Microsoft Dynamics 365 EDI Integration Best Practices Guide

Clear communication is essential in business relationships with suppliers, vendors, customers, and other stakeholders in your supply chain. 

For companies looking to connect and share data from their Microsoft Dynamics 365 to eCommerce platforms, online marketplaces, and trading partners, EDI integration is a common solution. EDI integration offers automated and secure communication between organizations, boosting efficiency and accuracy in fulfillment processes.

However, implementing Microsoft Dynamics 365 EDI integration can be tricky. Businesses might choose the wrong solution, lack the necessary expertise for implementation, or be new to EDI integrations altogether.

In this guide, we’ll cover EDI integration with Microsoft Dynamics 365—so you can build successful EDI connections between your digital ecosystem of internal applications and trading partners, allowing your business to thrive.

• What is EDI
• What is Microsoft Dynamics 365? 
• Methods of Integrating Microsoft Dynamics 365 EDI
• Microsoft Dynamics 365 EDI Integration Approaches
• Why You Should Integrate Microsoft Dynamics 365 With an EDI Solution
• Best Practices for Microsoft Dynamics 365 EDI Integration
• The Key to Reliable EDI Integration with Microsoft Dynamics 365: Middleware
• Selecting the Right Microsoft Dynamics 365 EDI Integration Partner
• Why Choose Cleo for Microsoft Dynamics 365 EDI Integration
• Cleo’s Microsoft Dynamics 365 Pre-Built Integrations

What is EDI?

Electronic data interchange (EDI) is the digital exchange of information in a standardized format. It’s commonly used to exchange and transfer data in the form of electronic documents such as purchase orders or invoices that a buyer and supplier might exchange in a typical EDI process.

By using this automated way of sharing data, companies can send important information in a universal standard format, so everyone (as well as the digital systems between which the information is being shared) understands it without any confusion.

As a top 10 ERP vendor of 2024, Microsoft Dynamics 365 is a leading ERP solution. If you’re new to the world of Microsoft Dynamics 365, here’s an overview of the platform:

What Is Microsoft Dynamics 365?

Microsoft Dynamics 365 ERP is a suite of cloud-based applications that helps businesses manage their core operations. Think of it as a central hub for tasks like finance, supply chain, sales and marketing, and customer service. It streamlines communication and automates processes, giving users a clear view of their entire business in one spot by compiling data from various systems.
 

Top advantages of implementing Microsoft Dynamics 365 include:

• Unified Hub: Manage finances, inventory, sales, and more in one central location.
• Cloud-Based: Access Dynamics 365 from anywhere, anytime. (Leader in Gartner’s Cloud ERP Magic Quadrant)
• Stronger Customer Relationships: Manage leads, sales, marketing, and customer service.
• Data-Driven Decisions: Gain insights with business intelligence tools and make strategic choices.
• Adaptable & Customizable: Integrate with other apps and tailor Dynamics 365 to your needs.
   
   

Methods of Integrating EDI to Microsoft Dynamics 365

If you use Microsoft Dynamics 365 (D365) and want to automate data exchange operations, there are three primary options:

1. Direct D365 EDI Integration (Best for High-Volume Partners):

• Establish a secure, direct connection for exchanging electronic documents.
• Requires both parties to use the same communication protocol.
• Ideal for high-volume data exchange with specific partners.

2. Indirect D365 EDI Integration (Flexible for All Partners):

• Use a third-party service to connect with partners who may have varying technical capabilities.
  • iPaaS (For Businesses with EDI Expertise): Offers full control and customization for your EDI solution.
  • VAN (For Businesses Without EDI Expertise): Managed EDI provider handles the entire setup for a quick and secure connection.

3. Hybrid D365 EDI Integration (Combines Both):

• Use a combination of direct and indirect integration to meet the needs of different partners
• Direct connection for high-volume partners ensures speed and efficiency
• Indirect connection for smaller partners provides flexibility

Choosing the Right Option:

• Consider your EDI expertise and IT resources.
• Analyze data volume and communication needs of each partner.
   

Microsoft Dynamics 365 EDI Integration Approaches

Microsoft Dynamics 365 itself doesn't have built-in EDI functionality. However, there are two main ways to connect Dynamics 365 to your trading partners and other applications using EDI:

• Third-party EDI solutions: This is the most common approach. Microsoft offers a marketplace called Microsoft AppSource where you can find various EDI solutions compatible with Dynamics 365. These third-party apps act as bridges, translating data between Dynamics 365 and your partners' EDI systems in standardized formats. For a list of the top EDI Providers, check out our blog on top EDI providers in 2024.
   
