broken down line by line and identified with a code (usually EAN, GTIN or SKU) and the quantity of each item.

However, it is also possible to issue a more complete ASN or DESADV, including additional information such as a list of all the products on the pallet with the batch codes, corresponding expiry dates and packaging numbers, among other details. This option is increasingly popular among businesses nowadays, as the traceability is better.

 

How does the Despatch Advice work?

For a better understanding of how 856 ASN or DESADV work, we’ll explain step by step the communication flow followed by this EDI message:

  • The supplier issues the customer (distributor) a despatch advice when the goods are ready for shipping.
  • The EDI solution from EDICOM integrates this message into the distributor’s ERP automatically so they can access it easily.
  • At a glance, the client compares the despatch advice with the initial purchase order, as both documents are traced and any differences will be obvious. In fact, this confirmation can be performed automatically by the platform.
  • If everything is correct, issues a confirmation note to the supplier.
  • The warehouses receive the information on the new items due to arrive, so they can plan the loading and storage in advance.

 

What benefits do we get from the despatch advice?

The use of 856 ASN provides considerable advantages for both suppliers and distributors. On one hand, suppliers improve the goods delivery management process. With this message they are able to announce the shipment to their customers beforehand, but they also have a document endorsing the goods being delivered.

On the other hand, distributors can make their stock controls and incoming order processing more efficient. This is due to total traceability throughout the process, which lets us know when the goods will be sent, when they will arrive and all the details of the shipment.

To these advantages are added the benefits obtained in general from using EDI, ranging from automation to economic cost savings.

Italian fashion industry joins EDI

L’EDI entra nel settore della moda italiano

The fashion industry is a key factor for the Italian economy, both for its level of turnover and the exports produced, mainly to the United States and Europe. In 2014, export sales generated 398,000 million euros, a record at the time. In addition, the figure forecast for 2016 is likely to reach 450,000 million euros. This internationalization is one of the sector’s principal defining features and has encouraged the spread of electronic document interchange (EDI) among fashion firms.

However, it is not the only one. In this area, beyond the challenge of communication across borders, companies handle a wide range of products. Everything ranging from sports clothing to footwear, through accessories, kids’ clothing and infant wear, to the high-end luxury brands. In this sense, EDI technology has also become an ally against the lack of uniformity in the sector.

How does EDI work?

With electronic data interchange, communications between different IT systems are standardized. This means that transaction and information sending take place in real time, automatically and safely, regardless of the features of the partners involved in the business or logistic relations.

In Italy, the spread of EDI throughout the fashion industry has mainly been driven by the big stores, such as Saks, Neiman Marcus, Harrods, La Rinascente, Printemps, El Corte Inglés, etc. These international brands usually act as a hub and require their suppliers to use this technology for the exchange of business documents like orders, shipping notes or invoices, as well as others of a logistic nature, such as product catalogues.

This is why so many Italian businesses of all shapes and sizes have signed up to EDI, a virtually indispensable requirement when exporting. But beyond the requirement, adopting EDI technology in B2B companies is now a key factor in optimizing logistics processes, boosting productivity, reducing the number of errors and, finally, maximizing efficiency through task automation.

A global solution

Some of the big brands already rely on EDICOM to implement their EDI solutions. To name but a few, Harrods, Cortefiel, Printemps or El Corte Inglés, four of the main fashion market hubs. This experience has enabled the EDICOM team to develop a Global EDI solution, which addresses the two needs of businesses in the sector: internationalization and product heterogeneity.

The EDI solution is integrated with the companies’ internal management or ERP systems. This way, the entire administration and logistic process is handled from a platform already known to the team, so there is no need to modify in-house working procedures. For example, when an invoice is generated, the EDI solution processes it automatically, translates it into the standardized language required by the partner and forwards it. This happens the same way with any other business, logistical and administrative transactions. Both in sending and receipt, all the processes are automatic, thus boosting efficiency and cutting economic costs.