Updated July 7, 2023
You’ve taken your first steps as a small business owner—you have a website, business cards, a line card, and other collateral for your business. You’ve implemented or will soon implement some degree of EDI capability. Your next step is to put that EDI to use with an Electronic Trading Profile as well.
In this blog we’ll take a look at the key elements of an Electronic Trading Profile and how it can help you establish smooth and profitable business relationships with trading partners.
Why You Need an Electronic Trading Profile
The capability to exchange business documents with customers, suppliers, and other trading partners via EDI is just as essential as your website or your other business collateral. EDI capability significantly reduces the time spent by your most valuable asset—your people—as they handle daily business transactions, increasing accuracy, decreasing cycle times, and improving relationships with your same trading partners along the way.
You may have made a significant investment in dollars and experience to get your business EDI-capable. You may have had to do it at the behest of a single significant trading partner who insisted on adherence to an EDI standard. Good news—that was the hard part, and now you have an important new tool to help you increase your return on your business investments and increase your business’s profit.
Now that you’re EDI-capable, it’s much easier to add more EDI trading partners or business documents to your supply chain with the help of an Electronic Trading Profile, which helps you and your trading partners further streamline your electronic transactions, reduce manual intervention, minimize errors, and improve the efficiency and accuracy of your supply chain processes.
What is an Electronic Trading Profile?
We’ve talked a lot about documentation in our blog articles, and an Electronic Trading Profile is one more essential piece of documentation to add to your library.
In short, an Electronic Trading Profile is a concise document to assist you in trading partner onboarding. Before the onboarding process, you prepare a one-pager about your business and your partner that identifies the contacts, the documents capable of being traded, and the communication possibilities to do so.
Elements of an Electronic Trading Profile include:
- The unique identifiers or codes for each trading partner involved in transactions between your business and your new partner, including company name, address, and EDI-specific identifiers like Electronic Data Interchange-Global Identifier (EDI-GID) or Trading Partner Identification Number (TPID)
- Definitions of the specific types of business documents that can be exchanged between trading partners, such as purchase orders, invoices, shipping notices, or acknowledgments
- Outlines for agreed-upon data structure formats, such as ANSI X12, EDIFACT, JSON, or XML
- Data mapping and transformation rules to ensure that data can be accurately exchanged and understood by both you and your new EDI trading partner
- Data validation protocols to ensure data integrity and adherence to business rules
- Identifying communication and security protocols for the exchange of EDI messages, such as AS2 (Applicability Statement 2), FTP (File Transfer Protocol), or secure VPN connections
In short, Electronic Trader Profiles are an essential part of new trading partner onboarding, as they set up everything you’ll need for smooth sailing on the EDI seas. By putting these documents together for EDI trading partner setup, you’ll be able to start your new business relationships off on the right foot, maintain satisfied relationships with your partners, work more efficiently, and make more profit.
What You’ll Find in Your Electronic Trading Profile
Some examples of the more technical fields you need to include on your business’s Electronic Trading Profile include:
- Current Messages Supported: X12 850 PO inbound 4010; EDIFACT ORDERS inbound D12A; XML PO inbound; X12 850 PO outbound all versions; etc
- Third-Party Network: Loren Data; etc
- Interchange Qualifier & ID: 12/1234567890T for Test; 12/1234567890 for Production
- Group ID: 1234567890 for Test and Production
- AS2 section: See your 3rd party coordinator on these details if it is a trading option
- Additional Capabilities: FTP; sFTP; Hosted Web Portal
Note that these are just examples of what the technical data on your profile might look like and won’t necessarily reflect your exact EDI capabilities.
Who Uses Electronic Trading Profiles
We recommend that Electronic Trader Profiles be used by anyone in your organization who is responsible for cultivating business relationships, such as:
- The company president
- Operations managers
- Business development reps
- Customer service reps
- EDI personnel
Note that the more technical aspects of the Electronic Trading Profile aren’t of concern to these positions in your company, but rather the technical and logistics personnel responsible for handling the nitty-gritty details of electronic business document exchange. That may be an in-house position, or it may be something you outsource to your ERP (enterprise resource planning) provider or cloud-based managed EDI services vendor.