• Managed EDI services: A Value Added Network (VAN) provider acts as a secure intermediary for EDI transactions. They manage the data conversion, security, and communication between your Dynamics 365 system and your trading partners. This option can be helpful if you lack internal EDI expertise or have complex trading partner requirements.
   

Why Integrate Microsoft Dynamics 365 With An EDI Solution?

Integrating Microsoft Dynamics 365 with an EDI solution creates a central hub for streamlined communication and data exchange with your trading partners. This is especially important for major retailers and businesses who often require their suppliers to have EDI capabilities.

Read our blog Maximizing the Value of Your Microsoft Dynamics ERP with EDI Integration

With EDI, you'll conduct business quicker, have access to more business opportunities with larger customers, and eliminate delays caused by manual setups. When it comes to working with new vendors, EDI solutions with streamlined onboarding let businesses get up and running faster, minimizing delays and speeding time-to-revenue. The advantages of Microsoft Dynamics 365 EDI integration often lead companies to use EDI as their primary method of communication.

Top Benefits of Microsoft Dynamics 365 EDI Integration

Integrating your Microsoft Dynamics 365 ERP with EDI unlocks a wealth of advantages for your business:

• Fast and Efficient Communication
  Replace days of waiting for a response with replies in minutes. Instead of waiting on a human to have the time to configure and send a response, streamline information exchanges and data processing with your vendors via automated EDI integration. This leads to faster business cycles and order processing speeds so customers can get their orders faster.
   
• Reduced Errors and Increased Productivity
  Automate critical processes like data sharing, order processing, and shipping updates. This minimizes manual entry errors that can lead to delays while boosting efficiency and freeing up your team to focus on strategic tasks.
   
• Cost Savings
  Say goodbye to manual document processing that’s riddled with errors that cause SLA violation fees and chargebacks. EDI integration automates tasks to reduce labor costs and eliminate missed SLA charges.
   
• Improved Visibility into Trading Partnerships
  Gain valuable insights into your EDI partner relationships. Accurate and automated data within Dynamics 365 provides clear visibility into their impact on your business, empowering informed decision-making.
   
• Scalability
  By using automated communication, your business can handle a higher number of orders at any given time. And when working with larger companies, you’ll often find they require their trading partners to be EDI-compliant . Therefore, by implementing EDI integration, your business can work with larger businesses that place bigger and more frequent orders, boosting your revenue.
   

Best Practices for Dynamics 365 EDI Integration

A successful Dynamics 365 EDI integration requires planning, not simple execution. Here are some best practices to ensure a smooth implementation that achieves more for your organization while maximizing your ERP’s benefits:
 

1. Define Business Goals Upfront
   Before diving in, clearly define your business objectives for EDI integration. What specific processes do you want to improve? Knowing your goals at the start of the project sets the stage for a successful and sustainable integration.
    
2. Understand Microsoft Dynamics 365 Inside-Out
   Having a thorough understanding of Dynamics 365 is crucial. Familiarize yourself with its data structures, workflows, and capabilities. Determine which of the suite’s applications your business will use. This knowledge helps design an efficient integration that leverages the strengths of both Microsoft Dynamics and the EDI solution.
    
3. Customization vs. Standard Solutions
   Consider your specific needs. Do you require a custom-built integration, or can you utilize existing EDI connectors or plugins compatible with Dynamics 365? Evaluate options that offer flexibility to meet your unique requirements (as well as your trading partners’ requirements) that may evolve in the future. Additionally, consider which service model offering you would like—self-service, managed services, or a hybrid approach.
    
4. Data Mapping and Transformation
   Ensure viable EDI mapping between your EDI system and Dynamics 365. Data transformation might be needed to reconcile differences in data formats and structures.
    
5. Robust Error Handling
   Establish a mechanism to identify, log, and promptly address integration errors.  Effective error handling minimizes disruptions and keeps fulfillment processes flowing smoothly.
    
6. Automate Workflows
   Design automated workflows to streamline operations. For example, upon receiving an EDI order, an automated process in Dynamics 365 should update inventory and initiate order fulfillment, eliminating manual tasks.
    
