May 23, 2013

Electronic Data Interchange (EDI) – A whole lot more than the PO and Invoice

Part of the New “EDI Expert Insights” Series!

By: Tom Guzik, Manager B2B EDI Solutions

Have you ever reviewed the ASC X12 list of EDI transaction sets? I have and there are 323 EDI transaction sets available; that’s 323 opportunities to automate a manual business process and cut costs from your business. But with all these opportunities, we observe 11% of Industry Data Exchange (IDX) subscribers are only using two or less EDI transactions. So where do you start when reviewing the list of available EDI documents that can make your company more efficient and easier to do business with? Don’t worry, the good folks at ASC X12 have grouped the transaction sets into categories enabling you to identify the documents that fall within the area you are trying to streamline. Here are the categories along with a couple EDI transaction set examples within each:

  •  Communications & Controls 
    • EDI 242 – Data Status Tracking
    • EDI 864 – Text Message
  • Finance
    • EDI 810 – Invoice
    • EDI 820 – Payment Order/Remittance Advice
  • Government
    • EDI 805 – Contract Pricing Proposal
    • EDI 813 – Electronic Filing of Tax Return Data
  • Transportation
    • EDI 210 – Motor Carrier Freight Details and Invoice
    • EDI 214 – Transportation Carrier Ship. Status Message
  • Supply Chain 
    • EDI 180 – Return Mechanize Authorization & Notification
    • EDI 845 – Price Authorization Acknowledgement/Status
  • Insurance
    • EDI 270 – Eligibility, Coverage or Benefit Inquiry
    • EDI 837 – Health Care Claim

You’re probably asking yourself, "What’s the significance to me?" or "How could this help my business?" The answer to that question is simple enough; in order to truly realize a benefit from your EDI program, you need to automate as many of your business processes as possible, enabling a more robust return on your EDI process investment. 

But what EDI documents should you consider using? What EDI documents will yield the greatest return on your investment? For most companies, their introduction into the world of EDI comes from a mandate issued by a major customer or supplier. When responding to a mandate, most companies will implement what is needed to be in compliance and never consider how else they can leverage their EDI capabilities within their business processes.

One of the easiest methods of identifying which business process to automate with EDI is to develop metrics around your company’s business processes. For example, you can track how much time your order entry folks spend entering purchase order lines into your order management system. The key is to track and record number of lines, not count of orders, to get a more realistic picture of the time spent manually keying in orders. Once you have your key metrics in place, you can spot the manual processes that are consuming the most resources and target them for EDI automation.

Still don’t believe that there’s more to EDI than just the purchase order and invoice? A quick check on the IDX network reveals close to 60 unique EDI and EDIFACT document types are being exchanged between trading partners every month. This suggests that IDEA customers are finding new ways to fully utilize their EDI investment and addressing their company’s business needs. To find out more, stay tuned for upcoming “EDI Expert Insights” articles. Next month we’ll discuss the top 10 EDI transactions in use on the IDX and how they can help you in your business operations.

Contact me at tguzik@idea-esolutions.com with your EDI questions, or ask questions in the comments section of this article so that I can address them in an upcoming issue of This Week in IDEA.