B2B EDI Integration: Definition, Importance, Benefits & Best Practices in 2024
B2B (business-to-business) integration is the automated communication between two or more businesses or trading partners. Modern B2B integration technology helps organizations seamlessly work with partners, manage workflows, send and translate files and business documents, and meet customer expectations – all while meeting strict security and compliance protocols.
Today's expanded digital footprint and globally distributed operations make internal and external coordination difficult. Customers are more demanding, supply chains are more complex, and interoperability standards are stricter than ever. Modern business partnerships demand:
- Rapid, reliable communication
- More workflow transparency and security
- More agile, scalable workflows
To keep pace with the change of pandemic-era digital transformation, organizations are re-examining how they manage B2B workflows – and the technologies they leverage.
Let's explore why B2B integration matters, how it changes, and what innovation in this space can do to keep up with your business needs.
What is B2B EDI integration?
Manual processing is slow, cumbersome, error-prone, and no longer sustainable in today's business environment. Speed and accuracy are paramount when fulfilling requests, sending invoices, tracking shipments, and more. B2B integration technology helps organizations streamline and automate that process, allowing them to operate at the speed of modern business.
B2B EDI integration is leveraged across every industry, including healthcare, manufacturing, retail, and logistics. For example, retailers can onboard suppliers, automate purchase order processing and invoicing, and maintain real-time visibility into order fulfilment and inventory. Healthcare organizations can send and receive insurance documents, process patient files, and more while meeting strict interoperability and compliance requirements.
The best B2B integration services offer businesses a chance to automate and streamline a wide range of workflows and integrations, with support for:
- Electronic data interchange (EDI): An EDI transaction involves the exchange of business documents such as invoices, purchase orders, and shipping notices via secure, standard file transmission protocols. Manual methods of processing such documents are inefficient and error-prone. Automated EDI technology allows for the instant, secure transfer, and translation of EDI documents into universally accepted standards, like X12, EDIFACT, HL7, and more.
- Managed file transfer (MFT): MFT technology allows for the secure, automated transfer of sensitive data via a central location, allowing organizations to share high volumes of data with their trading partners while maintaining control and visibility. Some of the popular protocols under MFT include FTP, FTPS, SFTP, HTTP and AS2
- API and application integration: API and application integration solutions provide end-to-end connectivity between data, applications, services, and systems. To communicate with trading partners and customers, organizations must be able to connect internal and external systems such as CRMs, ERPs, analytics platforms, accounting tools, and more.
Read: How to Connect with B2B and EDI Partners Over APIs
Why is EDI important in B2B transactions?
Here are some reasons why EDI plays an important role in B2B transactions:
- Efficiency and speed: EDI enhances the efficiency and speed of transactions by automating processes, reducing the time taken for manual data entry.
- Reduced errors: By automating data exchange, EDI minimizes the risk of human errors and data discrepancies, ensuring more accurate and reliable transactions.
- Improved supply chain operations: EDI systems provide better visibility into supply chain operations, enabling businesses to track and manage their transactions more effectively.
- Enhanced collaboration: EDI transactions foster better collaboration with supply chain partners by streamlining communication and data exchange.
- Cost savings: By reducing manual data entry and paper-based processes, EDI can lead to significant cost savings.
- Data quality: High-quality data is of the highest importance in B2B EDI, as it lays the foundation for reliable transactions and streamlined operations. ETL processes play a significant role in enhancing data quality within B2B EDI.
The challenges of legacy B2B integration
While B2B integration is undeniably vital to business operations, the technology has not been the subject of much innovation in recent years. Organizations tend to rely on their legacy B2B integration tools to “do the job," rather than investing in modern platforms that will help scale and grow their B2B processes.
But while legacy integration systems might be adequate now, organizations may experience friction as rising challenges outgrow older solutions.
- B2B partnerships are growing:
According to Gartner, at least 70% of enterprise marketplaces launched will serve B2B transactions by 2023. With this growth comes new challenges, especially around governance and interoperability requirements. - Most B2B integration platforms are not comprehensive:
Gartner also reports that through 2024, 75% of midsize to large enterprises will leverage at least two different integration tool categories to strategically address most of their pervasive integration needs. In other words, organizations must use and maintain multiple solutions to communicate with partners. - B2B integrations are complicated:
Common B2B integration issues arise from a lack of basic user-friendliness and accessibility within legacy tooling. Whether an organization is leveraging a heavyweight B2B integration software or building its custom solution, it relies on IT involvement to introduce and sustain partnerships, improve operations, and scale the business. Coordinating legacy systems and custom builds through IT takes time resources, and a budget better spent elsewhere. - B2B integration methods are stagnant:
EDI and B2B integration technology are workhorses within the business. But as digital transformation has become the standard and companies move to the cloud, organizations are finding the innovation around these legacy technologies to be slow, and modernization efforts stagnant. Simple features like user-friendliness, extensibility, and connectivity are necessary to move B2B operations forward. - B2B solutions lack extensibility:
Legacy B2B solutions tend to be monolithic, opaque systems that demand full control over every aspect of the data exchange process. As a result, evolving or upgrading your connectivity technology may require an overhaul of your entire B2B infrastructure. Without the appropriate emphasis on extensibility, legacy B2B platforms limit an organization's ability to leverage newly developed tools and protocols, stunting the growth of their B2B ecosystem.
