EDI, a tool for exports in a global market

exportações

Global trade and exports are recovering the levels of growth lost during the recent economic crisis especially in the BRIC countries (Brazil, Russia, India and China). A clear example of the recovery of global exports is Brazil. Last year, the country set a trade surplus balance record of $47,690 million dollars.

In fact, since the surplus of 2006, the South American country hasn’t seen such an increase in funds, specifically, $46.450 million dollars. The good part about Brazilian exports is demonstrated by the fact that Brazil is one of the top 25 exporters and importers in the world and that foreign trade makes up 25% of its GDP. These figures are mainly due to B2B sector operations involving the trading of raw materials, hydrocarbons, chemicals, agricultural products and food products such as coffee, sugar, meat and corn.

The great potential of Brazil represents a great business opportunity at the global level for the B2B sector and all types of companies that want to access new markets and business opportunities. Good economic relations increase the confidence of companies counting on electronic data interchange, especially in exports when processing invoices, purchase orders and doing other activities.

The use of EDI in exports is the best way to trade with another partner in the world. The standardization of processes and control measures offered by EDI ensure secure communication flow between corporations as well as public and private entities. This way it’s possible to connect the internal management systems of companies with those of the banking entities to avoid human error, or even worse, fraud.

Furthermore, even though Brazil has good foreign trade numbers, the internal situation of the country makes taking security measures a requirement. Security measures guarantee the balance of accounts when conducting commercial operations in the country, which is led by Michel Temer.

A foreign trade business opportunity

Globalization forces companies to adapt to different systems and platforms to be able to operate in any corner of the planet. However, thanks to EDI, this problem has a simple solution.

The complex variety of commercial operations makes document management difficult between countries, however EDI facilitates all kinds of procedures by standardizing the exchange of B2B processes. Simple operations such as stock management, shipping to suppliers, invoice payments or order processing suddenly became easier tasks thanks to EDI.

Having a global operator allows companies to develop operational policies that are more agile and efficient by having adequate computer management systems capable of operating in business relationships through combined software management and secure and private networks. This way, the exchange of standardized documents between the computer systems of both B2B parties is ensured.

Furthermore, EDI maximizes the exchange of operations and is the best way to take advantage of the current positive economic situation in Brazil. Although the use of invoicing is increasingly common in B2B relationships, it does not follow the same pattern in all countries.  Brazil is no exception, which is why there’s a need to have an optimal connection throughout the supply chain and ensure the sending and receiving processes in the ERP.

This way, any company can manage logistic business processes and establish all the necessary steps to connect with its suppliers, customers, logistics operators, and commercial partners using a global network.

The importance of standardization in an era of globalization

EDI solutions adapt to any need, business or ERP. Companies don’t have to adopt the different types of documents and processes their suppliers or clients use, but they can manage them through EDI. In Europe, standard UN/EDIFACT is most commonly used while in the United States, ANSI X12 (from the English acronym American National Standards Institute) is most commonly used.

Thanks to EDI connections can be established with markets as attractive as Brazil’s and companies can take advantage of their flow of exports, which reached a spectacular value of $185.240 million dollars, an unforgettable feat. Some economic specialists like Peter Gutmann or Goldman Sachs affirm that Brazil will have the fourth most important economy on the planet in a few years.

It is estimated that in 2050, it will reach the standard of living of 2,005 countries in the Euro Zone thanks to the fact that it will have a GDP of $11,366.000 million dollars and a per capita income of $49,750. In short, all countries will have to operate in the largest powerhouse in Latin America thanks to its economy.

Do you want to know how to establish an EDI solution that suits your company in order to optimize your international communications? Don’t hesitate. Contact us today.

EDI for SMEs: Basic solutions to create competitive advantages

EDI for SMEs

The use of EDI technology has always been related to large and multinational companies. However, with the advancement of digitalization, and the technological transformation of companies globally, EDI is recognized as a technology that serves the purposes of optimization and process efficiency in any type of company.

