Electronic data interchange (EDI) is essential to many manufacturing operations. It streamlines communication with suppliers, reduces documentation errors and supports agile supply chains, but the use of EDI in manufacturing often falls short of its potential. Too many organizations overlook the value of a cloud-based EDI.

While up to 86% of businesses already use EDI technology today, just over 60% of them keep related data in the cloud. That means nearly half of the companies using such software rely on an inferior version. As Industry 4.0 initiatives pick up across the board, it’ll become increasingly important for manufacturers to reverse this trend and upgrade their EDI.

Benefits of Cloud-Based EDI

Cloud-based EDI functions similarly to conventional solutions but runs entirely online instead of using on-premise IT infrastructure. Keeping all data and functions in the cloud offers several critical advantages for manufacturers and their supply chain partners.

Improved Communication

Moving EDI to the cloud makes it easier to connect it to a wider range of data. As a result, manufacturers can share more with suppliers, 3PLs and other third parties. Considering just 6% of organizations today have full visibility into their supply chain, a little communication can go a long way.

The primary benefit here is that a cloud platform provides a single source of truth. All EDI users will upload data to and get information from the same place. Consequently, they avoid miscommunication and conflict from different parties having unsynchronized records.

Cloud EDI also minimizes errors because Internet of Things (IoT) endpoints and other devices can upload new data directly to the cloud. No in-between step or manual transmission is necessary, reducing the chances of transcription mistakes or omissions. Higher accuracy, in turn, prevents supply chain disruptions.

Higher Efficiency

Automatic data uploads and a single source of truth have a secondary advantage — efficiency. EDI records in the cloud will always reflect the latest information without delay, as separate users no longer need to send updates to others. Automatic uploads further streamline communication by removing the manual element entirely.

Many cloud-based EDI solutions come with automation features. These may include automatic document transfers, data organization, chart and graph generation, data entry, automated alerts, and inventory management. When these processes require no human input, manufacturers can more easily work around the 622,000 job labor shortage affecting the industry.

It’s worth noting that setting up a cloud platform is far faster than an on-premise alternative, too. Manufacturers don’t need to install any IT infrastructure or upgrade their hardware because everything runs on remote data centers.

Scalability

Similarly, using cloud EDI in manufacturing improves overall scalability. Removing on-premise hardware concerns and interoperability barriers means businesses can scale up almost instantaneously. It’s often little more than paying for a new data storage tier or authorizing another party.

Downsizing and lateral scalability are likewise cheaper and faster in the cloud. Setting up new alerts, reducing data storage, aligning workflows with new goals and making other adjustments can take mere minutes. This agility is essential in a rapidly changing manufacturing environment.

Supply chain strategies are shifting across the sector, and disruptions are increasingly common. As a result, manufacturing organizations need to adapt quickly to maintain productivity and profitability. Achieving that level of scalability with an on-premise EDI would be expensive and slow, but a cloud alternative makes it accessible.

Better Security

The cloud also promises higher security standards than conventional EDI systems.

In 2023, about one-quarter of global cyberattacks targeted manufacturing. Organizations must do all they can to improve their cybersecurity, and cloud adoption is a key piece of the puzzle.

Cloud-based EDI’s biggest security advantage is that it offloads much of the responsibility to secure the platform. The cloud provider will manage most of the cybersecurity processes necessary, including encryption, compliance and ongoing monitoring. Because these companies are experts in the field, this usually means manufacturers can enjoy a higher level of security than they’d otherwise be able to achieve.

Keeping EDI data in a single cloud database has benefits, too. It’s easier to protect one location than it is to maintain the same protections across multiple. The cloud’s efficiency also enables faster incident detection and response, which is key in minimizing data breach costs.

Best Practices for Implementing Cloud EDI in Manufacturing

Given the substantial benefits, the time to capitalize on cloud EDI in manufacturing is now. However, manufacturers should recognize that using the technology effectively requires attention to some key considerations. The first and most foundational is learning how to choose an optimal cloud EDI platform.

The best EDI varies between organizations, so businesses can start by outlining what key features they’ll need for their specific goals. Budgetary constraints and compatibility with the company’s existing IT stack should also come into consideration.

Depending on the market a manufacturer serves, regulatory compliance may come into play, too. Defense contractors, for example, must comply with the Cybersecurity Maturity Model Certification, which requires access controls and other protections manufacturers must look for in a vendor.

After deciding on a cloud-based EDI solution, organizations should develop a formal cloud migration strategy. Misconfiguration has affected 59% of cloud users, making it one of the most common issues, and is often a matter of human error. Planning what data to move, steps to transition it, a timeline and steps to verify the shift’s success will make these outcomes less likely. Automation is often a helpful tool here.

Communication is also key. Businesses need to train anyone who will use the EDI on how the new cloud-based system works. Walking all affected parties through the transition process is also crucial, as it will minimize errors and confusion.

Modern Manufacturers Need Cloud-Based EDI

An effective EDI in manufacturing must be as agile, accurate and secure as leading manufacturers themselves. The only way to achieve that is to use a cloud-based alternative to conventional solutions.

There’s a reason why cloud EDI is becoming increasingly popular across industries. It provides the communication, efficiency, scalability and security modern businesses need. Manufacturers should jump on that potential now if they don’t want to get left behind.