Business

How EDI Providers Assist SMEs to Improve Their Efficiency

The challenge for any small or medium-sized business is to constantly find new ways to increase their bottom lines. In the end this can only happen because of two factors. The first is to increase sales which comes from selling more of a product or service, selling the same product or service at a higher price, or selling additional products and services.

The second way any SME can increase his bottom line is to lower costs.  Cost lowering can happen anywhere within the company, because any cash outflows directly impact the bottom line. However a company must be careful when seeking to lower cost, and make sure that cost lowering happens as a result of efficiency rather than the company losing valuable resources that are important to producing sales.

When an SME can both increase sales and lower cost, it is thought to be a very special company. Companies that can accomplish this feat always have a similar approach to operating their businesses. They will incorporate efficiency strategies and processes and engage companies like EDI providers who supply tools that are proven to consistently increase a company’s bottom line.

The solutions for productivity growth, will almost always be the same, and they will involve utilizing software and computer technology to both increase sales and to improve efficiency. In these efforts, companies can utilize a range of different types of software. One of the most effective tools is electronic data interchange software.

Electronic Data Exchange

Electronic Data Interchange or EDI is an outgrowth of the need for businesses to improve the efficiencies needed when communicating with each other regarding transactions between the two companies.  Today, EDI typically encompasses the exchange of common business forms and documents between two or more organizations utilizing a connected machine-based communications and archiving system that will generally be housed in a desktop computer.

Companies will utilize EDI to exchange status reports, bills of lading, purchase orders, invoices and shipping documents. Electronic Data Interchange can be performed in a number of ways, but today is most often performed through desktop computers. The industry has vastly improved efficiencies in a number of industries including healthcare, home and automobile purchasing and e-commerce.

Although the technology can be used to replace much of the paper associated with transacting business between two companies, the primary reason it has become so prevalent is because it decreases the time and error rates associated with manual data input. By automating much of these processes, companies can become more efficient and implement “just in time” strategies that save costs and vastly improve efficiency.

How EDI Software Works

The process is that documentation is sent between two computers that each have ED software and data is converted to specific code and then converted back to readable text on the receiving end. There are two common forms of translation for Electronic Data Interchange, a machine to readable format that creates a printed report, and the automatic translation of Electronic Data Interchange into Enterprise Resource Planning (ERP) software or an accounting system.

The system typically requires dedicated hardware for it to be its most effective and for those businesses that send lots of the type of data it can make more efficient, you will definitely need to buy a dedicated hardware system. However the system is infinitely expandable on the software side providing support to your company no matter how much or fast you grow.

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