From the 1960s to Now: EDIs Evolution Within the Supply Chain

Mike Gross, the CTO at TrueCommerce, tracks the evolution of EDIs within the supply chain, starting in the 1960s and continuing to the present. This article originally appeared in Insight Jam, an enterprise IT community that enables human conversation on AI.

Electronic Data Interchange (EDI) has been a mission-critical technology underpinning supply chains since its inception in the 1960s. Initially designed to replace paper-based transactions, EDIs have undergone significant transformations to support the demands of modern supply chains. Retail, automotive, food and beverage, and other industries have experienced significant changes and pressures that demand far greater integration, digitization, and collaboration up and down the supply chain. 

It’s difficult to imagine those supply chains functioning today without the digital backbone EDI provides. Consistently having staple products on retail shelves, building automobiles at scale and high levels of quality, and safely drop-shipping life-sustaining medications to a home are just a few of the outcomes enabled by an integrated supply chain with EDI.

While EDI provides a standards-based language for businesses to transact digitally, it’s far more impactful when all business partners adopt EDI and transact accurately and timely messages. Like many technologies, the cloud has profoundly transformed how EDI is served to the market. Supply Chain Communication Networks have lowered the barriers to adoption by integrating their large pre-connected networks directly with critical business systems and offering simple access through a web application. Supply chains depend on organizations of all sizes to function, so making EDI much more accessible—including small and less technically sophisticated organizations—has an outsized impact on achieving meaningful supply chain integration.

Today’s EDI solutions provide enhanced visibility, tap into advanced technology, and increase resilience against disruptions, opening the door to countless benefits that ensure success in today’s complicated supply chain environment. That’s why 59 percent of supply chain leaders are investing in EDI to mitigate delays, according to a new study. 

Instantaneous Flow of Data

Another significant advancement in EDI is the ability to provide real-time data exchange. Traditional EDIs often involved batch processing, where data such as purchase orders were sent in bulk at scheduled times. This method was efficient for its time but falls short of meeting today’s demands for rapid information sharing amongst the supply chain.  

Modern Supply Chain Communication Networks augment EDI capabilities with technologies like API, IoT, and AI that integrate more of the supply chain, increase the speed of information exchange, and make data more actionable for decision-making. This shift is driven by the demand for faster, more accurate, and robust data communication in today’s business environment.

Integrating deeper into the supply chain enables organizations to apply advanced analytics tools that unearth trends, demand patterns, inventory gaps, and other insights that deliver tangible, meaningful outcomes. Enhanced data visibility is also achieved through the integration of EDI with various enterprise systems like Enterprise Resource Planning (ERP) software. If implemented effectively, ERPs serve as the center of a business’s operations and conduct all value-generating activities across the enterprise. 

By integrating EDI with ERPs using APIs, businesses have now integrated their enterprise with all of the external business partners they depend on and serve within their value chain. Fully integrated EDI enables organizations to share the most accurate and timely data and more robust information like product, pricing, demand, and other information that allows supply chains to operate more efficiently.

Integrations for All

Digital technologies like the cloud, application programming interfaces (APIs), and the Internet of Things (IoT) are now integrated with EDI applications and networks, illuminating more of the supply chain. In the old EDI days, batch processing allowed for purchase orders to be collected and sent to suppliers at the end of the day, leaving urgent orders unaddressed until the next day.

Utilizing EDI solutions within the cloud removes that delay. Cloud EDI allows for immediate scalability, flexibility, and reduced IT costs. Businesses can easily scale their operations up or down based on demand. APIs have altered how EDI interacts with other systems. API-driven EDI solutions seamlessly integrate with various applications, enhancing interoperability, simplifying collaboration with new partners and systems, and making supply chains more agile and responsive to changes. 

Robust Resiliency

Supply chain risks are inevitable. The dynamic nature of global supply chains requires systems that can quickly adapt to changes. Modern EDI solutions offer the flexibility to integrate with new partners, accommodate different data formats, and scale operations as needed. This adaptability is essential for responding to market fluctuations, regulatory changes, and unforeseen challenges like a pandemic or port closure.

The Francis Scott Key Bridge collapse in Baltimore left many supply chain leaders wondering if their items were stranded on the cargo ship that lost power before colliding with the bridge and, if so when those items would make it to their destination. In instances like this, EDI technology can enable supply chain leaders to quickly reroute shipments and manage inventory levels in real-time, minimizing delays. Modern EDI solutions also offer cloud-based platforms that business partners can access and continue transacting even if one or more partners have been impacted by a major business continuity event.

The Positive Perks of EDI

For businesses aiming to optimize their supply chain operations, adopting EDI solutions provides benefits like efficiency, accuracy, enhanced visibility, strengthened collaboration, and regulatory compliance. Modern EDI solutions enable organizations to achieve greater ROI from their investment by integrating more of their supply chain, gaining better visibility into operations, and informing better decision-making.

EDIs allow businesses to track real-time orders, shipments, and inventory levels, reducing stockouts and excess inventory. The technology helps companies comply with industry regulations by ensuring data exchanges meet legal and industry-specific requirements. The collaborative nature of EDI fosters better communication between suppliers, distributors, and retailers, leading to improved business outcomes and customer satisfaction. 

The evolution of EDI is a testament to the rapid advancements in technology and the increasing complexity of global supply chains. EDIs were once very difficult and costly to implement. Technology advancements have lowered the barriers to entry considerably and reduced the dependency on highly specialized resources to make it work for your business. By enhancing data visibility, leveraging technological advancements, and increasing resilience, EDIs provide significant benefits that help businesses stay competitive and achieve long-term success.