In essence, organizations need a modern B2B integration solution that allows them to take control of their workflows. Modern B2B technology should help:
- Automate manual work
- Simplify technical barriers to mapping and designing workflows
- Easily connect to any system, data source, and application
- Accelerate time to value
- Streamline the way businesses communicate
3 Benefits of modern B2B EDI integrations
Why modernize your B2B integration platform? It comes down to having a solid foundation and full visibility into workflows to support growing business needs in a fast-paced world. Modern approaches to B2B integration software allow organizations to respond more quickly to customer demands, partner needs, and ever-changing innovations.
Think about today's retail processes, for instance. As e-commerce becomes more pervasive, customers expect quick, seamless, and personalized buying experiences from online retailers. Failure to meet and exceed those expectations leads to lost customers, damaged reputation, and decreased revenue. Retailers are held to higher standards and therefore must limit the time and labor it takes to take and fulfill orders, communicate with suppliers, track payments, and more.
In a few ways, today's B2B integration goals mirror those of early digital transformation efforts, including:
- Automate to replace manual information processing, as it is sluggish, wasteful, and error-prone.
- Standardize to ensure files and processes connect and are processed consistently across disparate systems.
- Offload low-level, repetitive administrative tasks to reduce wasted time, money, and resources.
Innovation in the B2B integration space is vital, and organizations can now take advantage of modern B2B platforms like CData Arc to:
- Simplify technical work: Modern B2B integration platforms simplify the process of connecting systems, allowing business users to leverage a no-code, IT-approved toolbox to map, build, and maintain custom integrations themselves. Developers can then refocus their time and energy towards more critical projects, while business users take control of B2B interactions.
- Connect anything: These platforms should easily connect to hundreds of the business applications organizations and their partners use every day, including CRM, ERP, marketing and accounting applications, as well as databases, payment systems, and much more. By providing a quick, simple way to connect each new application or system as it's added to an organization's stack, modern B2B integration platforms save time and headaches on the path to digital transformation.
- Implement and iterate in minutes: On-premises B2B integration systems can be hard to sustain when you add installation and maintenance cycles into your workloads. For those who want to offload these duties, B2B integration platforms are now offered via cloud-hosted services. Hardware maintenance, platform installation, backups, and security patching are all handled by the service provider — while you gain easier integration into a growing suite of cloud-native applications and systems.
4 Best practices for B2B EDI integrations in 2024
As we step into 2024, it’s necessary to understand and implement the best practices to leverage the full potential of B2B EDI services. Here are four key practices that can guide successful B2B system integration solutions:
- Set well-defined goals for EDI integrations: Establishing clear objectives is crucial for successful B2B EDI integrations. These goals should align with your business strategy and should be measurable to track the progress of your B2B EDI services. This practice ensures that your B2B system integration efforts are focused and effective.
- Ensure compliance with industry standards: Adherence to industry standards is a key aspect of B2B EDI software. It ensures seamless B2B connectivity and interoperability between different systems. Compliance reduces errors, enhances data security, and improves the overall efficiency of B2B integration solutions.
- Perform efficient data mapping: Data mapping is a critical component of B2B EDI. It involves translating data from your business applications to the EDI standard format and vice versa. Efficient data mapping ensures accurate data exchange, thereby enhancing the effectiveness of your B2B integration platform.
- Provide EDI training and support for all users: To maximize the benefits of B2B EDI, it’s essential to provide comprehensive training and support to all users. This helps them to effectively use the B2B EDI software, leading to improved productivity and better utilization of B2B integration solutions.
Successful B2B system integrations: How Parts Authority eliminated IT bottlenecks with user-friendly EDI workflows
Major auto parts distributor Parts Authority sells and supplies over 3 million unique parts to repair shops, auto parts stores, and fleets across the United States. Previously, they were required to sink developer time and resources into creating new processes to map and translate EDI documents that met each unique customer's needs. They needed a simple, repeatable, and scalable EDI solution, and that's where CData Arc came in.
CData Arc eliminated the need for developer-heavy B2B workflow design, replacing custom-coded B2B integrations with a user-friendly no-code interface to map and build EDI integrations.
“Previously, we would get a team of developers, design an application, and build it to fix the problem or provide the solution. With CData Arc we just get in and connect with our various systems," said Tyson McPherson, Development Manager at Parts Authority. “Now, whatever a customer brings to us, we can fit it in our Arc solution, and we don't have to do the development work that we've done in the past."
“I liked the way the application was set up," he continued. “It's so simple – we can go into each workspace, see the available connectors, and just work through connecting everything visually. The whole process takes us minutes."
Better B2B EDI integrations with CData Arc
As organizations face changing digital landscapes and increasing customer expectations, they should consider what changes they can make to keep their business agile.
If you're ready to enhance your trading partnerships with modern B2B integration solutions, get started with a free CData Arc trial today!