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EDI: Cost of Implementation & Cost Saving Potential


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Electronic data interchange (EDI) is an extremely successful supply chain tool that can help warehouse operators to reduce costs, improve accuracy of operations and increase facility efficiency. As with any other project your team may plan, it is critical to identify the cost of the project and see where it fits into your budget, both short and long term. In this presentation we will review the cost of implementing and maintaining EDI networks and how implementation strategies differ.

Before beginning your EDI project, have your team identify any existing pain points in your supply chain operation. Once these have been identified, project objectives and strategies can be developed with these components in mind. Be sure that these pain points are measurable so that your warehouse operators can measure the success of the electronic data interchange project.

Next, your team must identify whether they would like to implement an internal EDI solution or outsource to a third-party or value-added network (VAN). The cost of these implementation methods vary significantly. When implementing an in-house EDI network initially you will need to invest capital in EDI software, communication software, mapping/translation software, EDI and mapping resources and IT resources to maintain and upgrade the network regularly. If implemented internally the cost of implementing for your trading partners may fall on your plate as well, another cost consideration to take into account. In most cases, in-house EDI implementation is done only by very large supply chain operators with significant IT resource availability, such as Walmart and Amazon. For most other, using a VAN is a more cost-effective choice as it does not require investment in many of the fixed assets. Multiple different pricing models are available, but the most common are pay-as-you-go, monthly and annual subscriptions. Here you will typically pay for only the service as needed and can adjust your needs as time goes on. But, before selecting this pricing model consider transmission volume and any hidden charges that may exist as this could make your cash outlay more than expected.

Regardless of selected implementation method, ongoing costs will occur for your EDI solution. Throughout the years your supply chain operation should plan to pay transmission fees, support & maintenance and other fixed annual costs. Consider these fees when planning the scope of your electronic data interchange project.

The top reason to implement EDI is the significant cost saving opportunities. To learn more about how EDI can save your supply chain operation money contact Datex experts today at or view more resources here

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EDI: Cost of Implementation & Cost Saving Potential

  2. 2. Why Implement EDI? • Electronic data interchange (EDI) is an extremely successful supply chain tool that can help warehouse operators to reduce costs, improve accuracy of operations and increase facility efficiency. . 850 810
  3. 3. Identify Pain Points • As with any project, it is critical when starting an EDI project that you are clear about the purpose of the project. • Before developing an EDI strategy and identifying and selecting vendors, your team must identify the pain points that need to be addressed with electronic data transmission. • Once these pain points have been identified, project objectives and strategies can be developed. Make sure that identified objectives are both measurable and achievable.
  4. 4. EDI Cost Considerations : In-House or VAN • The cost of EDI implementation in your supply chain operation will vary based on the approach you take. • EDI can be implemented internally or using a 3rd party value-added network (VAN). Before selecting which method to implement, it is critical to consider the cost implications of both – initially and ongoing. OR
  5. 5. Cost of In-House Implementation • Some larger organizations with significant IT resource availability choose to implement internal EDI systems due to the increased control and security levels available. If implementing EDI internally startup needs will include: • EDI software • Communication software • Mapping & translation software • EDI and mapping resources • Resources to upgrade and maintain EDI network • In addition to internal resources and assets, your business will also have to work with supply chain partners to establish EDI networks on their behalf as well. The costs associated to setting up and maintain these networks may fall upon your organization as well.
  6. 6. Cost of VAN Implementation • Many supply chain service providers choose to implement EDI solutions with third-party providers as this is typically a more cost effective solution for small to mid-size businesses. • Multiple different pricing models are available through VANs including: • Pay-as-you-go • Monthly • Annually • Before selecting a pricing model consider transmission volume and potential hidden charges. These could make your EDI solution more expensive than expected, lowering your ROI potential.
  7. 7. Ongoing EDI Expenses • After initial implementation, ongoing expenses will occur, extending your EDI investment beyond the first year regardless of your decision to implement internally or via a VAN. • Costs throughout the subsequent years, depending on selected network type, can include transmission, support and maintenance and other fixed annual costs. • It is critical to consider these ongoing costs when planning thescope of your EDI project.
  8. 8. Benefits of EDI Implementation • Increase speed and accuracy of operations with faster document exchange rates and improved data quality • Improve efficiency of your operations by eliminating paper-based processes, allowing your staff to focus on other business critical functions • Enables real time visibility into inventory data, transaction statusand much more, improving your ability to make educated business decisions • More importantly, cost savings
  9. 9. Potential Cost Savings • EDI implementation leads to a significant reduction in paper use. Transactional costs associated to paper-based processes canbe reduced by up to 35% when using EDI. • Currently approximately 30% of incoming shipments are received without advance shipping notices (ASN). The cost to process an order without ASN is, on average, $78. If ASNs are received via EDI before the shipment arrives the cost to process that same order can be reduced to $0.01-$0.02. Learn more here. • Chargeback fees received from customers can also be reduced using EDI. When documents are transmitted through electronic methods, rather than entered manually, data accuracy is increased and errors causing chargebacks are reduced.
  10. 10. Potential Cost Savings • Both invoicing and payment processing costs can decrease significantly, up to 90%, when processed using EDI. The average cost of preparing and mailing a paper check is $5. Processing that same payment using EDI can cost as little as $0.50. • Utilizing EDI can reduce order cycle times by up to 50%, making existing labor more productive and reducing the labor investment required to process customer orders. • See some examples of EDI savings here.
  11. 11. Conclusion • Before beginning an EDI implementation consider all of the costs, both up front and ongoing, to determine the true cost benefits and what implementation method best suits your operations’ size and needs. • Your EDI investment could save your business thousands of dollars each year with improved labor productivity, reduced paper usage, reduced errors and much more. • Be sure to contact an EDI expert to help answer any questions you may have regarding your future project. Source:
  12. 12. Contact Us 800.933.2839 Online demonstration Email Us Web Chat Datex Corporation @Datexcorp