Realizing The Benefits Of EDI In Retail

A key benefit of EDI to the retailer is the reduction, or elimination, of manual processes. Creation of orders, which manually can take 24 man-hours or more to complete, can be reduced exponentially, often to less than one hour using EDI. Additionally, with virtually no human involvement, the resulting benefits are not only in the form of a direct savings of 24 man-hours on a single process, but by eliminating the data entry task EDI allows costly resources (manpower) to be dedicated to other critical functions increasing productivity and reducing costs by even greater levels.

Processing financial transactions with EDI can reduce the cost of invoice payment by more then 90%, using electronic payment methods. Paper checks costing $5.00 or more per check can be reduced to less then 50 cents per transaction. A retailer processing 1,000 checks per day can reduce fixed costs from over $5,000 per day to just $500 a day, a direct annualized savings of $1,080,000.

In addition to direct, hard-line savings affected by the elimination of manual processes, EDI provides increased benefits in other areas. EDI can increase the accuracy of orders, invoices, and shipping notices (on average) by 20 percent or more. When a retailer is fully leveraging EDI, a direct improvement of 1 to 3 percent in profitability is feasible from EDI related savings. Indirect savings can have an even larger impact on the bottom-line.