Today the ability to exchange business documents electronically has become a necessity for companies of any size. Many large North American distributors and retailers already require their suppliers to utilize EDI technology in order to communicate electronically and integrate orders, dispatch advices and invoices into their management systems. This demand is one step closer to digital business transformation, which benefits even smaller companies and especially those that don’t want to miss opportunities to do business with large retailers such as Wal-mart, P&G, Carrefour, etc…. For retailers, fully integrating electronic business documents has huge advantages and benefits. Therefore, it is becoming a requirement if their suppliers want to work with them.

Implementing an EDI project for an SME

Implementing an EDI project can seem long and costly, but the medium-term advantages are remarkable and include optimizing business processes and making communication more efficient throughout the supply chain. In addition, for small and medium-sized companies, it means getting ahead of potential competitors and generating more business opportunities with distributors who are demanding to work with EDI. Therefore, solutions and possibilities exist for these companies so that they can use EDI in a more economic way that’s best adapted to their needs.

Depending on the volume of transactions and messages exchanged with a company’s partners, there are basic solutions available, such as Web EDI, which enables low cost and rapid deployment. All you need is an Internet connection. The different messages will be built through simple data input screens with simple Web forms and sent securely to the destination in the required EDI format. With this EDI web solution an SME can manage all their EDI communications easily.

Contact us to know more about the implementation.

Advantages of Working with EDI for SMEs

  • Cloud-based: At EDICOM, we offer our services in SaaS mode, software as a service hosted in the cloud, so companies don’t need to develop or implement costly on-premise solutions or take care of maintaining or upgrading the platform.
  • Web-EDI: This is a modality with a fast turnaround and a minimum economic cost designed for companies that exchange low volumes of documents. The data from the documents is loaded manually in simple forms along with the information required by the distributor. These forms are transformed into structured documents that will be automatically integrated into the recipient’s ERP.
  • Financial savings: EDI completely eliminates paper processing in companies. Furthermore, it protects the environment because companies don’t have to use paper or printers, and manual processing is eliminated. In addition, everything is stored in the cloud guaranteeing security and confidentiality.
  • Instantaneous: Documents are received and processed instantly, therefore shortening the collection cycle for small and medium businesses that may need to receive payments in less time than large retailers.

EDI as a competitive advantage for SMEs

Once an EDI solution is implemented, a company will be able to connect with any company that requires it, since these solutions are completely scalable at a global level. In addition, as a company increases the volume of documents to be exchanged or requires new connections, the solution will be able to adapt to new processes.

Digital transformation is a reality that affects all of the players in international trade. Therefore, the adoption of new technologies can affect the growth of companies that are lagging behind their competitors.

Getting on board with digital transformation will no longer be an option. Soon it will become an obligation. Companies that begin to make the choice to commit to the new technologies are those that will adapt to and improve their business processes at an international level.

Find out how EDI can help your business.

Growth of e-Commerce driving use of EDI in the fashion industry

MOda

In the retail sector, the fashion industry has a great impact on business and exports in countries such as Italy. The country is a major hub of suppliers and distributors with department stores such as Printemps, Harrods and Saks, among other big names. The sector is in continuous movement and covers a wide range of products, which entails complex operational and supply processes in the international scope. A new scenario in ongoing development that calls for agility and efficient solutions.

The future of fashion is digital and defined by the customers’ needs. e-Commerce in the retail sector and the use of mobile devices are growing year after year and require new, more complex processes to which companies must adapt. According to an e-Marketer study, a 23.2% increase in e-commerce worldwide is expected in retail. Electronic sales amount to 10% of total sales for the sector. This study also states that, by 2017, mobile commerce will account for more than 70% of e-commerce sales in China and India.

