Posted by Indusa Admin on June 28, 2016 10:53 am
In the last two decades, the production and manufacturing industry has rapidly adopted an array of new concepts, ranging from just-in-time manufacturing, total quality management, lean production, and more. As manufacturers across the world use their own systems to manage diverse businesses, the disconnect between these systems mandates the need for a common protocol that enables seamless interaction. EDI (electronic data interchange), an internationally standardized process that has been in existence for decades, finds major applications in the supply chain space even today. EDI integrates incoherent systems, such as EDI integration with ERP, enhancing communication between various entities for timely delivery of goods and services to customers.
EDI Over the Years
The first version of EDI came into existence around the 1970s. It started off with large enterprises looking to replace the way they exchanged documents with their partners. As manual processing and paperwork took up a lot of everyone’s time, shipments were getting delayed. Moreover, any lapse in communication anywhere within the process could lead to wrong forecasting. Therefore, in order to speed up and improve the accuracy of processes, many of these enterprises decided to set up a standard that could be used to seamlessly and quickly exchange information with partners. This eventually led to the inception of EDI, which paved the way for an efficient and cohesive means of exchanging critical business information between business entities.
Now more than 40 years later, EDI is not only alive, but flourishing across enterprises around the world. Companies are using EDI to exchange information around purchase orders, invoices, and shipments with highly dispersed business partners and is one of the most sought after means for securely and swiftly sending data over the Internet.
EDI reduces the number of manual processes and ensures that all communication between suppliers, partners, manufacturers, delivery agents, and customers are electronically entered into systems. EDI makes the latest point-of-sale data from the entire supply chain available at any time, accelerating the reaction time for customer requests. It supports the automatic transmission of structured information between systems, which in turn helps in accurate production planning.
EDI allows you to control a varied range of processes such as pricing and catalogs, promotions, rebates, order status, shipping schedules, and invoices, and accelerate the transfer of electronic business processes. EDI can also be used to transmit typical information such as point-of-sale information, warehouse data, delivery forecasts, advertising processes, and new product introductions in addition to transaction data such as purchase orders, shipping notes, and invoices. Furthermore, eliminating manual data entry creates extensive cost-cutting potential, making it a highly useful system in organizations where day-to-day work involves an extraordinary share of repetitive business processes. With EDI, you can:
- Store and manipulate data electronically thereby saving cost and effort of manual entry
- Reduce the number of shipping and billing errors by eliminating the need to rekey data
- Increase the speed of business processes through automatic transmission of data and reduced cycle times
- Replace the flow of information that requires high levels of human interaction and material resources
- Enjoy seamless communication of structured business information between different stakeholders
- Ensure faster delivery of products as a result of quicker information flow
Implementing an EDI System
So what does it take to implement an EDI system? EDI-enabled processes are implemented either internally with in-house technical teams or with the support of an expert third-party vendor. The ideal approach for implementing EDI in-house depends on your company’s resident technical expertise, the geographic and business scope of the implementation, and the cost parameters associated with the implementation.
On the other hand, selecting a vendor or service provider to support an EDI implementation is determined by the vendor’s knowledge and expertise within the industry, the track record of successful and cost-effective implementations carried out by the vendor, as well and the vendor’s knowledge of integration needs.
Leveraging from EDI
There are several benefits of using EDI in supply chain business transactions. While the most evident is the reduction in large volumes of paperwork, what’s even more significant is the enhanced speed of transactional and information flow among various SCM processes that in turn helps save significant amounts of money. As EDI eliminates unnecessary re-capture of data, you can ensure faster transfer of data with far fewer errors, and enjoy a more streamlined business process.
Contact us to learn how EDI has the right potential to add significant business value when it is integrated with your ERP system.
About the Author – Neha Kumar
Neha Kumar is a digital media evangelist and marketing professional. She overlooks Indusa’s content management, social media, online events, email marketing, blogs, digital campaigns, lead generation and inside sales activities on a broader scale.
Contibuting Author: Malavika Nityanandam