7. Data Validation is Key
   Implement data validation mechanisms to prevent inaccurate or incomplete data entry. This safeguards data accuracy and integrity within your systems.
    
8. Thorough Testing and QA
   Rigorously test your integration in a controlled environment before deploying it live. Test various scenarios and edge cases to ensure everything functions as intended.
    
9. Monitoring and Maintenance
   Establish practices and tools to monitor the integration's performance. Regularly review and update the integration as needed to adapt to changes in business processes or technology.
    
10. Security and Compliance
    Prioritize data security and compliance. Ensure sensitive data is encrypted during transmission and stored securely. Additionally, comply with relevant industry standards and regulations.
     
11. Scalability for Growth
    Consider future scalability needs. Ensure your integration can handle increased data volumes and additional trading partners as your business expands.
     
12. Comprehensive Documentation
    Maintain thorough documentation of the entire integration process, including setup, configuration, data mapping, workflows, and troubleshooting steps. This documentation is invaluable for ongoing development and future improvements.

By following these best practices, you can leverage the power of EDI integration with Microsoft Dynamics 365 to achieve enhanced data accuracy and faster business cycles, as well as gain valuable insights into your trading partner network—all while managing critical orders and integrations from a central hub. This will help you maximize the benefits of EDI and minimize potential challenges, propelling your business forward.

The Key to Reliable EDI Integration with Microsoft Dynamics 365: Think Ecosystem Integration

The secret to a successful EDI integration with Microsoft Dynamics 365 lies in utilizing a robust EDI integration solution as a way to make your business ecosystem stronger. Think of ecosystem integration as a way to connect your Dynamics 365 ERP system to trading partners, visibility platforms (e.g. Project44 and FourKites), as well as back-office and internal applications (TMS, WMS, CRM, etc.). Once connected, an ecosystem integration approach (via EDI in this situation) facilitates seamless data exchanges and sharing between your ERP and your trading partners’ systems, ensuring smooth communication.

Through such an ecosystem integration strategy, you'll gain significant advantages, such as:

• Improved Visibility: Gain organization-wide visibility into data exchanged through EDI. All teams can access and share information efficiently within Dynamics 365.
• Real-Time Data Access: Enjoy immediate access to a centralized and reliable source of truth for all your EDI-integrated business applications and trading partners. Data is readily available in real-time, leading to more informed decision-making and better data analyses.
• A Centralized Hub: With middleware in place, Microsoft Dynamics 365 becomes a central hub for all your EDI communication. This streamlined approach simplifies data management, improves collaboration, and ultimately strengthens your overall business operations.
   

Selecting the Right Microsoft Dynamics 365 EDI Integration Vendor

Choosing the right Microsoft Dynamics 365 EDI integration vendor is a critical decision for a successful EDI implementation. Keep in mind, any good B2B integration provider will ask you relevant questions to determine if they can actually help your business achieve its goals. Additionally, here are eight key factors to consider to help ensure a successful implementation:

1. Expertise and Experience:

• Look for a vendor with a proven track record of successful Dynamics 365 EDI integrations and B2B integrations in general.
• They should possess deep knowledge of both Dynamics 365 and EDI technologies, with certifications, client testimonials, case studies, and positive online reviews (G2 Crowd, Capterra, etc.) that demonstrate their expertise.

2. Customization and Scalability:

• Ensure the vendor can tailor the EDI solution to your unique business needs and your trading partners' EDI requirements.
• They should have the skills to handle complex integration scenarios and offer scalable solutions that can grow alongside your business.

3. Proven Methodology:

• Inquire about the vendor’s integration methodology and project management approach. A structured methodology ensures a smooth and efficient implementation process.
• Look for clear timelines, milestones, and established communication channels to keep you informed throughout the project.

4. Support and Training:

• Verify the vendor provides ongoing support and training after implementation.
• They should offer comprehensive training for your team on EDI functionality within Dynamics 365, whether through pre-recorded videos, written guides, live workshops, or other means.
• Do they have reliable support that ensures prompt resolution of issues and minimizes operational disruptions?

5. Integration Network:

• Evaluate the vendor's network and relationships with EDI service providers.
• A well-connected vendor can facilitate seamless connections with your trading partners, simplifying onboarding and enhancing supply chain communication.

6. Client References:

• Request client references or case studies from the integration vendor.
• Contact their past or existing clients to gain insights into their experiences and satisfaction levels.
• This feedback will be valuable in assessing the vendor's reliability, responsiveness, and overall performance.

