Electronic Data Interchange (EDI) has become an essential part of Supply Chain. EDI has allowed manufacturers and businesses to carry out paperless communication between trading partners in their supply chain. This article will explain what EDI is and how it has benefitted the Supply Chain Management.
What is Electronic Data Interchange (EDI)
Electronic data interchange (EDI) is the data communication through electronic ways which were traditionally communicated on paper, like purchase orders and invoices.
EDI is used across many different companies, but its major impact has been noticed in Supply Chain.
Supply Chain Electronic Data Interchange (EDI) has allowed quick and accurate exchange of supply chain EDI transactions which has fastened the businesses. In addition to that, it has also improved the experiences of customers.
In this modern age, EDI is successfully delivering the fast and safe file transfer that steers collaboration and along with that, increases sales amongst trading partners.
Defining EDI for the supply chain
By substituting paper-based transactions with electronic transactions, Supply Chain EDI facilitates dealers, manufacturers, and logistics organizations to go for a more efficient paperless communication in their supply chain.
This paperless transaction has facilitated businesses to multiply their efficiency allowing for a more environmentally friendly impact, and increasing efficiencies in both inventory and business operations. EDI has made it easy for customers and trading partners to keep a well-structured record of their transactions.
Benefits of EDI for supply chain management
There are many advantages that Electronic Data Interchange (EDI) can provide to your business. A few examples of how EDI can be beneficial for your business are as follows:
- Enhance customer experience
Purchasing and using Supply Chain EDI enhances the transparency which is a necessary part of ensuring increased communication with customers and clients. EDI provides the customers with accurate information and data on their transactions with the business.
These features make the customer experience better and turn them into loyal customers as it satisfies the customers and offers no guesswork or confusion.
- Speed processing
EDI facilitates speed and improves comprehensive action throughout a company because Supply chain EDI offers quicker and more focused processes. Supply chain EDI transactions among the trading partners can be finished off quickly and at tremendous volumes, which fastens the payments and improves cash flow.
Faster payments can provide new opportunities for both the company and the partner. It is because it can introduce opportunities for customer discounts.
- Reduce errors
Minor mistakes can make the businesses suffer a lot in terms of money. But now you don’t have to worry about commuting such mistakes. Paper communications increase the likelihood of committing such mistakes more often. EDI in the supply chain reduces the risk of miscommunication, human error, incorrect shipments and other mistakes which can significantly put the customer relationship in danger. This can be especially valuable for huge businesses and retailers because they deal with many suppliers on a daily basis and commuting such minor mistakes can put the customer relationships in danger.
- Save time and money
EDI can help businesses save time on monotonous procedures and save finances by many paper transactions paper-less. By migrating to EDI in the supply chain, business procedures like ordering and purchasing have been changed to a huge extent and have been made very easy. The expenses for storage are minimized, all thanks to Electronic Data Interchange. (EDI)
- Improve inventory management
EDI in the supply chain has ensured a great deal of clarity for businesses and trading partners which allows for modifications across the board for supply chain management.
How Does EDI Work?
EDI (electronic data interchange) functions in minutes by utilizing a software system to send business documents between business partners in a paperless transaction system.
There are 3 steps to send Supply Chain EDI documents.
Step 1: Prepare the documents that are to be sent to the trading partner.
The first step to implement EDI is to compile and categorize the data you want to send. For example, rather than printing a purchase order, your procedure develops a file with all the essential data. The methods known to develop the electronic documents can include:
- Human information and data entry through screens
- Exporting PC-based data from spreadsheets or databases
- Reformatting the reports into electronic data files
- Improving existing applications.
Step 2: Translation of the documents into EDI format using a translator
The next step is to provide your electronic information to alter your internal data format into the Supply chain EDI standard format utilizing the reasonable segment.
You can also pay for EDI translation software that you organize and maintain on your suppositions. Translation software is available to case just about any computing setting and budget, depending upon the requirements.
Step 3: Transmission of your translated EDI documents to your business partner
Once your business documents are translated by the translation software to the reasonable EDI format, they are prepared to be transmitted.
Now the next step is, you need to agree on how you will relate to each of your trading partners to perform that transmission.
There are numerous ways, the most ordinary and common of which include 1) to attach directly using AS2 or any other safe internet protocol, 2) connect to an EDI Network provider, or 3) a mixture of both.
What Data can you Share through EDI?
In Electronic Data Interchange (EDI), you are the one controlling everything and you can decide what data is to be shared.
With EDI solutions, a variety if data can be shared with your partner like:
- Supplier capability surveys
- Supplier on-boarding
- Managed connectivity
If you have just started thinking of integrating your transactions with Supply chain EDI, it may seem a bit tricky and hard to handle and complicated, but in fact, it is a vehicle to normalize and simplify communications between trading partners and a simple way to convert paper transactions into paperless transactions.
Retailers, suppliers, distributors, etc. all can benefit by swapping essential business papers on a safe network and in real-time.
Benefits to Suppliers:
EDI is a thriving technology solution used by many trading businesses. The benefits to using EDI are innumerable and include:
- EDI compliance to Trading Partner/Buyer Needs..
- Real-time contact.
- Global data sharing.
- Improved order precision & rapid assurance.
- Elimination of manual chores.
- Totally paperless.
- Responsible B2B Expertise.
- The capacity to relate with many dealers.
- Delivering competitive pricing for small businesses suppliers.
- Quickly connect with your trading partners who are demanding that you become EDI compliant.
- Staying educated about current technology.
- Improved customer satisfaction.