That nationwide fashion retailer you’ve been dying to work with has finally noticed your brand, but before your trading partnership is a perfect fit, they want you to implement an EDI system. If a request such as this has brought you here, you’re in good company, as many organizations in retail (ie. Nordstroms, Bloomingdales, Macys, Target, JCPenny, etc.) are requiring EDI for a variety of reasons. EDI can play a vital role in meeting consumer expectations and supporting business success in the modern digital retail world.
How does EDI work?
EDI is an acronym for Electronic Data Interchange. EDI systems enable the standardization and rapid exchange of business documentation between business partners. For example, instead of sending a paper invoice to Nordstrom’s, the invoice is sent electronically. The documents that can be processed via EDI include, but are not limited to, invoices, purchase orders, purchase order acknowledgements, advanced ship notices, credit adjustments and more. EDI vastly improves and streamlines workflow within an organization and between trading partners, while reducing errors and improper or lost documentation.
EDI solutions can be integrated to connect an ERP, content management systems, accounting software, warehouse management systems and more. In addition to the ability for EDI to scale to the size of your business, EDI can be adapted to new ERPs, software and other systems you may choose to upgrade.
As an example, standardizing and processing business transactions through AIMS360 ERP and SPS EDI automation can eliminate the need for exchanging paper documents, while also considerably reducing costly manual data entry errors. For example, using EDI, a retailer’s purchase order can be automatically compared to the vendor’s invoice and to the receiving advice/acceptance certificate from the warehouse. If everything matches, the payments can be wired automatically. If something doesn’t match, the transaction would be flagged for review by human eyes to address the issue. EDI can enhance efficiency to such a degree that many companies with EDI prefer to work with trading partners that already have EDI systems in place.
How can EDI help my company grow?
EDI helps companies in the fashion and apparel retail industry deliver on consumer’s high expectations and desire for a positive experience. For consumers, EDI is the invisible network behind the e-commerce site that ensures that the online order is quickly routed through the fulfillment queue. For retailers and brands, EDI empowers trading partners to engage in the speedy, dependable and accurate communications needed to fulfill the order correctly and ship it for on-time delivery. EDI reduces late shipments, inventory issues and delayed backorders that send customers to a seller that can deliver – literally.
EDI can also enhance inventory visibility. EDI can break down inventory visibility silos between warehouses, retail stores and even suppliers. Retailers can evaluate product availability before placing an order to the warehouse or vendor. EDI also encourages sales by facilitating the display of inventory information directly to ecommerce sites and other channels, letting consumers know the product is in stock – even if the item is still in the physical custody of a vendor or 3PL. EDI also relays shipment tracking information between trading partners, in turn allowing the retailer to notify the consumer of their expected delivery date.
Clothing and related items tend to have a high return rate due to expectations of size, color and more. Item attribute documentation processed through EDI can reduce some of those return issues by increasing product description accuracy. Additionally, EDI can process return documents between the consumer and the seller, as well as among trading partners when needed. When consumers have a positive return or exchange experience, they’re more likely to make another purchase in the future.
Document processing automation, increased efficiency, reliable inventory visibility, streamlined fulfillment, and a smooth returns process leads to greater trading partner collaboration and customer satisfaction. That can all add up to a winning recipe for scalable growth.
What is a ERP and how does it work with EDI?
For apparel companies, an ERP system integrates various functions into one complete system to streamline processes and information across the entire organization. These span out across production, customers, orders, inventory, invoicing, shipping, accounting, and more.
An integrated ERP system, like AIMS360, can help streamline EDI by connecting it to an EDI provider, like SPS.
How can my business implement EDI?
There are several ways to pursue EDI for your company, with pros and cons for each:
In-house EDI solution:
In-house EDI solutions that live onsite at your business is the most traditional route for EDI. These systems tend to cost more up front because you are responsible for all the investment and expenses for creating the system. That includes software and hardware, as well as the IT staffing required for system upgrades and EDI requirement changes. After that investment, EDI costs may go down, but if your business grows, EDI expenses may increase over time.
Online EDI solution:
An online EDI solution typically allows access to EDI software via a portal, which can result in fewer expenses when compared to a traditional EDI system. However, it may still require investment in onsite network and infrastructure resources to ensure the bandwidth needed to accommodate increases in order volume and documentation needs.
Cloud-based EDI solutions:
Cloud-based EDI solutions cost considerably less than online EDI and traditional EDI, both for upfront costs and long-term expenses over time. Cloud-based EDI puts the processing power on your EDI provider’s system instead of your own, reducing software, network and infrastructure needs. The monthly recurring subscriptions costs for cloud-based EDI are much less than traditional or online solutions, more predictable and are easily scalable as your business grows.
Today’s retail industry landscape is unpredictable. Increased efficiency, a stronger supply chain and streamlined communication can keep your business competitive and attract new valuable trading partners. Keep your business running smoothly and support growth in the future by investing in an EDI solution.
About SPS Commerce
More than 70,000 companies in over 60 countries trust the SPS Commerce platform. With so many organizations in our retail network, SPS likely already works with many of your trading partners, making integration especially easy and valuable. SPS Commerce offers a state of the art data center engineered to accommodate huge spikes in transaction volumes, as well as global support 24 hours a day, 365 days of the year. Contact SPS Commerce for more information.
AIMS360, the world’s leading fashion ERP software, empowers you to deliver your fashion to the world. Committed to helping you increase profits and scale your business, AIMS360 gives you the control to manage your operation with ultimate visibility, and delivers hundreds of hours of time back to focus on what matters most. Whether you are a manufacturer, wholesaler of apparel, footwear, or accessories, our fully-integrated, constantly evolving, cloud-based software utilizes the world’s latest technologies and platforms to ensure you and your business realizes its greatest potential. Some of the many features include: Customer Management with Advanced Accounts Receivables; Order Taking on the Go with iPad; Sales Rep Commission Management; EDI with major retailers such as Nordstrom, Macy’s, J.C. Penney, and hundreds of others; AIMS GL Integration with QuickBooks; UPS/FedEx/USPS Shipping Integration; Advanced Business Intelligence. Additionally you can connect AIMS360 with any third-party solution (JOOR, NuOrder, Brandboom, Shopify, Magento, Bigcommerce, Amazon, etc.) to create one integrated omnichannel system. The possibilities are truly endless!