Have you heard of the EDI dropshipping program? A lot of people haven’t, which is why they also don’t understand the benefits of it. Let’s say that a client wants to purchase 20 coasters, and that you, as a business, supply these but as a dropshipping program. This means that your client has to tell you that they want the coasters, you have to tell your dropshipper, they have to send the product out, your client makes the payment, you split the payment between yourself and the dropshipper, and so on. All of this takes a lot of time, because they are all individual actions that require actions and documentation. With an EDI, however, everything can be automated.
How an EDI Dropshipping Program Can Benefit You
Perhaps the greatest benefit of all is that you are working with an electronic format, which follows through every step of the ordering process. This means you save tremendously on time, but also that you minimize the chance of human error. It reduces cycle times and your staff can finally catch up to those data entry back logs. A single EDI system can receive the order, manage the dropship element, and invoice it, within a day. In fact, some studies have shown that it can lead to a 40% reduction in time.
The result of this is that, when a company implements an EDI, they can suddenly handle far more orders, without having to hire new members of staff. This means their revenues increase and that they see a very rapid return on investment for their EDI program. These savings that allow for the return on investment come from:
- The reduction in data entry errors.
- The removal of mail time.
- Reduced lead times, labor processing time and cost, order cycle time, and inventory carrying cost.
- The elimination of paperwork and the processing time that comes with it.
Thanks to EDI margins are improved and customers can enjoy greater customer service, which improves relationships. Furthermore, it means businesses can manage internal priorities better. Various studies have shown that the processing of a single invoice outside of an EDI program costs $5 – electricity, paper, printing ink, direct labor, handling, postage, and so on. With an EDI, however, the cost is just $0.50.
Last but not least, an EDI allows for the implementation of JIT (Just in Time) processes. JIT means that companies can avoid obsolete inventories or stock-outs, reduce the cost of carrying inventory, and lower the lead times associated with their suppliers. This is particularly important for those who use a dropshipping system. It is important to have good agreements in place to use the EDI, of course, but that is quite easily done. In fact, if the dropshipper is not yet using an EDI themselves, they will quickly see how beneficial it actually is and perhaps sign up to their own system as well.
Clearly, if you use dropshipping, you should consider investing in EDI. Your business could potentially grow tremendously as a result.