7. Future-Proofing:

• Consider the vendor's commitment to staying current with the latest advancements in Dynamics 365 and EDI.
• They should actively monitor and incorporate new features, upgrades, and industry best practices into their solutions.
• This ensures your EDI integration remains robust and adaptable to future business needs.

8. Integration Capabilities and Compatibility:

• Verify that the vendor's solution is compatible with your specific Dynamics 365 version and supports the EDI document formats and protocols required by your trading partners.
• Additionally, evaluate their expertise in integrating with other business systems or applications you currently use or plan to use in the future.
• By considering these factors, you will have a better idea of what to look for in a Microsoft Dynamics 365 EDI integration vendor—so you can find one that aligns with your business goals and will maximize the value of your EDI integration.
   

Why Choose Cleo for Microsoft Dynamics 365 EDI Integration?

At Cleo, we understand the critical role EDI integration plays in connecting your Microsoft Dynamics 365 ERP to your trading partners, indeed your entire supply chain ecosystem.

A robust EDI integration lays the foundation for successful, long-term business relationships and a streamlined digital ecosystem. That's why thousands of companies worldwide trust Cleo as their EDI integration partner.

Our flagship product, Cleo Integration Cloud (CIC), simplifies and accelerates the setup of EDI integrations with Microsoft Dynamics 365 by providing customers with pre-built maps that can be customized to fit their precise needs—eliminating the need for expensive, complex, and time-consuming custom coding.

This allows you to seamlessly connect your digital ecosystem to your trading partners and speed-time-revenue.

Furthermore, our team of EDI integration experts at Cleo is available 24/7 to guide you through the entire Microsoft Dynamics 365 EDI implementation process and answer any questions that may arise.

And for businesses seeking comprehensive support, we offer managed EDI services where Cleo can handle implementation, onboarding, error resolution, ongoing monitoring and maintenance of EDI integrations, and more — freeing your team to focus on core business activities.

We also offer a fully self-service approach for companies that want to handle their integrations in-house, as well as a unique blended approach that combines self-service and managed services which gives your business the flexibility to pick the approach that works best for you.

Benefits of Cleo Integration Cloud as Your EDI Integration Solution

As a leading ERP integration provider, Cleo Integration Cloud provides our customers with:

• End-to-end visibility into any error or transaction
• Rapid trading partner onboarding
• Flexible service offerings—self-service, managed services, and blended services
• Quick error resolution
• Business process automation
• Platform scalability
• A user-friendly design 
• A wide variety of protocol support
• …and more.

Cleo’s Microsoft Dynamics 365 Pre-Built Integrations

Cleo’s Microsoft Dynamics 365 pre-built integrations are available for both Dynamics 365 Business Central (D365 BC) and Dynamics 365 Supply Chain Management (D365 SCM).

These pre-built integrations provide the industry’s only pre-built, end-to-end integrations with out-of-the-box business logic that quickly connects your new ERP to other applications and trading partners.

Using the pre-built integrations, you can configure traditionally complex B2B integrations with an easy-to-use interface that requires no coding. The combination of Cleo Integration Cloud (CIC) and the pre-built, customizable integrations, enables every user in an organization to track the operational pulse of supply chain integrations.

This is due to CIC providing real-time, end-to-end visibility of every transaction, which enhances collaboration with external ecosystem entities.

Why Use Cleo's Pre-Built Microsoft Dynamics 365 Integrations?

The benefits of Cleo's Microsoft Dynamics 365 pre-built integrations include:

• Pre-built end-to-end business process logic for deploying common EDI-based supply chain integrations
• Speeding time-to-revenue by quickly connecting to eCommerce stores, marketplaces, and EDI-based trading partners
• No coding necessary
• Rapidly expanding to new sales channels
• End-to-end visibility of every transaction

When your company is looking for a leading Microsoft EDI integration solution, be sure to consider Cleo. Our versatile team of business and technical experts possess thousands of years of combined integration experience and lead the way in implementing, customizing, and integrating ERP solutions, including Microsoft Dynamics 365. We closely collaborate with our customers to transition their business processes to our innovative Cloud platform, delivering unparalleled levels of productivity and efficiency through their digital business.

Contact us today at sales@cleo.com or +1.815.282.7695 to leverage our expertise and start experiencing the advantages of EDI integration. And be sure to explore some of our educational resources through our resource library.