The sector’s features have made it one of the most advanced in adopting technological processes in its logistics operations and the exchange of business documents. The great heterogeneity of products and globalization has led fashion companies to implement electronic data interchange (EDI) to deal with the large volumes of information they handle and to be able to connect with companies from any part of the world.

In a sector where the commodities are constantly changing and must reach the end client in record times, it is indispensable to find ways of working which are more efficient and immediate. Automation of the exchange of information between businesses in the sector savings on cost and times by accelerating data processing.

How to reach any part of the world?

Through an integral EDI system such as EDICOM’s, a single company can exchange its orders, invoices, or delivery notes electronically and immediately with any supplier, wherever they are located and using any type of standard message. When an invoice or business document is created, 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 transaction.

Some of the biggest 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 enabled EDICOM team to develop a Global EDI solution, which tackles the two needs of businesses in the sector: internationalization and product heterogeneity.

What other documents can be exchanged?

This electronic system allows the exchange of other types of messages such as product and price catalogues, sales reports, despatch advices or returns, etc. EDI automates the sending of this information and also ensures traceability of the documents, at all times providing knowledge on whether the document has been opened, read, etc…

Benefits of EDI in the fashion industry

  • Faster response times
  • Saving on administrative costs
  • Efficiency in working procedures
  • Accuracy in the reports sent, as they come from the ERP
  • Providing greater visibility of the status of processes throughout the supply chain.

Why FinTech companies should join forces with EDI

EDI fintech

FinTech companies are expanding in Brazil. A report by Goldman Sachs says that more than 200 financial technology companies located in the country could generate $24 billion in revenue over the next decade. The growth potential of this sector, which is dedicated to the development of innovative financial services, is widespread throughout the world but its incidence is even greater in Brazil due to the high concentration of banking institutions.

In a crisis scenario like the one that the Latin American country is currently experiencing, innovation seems to have become a door for getting ahead. It is estimated that Brazilian banks and FinTech companies have invested $1 trillion in disruptive initiatives to improve the ecosystem of the sector. However, much still needs to be done in order to optimize the flow of communications in banking.

Compared to other regions such as the United States or Europe where financial EDI practically does not exist, Brazil stands out worldwide in the adoption of EDI in this sector. Moreover, FinTech companies are helping to increase the development of business management in this area.

The automation of communication with banks, through EDI, is a key solution to fight the main problems that affect the techno-financial sector which include:

  • Lack of security. The use of communication tools such as e-mail does not guarantee the confidentiality and integrity of data. But beyond that, the big drawback is that all accounts payable and receivable operations are handled by people, so the risk of fraud is high.
  • Difficulties in growth. FinTech companies are in full expansion. The number of customers grows fast and companies must be prepared to respond to high demand and sustainable growth. EDI with banks and automation allows such scalability without the need to constantly increase human and physical resources.
  • High lead time for processing transactions. In a world marked by immediacy, no business can afford to waste time on operations. Faster processing makes businesses more competitive.
  • Inadequate use of resources. FinTech companies and financial institutions that do not yet use EDI need to have a human team dedicated to carrying out the transactions related to accounts payable and receivable, a task that takes time, is expensive and does not add value to the company. With the automation of EDI, these people could dedicate themselves to more productive and beneficial tasks for the company.
  • Human errors. When transaction processing is done manually, it is common for errors to occur. Their detection and subsequent correction increases management time, which is something that does not happen with financial EDI since the process is automatic and error-free.

How to implement financial EDI

Given the advantages of electronic data interchange and its ability to solve these major problems affecting FinTech companies and banks, the financial sector is taking the lead in the implementation of this technology in Brazil.

To encourage its use and facilitate implementation, EDICOM has specifically developed a financial EDI platform, aimed at FinTech companies, banks, suppliers and all partners in the sector. It’s a comprehensive multi-standard, scalable, global solution. In addition, it has different internationally recognized certifications that guarantee safety such as the ISO 27001, the ISO 20000 and the ISAE 3402.

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.