Since your own Electronic Trading Profile establishes your EDI capabilities, make sure to share it with your company’s identified prospects for electronic trading amongst existing and potential customers or suppliers. These profiles can even serve as a reminder of your EDI capabilities to your existing partners, as well as a convenient way to update partners when your EDI standards change.
It’s typically not necessary for your internal associate or the rep from your potential new trading partner to understand the details of a given profile, so long as they understand what it means and what it represents—mainly, your company can help both parties realize more profit.
Onboarding New Trading Partners With Your Electronic Trading Profile
Even with your EDI capabilities well-established and your shiny new Electronic Trading Profile all set up for your business, it can be hard to know where to start when it comes to onboarding your EDI trading partners—especially considering not all of your partners might have EDI capabilities yet.
Now that you’re EDI-capable, we’ve got a few tips for you on getting started and growing your supply chain partner network.
Start With Your Unconnected Trading Partners
Start out your EDI onboarding with your existing trading partners first—though they may not have EDI, they will be the easiest to work with. You’re already familiar with them and vice versa, and you may have historical data to analyze and rank for suitability.
Remember, the focus of connecting with your trading partner isn’t necessarily on the dollar value of the activity with them—rather, the number of transactions should drive your suitability ranking. Ranking suitability through the number of transactions is a function of the much lower processing cost per transaction of electronic vs manual handling. It’s a tried-and-true tactic, and we see it in use every day by major retailers from AutoZone to Walmart.
Other business factors to use as suitability rankings to decide which unconnected trading partners to focus on first may also refine the recruiting pool, including:
- Potential for increasing volume
- Risk of loss
- Appreciation for your leadership
- Number of routine transactions
Go Where You Couldn’t Go Before
Now that you have EDI capabilities and an Electronic Trader Profile, expanding into additional markets with new partners might now be easier. When you advertise your EDI proficiency to potential partners, it makes you an easier partner to do business with and positions you as forward-thinking and efficient.
You may have missed out on old customer prospects in the past because of a lack of EDI infrastructure. Revisit these old prospects who didn’t engage because of your lack of electronic trading capability or suppliers who previously shut you out because you weren’t EDI capable; you could have much better luck this time.
Play Piggyback with Non-EDI Suppliers
You may have suppliers who are neither currently EDI capable nor likely to become so, but who still value your business. You can pressure them to adopt EDI themselves, but there is an alternative you may consider with your own EDI capability.
Some of these suppliers might be willing to work with you via a web portal as an alternative to adopting EDI standards—especially if there’s the possibility of an increase in your annual spend with them or an improvement in terms.
From your supplier’s perspective, all activity would occur on the web portal and be driven by your e-mailed notice of an order. By integrating with your enterprise resource planning platform or solution, all activity would use your existing EDI capability. Then your supplier’s acknowledgment, shipment, and invoices flow from their use of the portal right back into your ERP.
In other words, you can help smaller trading partners who may not be capable of adopting EDI piggyback off of your own EDI capabilities, which can be a potentially powerful strategy for growing your network and your business.
Finding a Path to Fun and Profit with EDI
Once launched, an Electronic Trading Profile is essential to jumpstart the expansion of your EDI trading partner network—and unlocking new opportunities for profit and growth.
Implementing and maintaining EDI in-house isn’t easy, though. There can be a high upfront cost to both the labor and time it takes to implement new electronic business document exchange standards, especially if your business is growing, and a high cost to hiring and maintaining EDI expertise.
Cloud-based EDI managed services may be a better option for your business. At GraceBlood, we develop fully customized, white-glove EDI solutions for businesses of all shapes and sizes to take the pressure off them for implementing and maintaining EDI solutions, including EDI trading profiles, that work to make supply chain success easier and more streamlined.