When you think about your growth strategy, a lot of things probably come to mind: M&A, international expansion, strategic partnerships, investments in automation, etc. Your Electronic Data Interchange (EDI) implementation is an often-overlooked key driver of variable cost. By architecting a new integration infrastructure, you can both scale and reduce fixed costs.
What is Electronic Data Interchange (EDI)?
Electronic Data Interchange, or EDI, is a standard that allows an organization to replace old and outdated methods of trading business documents (e.g., inventory and sales orders) with a faster and more efficient electronic method.
Traditionally, retailers have relied on managed EDI services like DI Central, SPS Commerce or TrueCommerce to transact with their trading partners. However, the traditional per-transaction or per-kilobyte price structure of these managed EDI solutions can become costly very quick, especially when you account for all the business documents that can go into just one sale.
In addition, these traditional “black box” solutions make you completely reliant on third-party provider. This leaves you with no control or visibility into your data, meaning you could face huge fees for errors in your documents before your third-party vendor even makes you aware there’s an issue.
Think of it this way: a “black box” solution is akin to going to a “chef’s choice” experience at a restaurant where you pay for a meal and are presented with a plate of food that you had no say in. While you may feel adventurous enough to dine the chef’s choice way, it’s a risky way to do business in the long run.
The “Glass Box” EDI Solution
Fortunately, there’s a better way. The “glass box” EDI solution offers a complete shift in control, ownership and visibility. Whereas the “black box” is chef’s choice, the “glass box” is the chef coming into your kitchen and preparing your meal with all your ingredients while you watch. You may want to take notes so that you can learn how to take over in the future, or you may prefer to just occasionally pop in, check on the chef and enjoy the meal after.
The Role of EDI in Your Integration Strategy
Your organization produces a lot of data. The disparity comes when you need to pull data from multiple systems that speak different languages: a report from your EDI into your CRM, an integration passing data into your data warehouse, another integration that was built by an Excel guru in the accounting department that’s pulling information down in VBA macros. These are very different and unique solutions that require different skillsets to maintain.
Funneling all that data into a custom tool allows you to have one data format that requires only one skillset to maintain. The total cost of ownership goes down, as well as the risk to the business of losing a piece of functionality to a lost skillset.
With all your data in one place and speaking the same language, you now have complete visibility into your operations. For example, if you’re looking at your logistics, you’ll be able to answer:
- How quickly am I processing an order?
- How long does it take between receiving the order to being packaged and shipped?
- How long did it take between point of sale and entering our system?
- How long did it take between entering our system and going to the warehouse?
- Who is packaging it? Are some packagers faster than others?
Your data can tell you if you have a bottleneck or an efficiency problem and can be the driver of your process changes.
A Scalable Integration Infrastructure Enabled One Team to Go from $30M to $300M in Less than Five Years
In 2015, a global e-commerce organization was trying to run their $30 million drop-ship furniture company on QuickBooks. They had an aggressive growth strategy, and today they are a $300 million company trending to be worth $1 billion by 2025.
So, how did they get here?
“Eide Bailly has been instrumental in helping us to architect and build a solution to support our massive growth.”
- From QuickBooks to NetSuite
In 2016, they reached out to Eide Bailly for help implementing NetSuite so they could stop the manual paper pushing and automate their processes.
The NetSuite implementation gave them better processes and visibility, but the holiday season brought them to their knees when they received 10,000 orders that took more than 24 hours to process. Because their Electronic Data Interchange (EDI) provider architecture relied on NetSuite, it bogged the system down to a near stop.
- From Black Box to Glass Box
Their EDI partner offered a fully managed “black box” solution in which their team was reliant on the third party to connect to marketplaces and retailers, perform updates and send data reports. They were facing fees and fines from their marketplace partners for errors in documents that they had no way to fix without data that took months to acquire from their EDI provider. Moreover, their systems were breaking and their price-per-document model was becoming increasingly more expensive as they grew.
When their EDI solution provider went down for four days in 2019 due to poor IT practices and cost them $1 million in anticipated revenue, their team soon realized that they needed to make a change.
Integrations are a reflection of systems, data and business process, and because those things are constantly evolving, it’s imperative that integration systems have the agility to also constantly evolve. This means that a fast-growing organization can’t wait 4-5 months for a third party to make changes to the system.
With help from the Eide Bailly team, they were able to implement a “glass box” solution with Boomi that will not only grow with them, but has also allowed them to take back control of their data with more visibility so that they could better handle their partner requirements.
“Eide Bailly’s EDI solution has been the ‘golden child’ of our tech stack.”
Leveraging Boomi, a leading Integration Platform as a Service (iPaas), Eide Bailly designed an EDI solution that scales, removes the burden on their internal systems, and eliminates the costly price-per-document payment model. And, most importantly, the client now has their data at their fingertips. Because Boomi provides a low-code environment, they have been able to build a culture of “citizen integrators” on their team. This has enabled them to regularly assess and adjust their EDI integration based on the needs of the organization instead of going through the lengthy process of working with a third-party developer every time there is a new need.
And with a price structure based on licensing instead of on document or data, they were able to cut what would have been an EDI expense of .88% of their revenue to just .21% of their revenue.
Where 10,000 orders in one day previously brought them to their knees, they now average 10,000 orders every day. In peak seasons (Black Friday – Christmas) they will process 100,000 orders per day. And, despite logistical challenges, they processed over 2.5 million orders in 2020. Through their massive growth, they’ve also been able to realize a significant reduction in the time it takes to process orders.
The Boomi solution designed by Eide Bailly has allowed this e-commerce organization to connect all of their data silos with built-in translations so that all of their data sources are always speaking the same language. From their ERP and transactional database to their shipping and logistics management, their team has complete control, visibility and ownership over their data and the structure to support a total digital transformation.
"Eide Bailly is just a really solid partner for us to lean on. In times where we’re not sure what to do next or need additional guidance or resources, they’re there to help us figure out a solution and really collaborate with us on improving our operations and outcomes."
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