3 Steps To Evaluating Edi Effectiveness

Are you considering implementing or upgrading an EDI system for your business? The choices and factors involved in making a decision for or against an EDI system can be overwhelming. If you’re feeling inundated, confused, and bewildered, you’re not alone. Many businesses put off making a decision about EDI until they reach a critical crossroads. The good news is that there are distinct tipping points for implementing change in any business: productivity, cost, and customer satisfaction.

Employee Productivity

Is the process of manually entering purchase orders, sales orders, Advance Ship Notices, and invoices eating up your employee productivity?

Businesses spend big bucks to evaluate and improve employee productivity because productivity is absolutely crucial in today’s competitive and fast-paced business world. If your employees are spending more than an hour a day manually entering documents that would normally be processed by an EDI system, it’s time for a change. Additionally, if your current EDI system is so cumbersome that it saps your employees’ productivity by eating up precious time with redundant or repetitive data entry tasks, a new EDI system could save you money.

When we ask the question, “What is the task of EDI personnel?” the answer is not simply to enter order data. The answer is that EDI personnel process orders and maintain the system. The less time employees spend on data entry, the more time they have to devote to other aspects of the order process.

It is important to consider all the ways EDI can reduce the drain on productivity, including the level of on the job employee satisfaction, before pitting the pros of a new EDI system against the cons. A good indicator of the effectiveness of your current system is to evaluate how long your employees spend each day processing EDI documents. If you are investing more than an hour a day for EDI entry in a small to medium sized business, or two hours a day for a larger business, your system could benefit from change.

Overall Cost

Has the cost of supporting your current EDI system become a budgeting nightmare?

Sometimes maintaining an inadequate EDI system is simply a pain. EDI technicians, lost productivity, delays in shipping and order processing, and the increasing level of frustration associated with dealing with an inadequate system all add up to business disaster.

While upgrading your EDI system may seem like an unreasonable expense, consider the amount of money wasted on maintaining your current system and you may discover that a new system is more affordable than you previously thought.

Healthcare Purchasing News contributing Editor, Rick Dana Barlow (2009) writes “ If full EDI motivates you to channel your inner Indian Jones or Gil Grissim, helping you unearth mistakes and problems you didn’t realize you were having, you’ll likely generate revenues and profits in the long run.”

The real challenge is evaluating if not having an effective EDI system is costing you enough to warrant the expense of change.

Customer Satisfaction

Are your customers unhappy with your order processing and shipping performance?

Customer satisfaction can make or break your business. One unhappy customer can generate countless adverse affects for your business. A horde of customers waiting for late shipments can generate a PR nightmare. If 80% of your overall sales come from 20% of your customers who return for repeat orders, you cannot afford to compromise customer satisfaction.

Bailey Tanks in Auckland experienced firsthand what sudden growth can do to your business. When the company expanded into Australia, a government initiative produced unpredicted growth for the company and they found themselves facing a six-month backlog of orders. Not only did this affect customer satisfaction, but adversely affected production planning, distribution scheduling, and raw materials procurement (NZ Business, 2008). Something had to change. The solution for Bailey Tanks was to switch to Microsoft Dynamics AX and launch an effective EDI system.

Choosing to switch to EDI is too often a difficult decision for many businesses. Barlow (2009) states, “Trolling for software shouldn’t be a seduction of the innocent or the ill-informed, or a clever exercise in sophistry.” Get the facts before evaluating if EDI is the right solution for your business.

By: Lisa Steinhart

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