EDI is Essential to Supply Chain Management

Within the field of supply chain management (SCM), ElectronicData Interchange (EDI) is an industry standard. Big retailers, such as Amazon.com and Walmart, require EDI from all their suppliers. However, even still, not all companies in the supply chain utilize EDI. Others use EDI minimally.

EDI and Supply Chain Management

Industry leaders require EDI from suppliers because of the many benefits and efficiencies EDI provides.

Communication between trading partners in SCM is constant. A typical transaction between a buyer and a supplier functions as follows. A supplier receives a purchase order from a buyer. The supplier then needs to acknowledge the order with any changes if required. The buyer then confirms the acknowledgment. The supplier sends a final order acknowledgment, an Advanced Shipment Notification, and an Invoice to the buyer.

Manually receiving orders is still taking place, especially by smaller companies. A person takes the order over the phone, via fax, or by email and enters the order by hand. This process wastes time and introduces errors due to mishandling and entering data incorrectly. Furthermore, because of time wasted and miscommunication suppliers’ inventories may not be optimized.

This process wastes time and introduces errors due to mishandling and entering data incorrectly.

Other suppliers may use EDI only to receive orders so they may conduct business with buyers that require EDI. Because of out-dated order systems they receive an order electronically and then manually handle the order. Electronically receiving orders and then manually controlling them does little to mitigate errors. Some suppliers are only capable of receiving a limited number of EDI documents.

With EDI, the SCM process is automated and takes a fraction of the time and eliminates the errors of manually handling transactions. EDI works by converting data and forms into standard formats so that different electronic systems may communicate.

Buyers, suppliers, logistic providers and customers all utilize EDI. Thus, when one part of the supply chain manually handles transactions, the bottleneck affects the rest of the chain.

Electronic Data Interchange generates faster ROI and creates better relationships between trading partners.

If a supplier expects to gain the business of industry leaders, they must implement EDI.

In the situations of not using EDI at all and limiting the use of EDI, the most common belief is that implementing EDI is cost prohibitive. This may be true if a supplier tackles EDI in-house: suppliers will purchase both hardware and software, they will hire an EDI staff, and suppliers must make updates to systems.

Outsourcing EDI services to a Value-added Network (VAN) is a viable solution for companies of all sizes.

A VAN handles all the complexities of EDI so that suppliers may focus on day-to-day business. They onboard trading partners. Data and forms are retrievable. No software or hardware may have to be purchased as many VANs operate from the cloud. Most VANs enable suppliers to manage EDI from any device.

BOLD VAN advances EDI for SCM further by integrating data from trading partners into readable files. You no longer have to wait for flat files to integrate and have immediate access to readable data.

BOLD VAN thrives in finding ways for EDI to make business easier and more efficient.

Want more? Read about optimizing logistics through EDI.

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