In the world of Supply Chain organizations, there’s always a faster route. There’s always a smoother way to transfer data between stakeholders, and a cheaper way to execute processes.
Here’s something that you already know
For the past fifty years or so, Electronic Data Interchange (EDI) has been the go-to solution to ensure that stakeholders and processes are firmly a part of an integrated loop. A standard electronic format that replaces paper-based documents such as purchase orders or invoices. Thus, by automating paper-based transactions, organizations can speed up logistics timelines and eliminate manual errors through business to business communication automation.
Now, here is another way to look at it
In EDI transactions, information moves directly — and quickly — even from one organization’s computer to another organization’s computer. It is commonly used to enhance efficiency, improve communication and supply chain visibility, and streamline operations with a real time data monitoring system.
The components of an EDI System are generally narrowed down into four divisions:
An application or an outsourcing company that translates the data into a standardized EDI format
A connection between the sender and the recipient
Users to send and receive data
A device on which to transmit the data
An example how EDI systems work
Let us consider a supply chain that manufactures circuit boards submitting an invoice to their trading or logistics partners.
Step 1: the supply chain company may do any one of the following:
Manually enter data through a series of screens
Export information stored within a computer network
Rely upon electronic reports that have been reformatted into data files
Use an application that has built-in interfaces for EDI files.
Step 2: Translating the data into EDI format. The company has two options here:
Feed the data through translator software. The translator software converts the information into a standard EDI format.
Choose to outsource the data translation to an EDI provider.
Step 3: Transmitting the data to trading or logistics partners. There are three common methods of transmitting documents through EDI:
Connecting directly through a secure Internet protocol such as AS2
Connecting through an EDI network provider (who connects the concerned parties through an agreed-upon protocol)
A combination of the two
Moreover, there are a variety of EDIs available, each suited to an organization’s needs, capabilities, and budget. These include Direct EDI, Value-Added Network, AS2, EDI via FTP/VPN, Web EDI, Mobile EDI & Managed Services EDI Systems.
Of course, each type of EDI provides a unique group of benefits to the organizations, but in general terms, the overall benefits of using EDIs in the supply chain domain are as follows:
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Save time and money
EDIs help businesses save time on tedious processes, and save money by moving paper transactions to digital mediums. By switching to EDI in the supply chain, business processes like ordering and purchasing are catalyzed exponentially. Also, expenses for storage are minimized, while costs for communications and manual checks are reduced due to streamlining and improving processes through the EDI system.
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Reduce errors
EDI in the supply chain standardizes transactions with suppliers reducing the risk of miscommunication, human error, incorrect shipments and other mistakes. This can be especially helpful for large retailers as they deal with a large variety of suppliers within their supply chain.
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Speed processing
Supply chain EDI transactions between trading partners can be completed faster and at greater volumes. This, in turn, speeds up payments and improves cash flow.
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Improve inventory management
Via the exchanging of EDI documents, high levels of supply chain visibility are attained. This provides real-time updates for businesses so inventory levels are much more accurate, and gives businesses the ability to effectively allocate resources and prevent inventory shortages while also giving them the capabilities to eliminate excess inventory.
Therefore, when it comes to supply chain organizations partnering with Transport & Logistics stakeholders, the latter require their vendors to become EDI capable and compliant. ‘EDI capable’ is a company’s ability to implement an EDI solution for simplified procurement processing and streamlined communications between trading partners, suppliers and customers. ‘EDI compliance’, on the other hand, refers to following an organization’s EDI specifications and requirements.
Having said that, EDI can be difficult to implement for some enterprises. There are shifting government regulations, standards and updates. Moreover, any organization looking to implement needs to accommodate the complexities of global business needs. These factors, and others, have led many organizations to outsource their EDI solutions.
Outsourcing EDI allows your company to focus on your business while a team of specialists manage your EDI environment.
Take Monitor Pro’s EDI Readiness and Maturity Assessment to determine the current level of EDI integration at your company.
With an EDI provider such as Monitor Pro, easily connect to trading partners, get supply chain visibility and analytics, maintain 100% compliance, have access to the industry’s best all-in-one inclusive EDI and eCommerce cloud-based feature rich portal that scales by integrating with your business operations. With a seamless sign up link, you will have an analyst working on your behalf, testing directly with your trading partners and setting a go-live date.
Also, with Monitor Pro, you can simplify your daily operations with our cloud-based, all-in-one multichannel, intuitive solution that scales by integrating with any application. The Monitor Pro team of specialists manage your EDI environment so you can seamlessly process and fulfill orders, therefore letting your organization gain from the multitude of benefits that EDI on-boarding can bring, without ever having to worry about infrastructure costs, government regulation changes and EDI non-compliance penalties
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