It’s one of the most confusing topics you’ll find on the web. From the moment you find out you need EDI and begin your Google, Bing, and YouTube research, you’re more likely to come away confounded with frustration, with more questions than when you started.
I was faced with the same task, and as an ERP and small business expert with a horizontal technology background, you’d think this stuff would come easy to me, but that only made it more frustrating when I realized I wasn’t getting it. Then I realized… that’s how the the industry makes its money. It’s submission through obfuscation. Kind of like taxes. At the end of the day, chances are you’ll throw up your hands and just pay “whatever” it takes.
Firstly, I’m going to assume that you know you need EDI. If you’re weighing the options of EDI vs API or anything along those lines, read my EDI vs API article where I conclude that it’s not a competition, as each technology is designed for different purposes. Secondly, I’m going assume that you’re looking to integrate EDI with your business systems. I’m also going to assume that as a business owner you’ve figured out that integrating non-core modules is only going to land you in data hairball hell, and if you’ve still not figured that out and are jumping to EDI, you have foundational problems you may not even be aware of, and will be seeking to compound them by looking to integrate EDI on that technology stack. Rather than reading on, instead you need to read my article (or what the video) about WHY you should only integrate “non-core” functions into your business system then come back to this article. BTW Core refers to the functions provided by apps that share common data that you can run within your business, such as Accounting, e-commerce, and CRM, where as Non-Core refers to services you can’t run on your business system, such as FedEx shipping rates, Credit Card processing,, etc.. these you have to “connect” to over the web. Lastly, if you outsource your warehousing / shipping to a 3PL, read my article about “How small business should integrate with 3PL” first. Oh and BTW, if you sell in North America, you’re going to use X12 EDI over AS2 or SFTP (AS2 is rather pricey but might be required by the trading partner, SFTP is not).
So then, you’re a small business and need EDI. Let’s get one thing strait right off the bat. If you type EDI in any keyword phrase into Google, you’re going to probably land on one of the managed service provider pages from companies such as TrueCommerce (they own HighJump), SPS Commerce, Covelent Networks, and B2Bgateway (there are many more). These are EDI MSPs that have experience providing the Walmart’s of the world with data from companies such as BizAutomation that integrate with them, exactly the way they want it. You’re going to use one of them for the same reason you wouldn’t bother doing your own taxes (if you have complicated taxes). Not worth the hassle because they provide a huge ROI (you can thank competition for that).
How EDI and ERP should work together
I looked at some competitors that provide ERP software to figure out what we should be doing, and found that big players like NetSuite and Sage have a ton of solution app “partners” who will happily sell you their middle-ware for extracting and inserting data into these ERPs in order to transport that data to one of those EDI MSPs. Why NetSuite, Sage, and others don’t provide this directly to their subscribers ? Probably because these “partners” provide them with lots of leads, but you’ll have to ask them yourself. At BizAutomation you’ll find no such cronies partnerships. We integrate directly to a single EDI-MSP (based on their library of maps, and experience with the retail network, developer support, and end customer pricing flexibility). We selected “True-Commerce”.
So here’s how workflow should happen, within a typical transaction.
1. Initial Sales Order trigger:
A. You manually create the Sales Order or
B. Walmart issues a Purchase Order electronically for 100 widgets in which case BizAutomation automatically creates a Sales Order for “Walmart”.
2. This places product on allocation. It also will automatically confirm receiving the PO from Walmart in the background (All customers using EDI will require this). Workflow automation updates “EDI Status”, “Order Status”, and “Order Source”, so you can easily track and separate all new open EDI from non-EDI sourced orders.
3. Once you’ve reviewed the order to make sure you have product to ship (3PLs can be incorporated into this but the process varys slightly), you’ll set a value on your order status that will automatically email your warehouse people with an alert that tells them it’s to ship out the order. When they do, order status changes to “Shipped” which triggers allocation release, which impacts accounting asset values, and workflow that automatically sends Walmart a shipping notice of the order. They respond by sending a confirmation that they received it, and everyone waits for the shipment to be received by Walmart.
4. When you send Walmart (or whomever) the invoice will depend on the business terms (They may need to first send you a “Shipment Received” notice), but in any event, you’ll eventually need to invoice them, which you can do by changing the value on the order status, which triggers workflow to issue the invoice to Walmart (which they confirm receiving with a confirmation note).
Needless to say, there are many moving parts, and this is with a totally integrated business system like BizAutomation working in concert with TrueCommerce for EDI. Adding more tiers to this technology stack (e.g. separate Accounting and Order mgt, or another middle-tier integrator) is just going to make things more prone to problems and increases longer term expense.
If you create a low number of sales order per month with a trading partner (e.g. Walmart) ? Skip integration all together, it’s not worth the hassle. Use one of the portals that True Commerce or SPS Commerce offers for $99 to $199 per month, and manually enter the orders, and update order status in BizAutomation accordingly and call it a day.
If you absolutely need to integrate EDI with BizAutomation, know that there are one time, and recurring costs that will need to be included in your budget.
One time costs - These will vary depending on the number of trading partners, and what those trading partners require of you (ask 2 or 3 of them for their requirements documentation and you’ll see the variations I’m talking about). Both TrueCommerce and BizAutomation will be included in setting up this environment based on your trading partner requirements. If one trading partner requires an AS2 connection (instead of SFTP for example) there’s additional cost.
Ongoing costs – TrueCommerce charges a per document fee which. A typical set of documents within a single order would include the PO coming in from the trading partner called the 850, the confirmation response (997 which typically is free), the Ship confirmation 856, and the Invoice 810. So that’s 3 documents per Sale Order which will incur a fee.