EDI Outsourcing Solutions

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EDI Outsourcing

EDI outsourcing can happen in several different contexts, but essentially it takes place when a company decides that outsourcing EDI would be of strategic interest – EDI has in that situation been determined to not be one of the company’s core strategic areas. There are three major types of EDI outsourcing:

• EDI Service Bureaus
• EDI Outsourcing of an entire EDI Department
• Onboarding of Suppliers or Customers

EDI outsourcing with EDI Service Bureaus: This is common when small companies are asked to do EDI with a larger company. This is often a customer like a retailer or large manufacturer. When asked to do EDI, often the small company doesn’t know anything at all about EDI and decides to do EDI outsourcing because it is simpler. Though it may be more expensive in the long run, EDI outsourcing is a good option for companies unfamiliar with EDI and that have a low transaction volume. It will, however, over time be more expensive than purchasing EDI software and managing it in-house.

Outsourcing the EDI department: This means that a company has decided that EDI is neither a strategic competency within the organization, nor an area that provides competitive advantage. EDI outsourcing in this context makes a lot of sense, especially when a company wants to focus resources on their core business. EDI outsourcing is always relevant when an organization has difficulty seeing the strategic aspect of EDI.

Outsourcing the on-boarding of EDI trading partners: When a large organization (eg. a retailer) does EDI outsourcing of the on-boarding process, it means that they are outsourcing the work of getting individual suppliers up on EDI. EDI outsourcing is important in this context because most retailers have thousands of suppliers and lack the manpower or expertise to get all of these on-boarded to EDI. When a retailer does EDI outsourcing of the on-boarding process, it is generally because it’s a significant drain on resources.

There are some important points an organization should consider when contemplating EDI outsourcing:

How experienced is the entity with which you will do EDI outsourcing? For how many years have they done it? What are the characteristics of their typical EDI outsourcing project? Get details!

Will EDI outsourcing really save money? In many situations the outsourcing organization has found that outsourcing may not be as cost saving as originally forecasted. This is especially true when the EDI outsourcing was of the entire EDI department. This is often due to the fact that knowledge of the company’s business process and any changes to this is important for the EDI department, but when EDI is outsourced it is difficult to ensure that the outsourcing vendor understands the inner workings of your organization (and the effect of changes to business processes on the EDI outsourcing). Please do careful and detailed calculations showing best case, average and worst case scenarios of EDI outsourcing. Also know that when entering into an EDI outsourcing agreement, the outsourcing organization is no longer accessible to your needs in the same way How will the outsourced EDI collaborate with the rest of your organization? Before engaging in EDI outsourcing, you need a clear understanding of how you will be interacting with the vendor on all levels, so your needs are met. EDI XML

As a small but growing business doing EDI, you must eventually decide – has my company outgrown EDI Outsourcing? When should you move away from EDI Outsourcing and on to the purchase of EDI Software?  The answer to this question will depend on several factors.  EDI Outsourcing is convenient for organizations using EDI in a reactive mode, but is not ideal for growing companies wishing to take advantage of all the features of EDI.  

EDI Outsourcing can become expensive.  While an EDI Outsourcing organization has the infrastructure to quickly enable your EDI operations, the EDI Outsourcing company relies on variable pricing. This can make EDI Outsourcing expensive for a growing business.  The answer to the question of when to move on from EDI Outsourcing to the purchase of EDI Software might seem to be: abandon EDI Outsourcing when it becomes prohibitively expensive.

The better answer, however, is to plan an exit from EDI Outsourcing well before the price of EDI Outsourcing  becomes too high.  When EDI Outsourcing is your vehicle for exchanging EDI, you are unable to take advantage of the back-end benefits of EDI.  Specifically, integrating your EDI data into your ERP system is difficult to impossible when using EDI Outsourcing.  With EDI Outsourcing, you receive a report of in-bound documents that then have to manually processed.  It’s best to view EDI Outsourcing as beneficial only when you first begin to use and test EDI, and then move on to the purchase of EDI software when you have outgrown EDI Outsourcing.

Once you are sure that EDI is right for your business, you will probably also find that EDI Outsourcing has become too limiting.  With EDI Outsourcing, you may be restricted in the number of trading partners you can connect with. With EDI Outsourcing, you will not have any control over who processes  your EDI within the EDI Outsourcing organization. EDI Outsourcing is a shared resource – which means that other companies will be working with your EDI Outsourcing provider – often these companies are your  competitors.  EDI Outsourcing may be a good value for the beginner; but when companies get serious about EDI, EDI Outsourcing is usually the first victim.  EDI Outsourcing may be appropriate for first time users; but even small businesses will soon outgrow the need for EDI Outsourcing. When you are ready to move on from EDI Outsourcing, Trading Partner from EMANIO  is powerful and easy to use.