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:

1. 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!
2. 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