It is expensive to set up your own in-house EDI system. You might start looking at EDI software and think it's not so bad but that is one small part of your total costs.  To set up an in-house EDI system, you will need to have:

• EDI Translation Software - The low end packages are a few thousand dollars and they go up from there.
• EDI VAN Services - A few hundred dollars to set up and monthly charges based on volume.
• EDI Integration with your Business Software (Your ERP package or accounting package such as SAP, Quickbooks, whatever you run your business with). This can be expensive. Even if there is "canned" software available, some customization will probably be required to make it work in your business environment.
• EDI Technical Staff - You will need at least one technical person to set up the EDI Translation Software and integrate it with your business software. They will need to understand many aspects of your business as well as all of the EDI requirements from your trading partners and of course the computer systems and software that are involved.
• EDI Coordinator - At least one person will oversee the day to day operations of your EDI system.

So you can get the idea from the above, that there will be some significant upfront software investments and some ongoing investments in staff and operations to maintain an in-house EDI system.

If you anticipate having a small volume of EDI transactions and only one or a few trading partners, it might make more sense to outsource than to set up your own EDI software.

If you are considering using an EDI outsource, look at their experience, particularly in the following areas:

• Make sure they have worked in your industry with your trading partners.  You do not want to hire a company that specializes in healthcare to do your EDI in retail.  If they have retail experience, make absolutely sure they have worked with your specific trading partners.  A grocery retail environment is similar to a department store environment but it is not the same.
• Make sure that your EDI service provider sets you up with a private mailbox for your EDI transactions. Some outsource companies share mailboxes to save money. DO NOT let them share your mailbox and demand that you have full online access to your account. This becomes important for two reasons: 1) for day to day operations, your staff will need to be able to view transmissions and verify acknowledgments. 2) If you decide at some point to change service providers, it will be easier to make the change if you have your own mailbox.
• Make sure that the outsource company has successfully integrated with your business software.  If you are integrating with Quickbooks, as an example, ask to see a real live client in retail with a Quickbooks EDI integration.
• Find out how they process the advance ship notice transaction.  REALLY find out, do not let them gloss over this critical function. Have them show you the whole process at a real company with an environment similar to yours. As you watch the process, try to envision how it will affect your operations. Are you going to have to make major changes in your warehouse and staff to implement EDI?
• Finally, really talk to some of their existing clients and find out how satisfied they are with the service.

If after checking out all of the above items, you are satisfied that they can do the job, then you might find that EDI Outsourcing can be very cost effective.  If however you pick the wrong company and end up with mis-managed operations and loads of chargebacks, this could be a very costly process.

I hope I haven't scared you off totally.  EDI that is implemented properly can be a great tool for efficiency within the company and the supply chain.