How EDI Drives the Automotive Industry

Car and truck manufacturing is an elaborate process that is simplified via EDI.

By Molly Goad

For more than 40 years, EDI has been used in the automotive industry, ensuring that the production lines keep moving and delays are addressed. Manufacturing a car is a complicated process, with components, modules, and parts produced by suppliers in a tiered structure, which I will talk about later. The numerous players in this auto space must be EDI-compliant. 

Let’s take a look at all of the ways EDI is used to make things run smoothly in the automotive industry. (EDI — electronic data interchange — is the transmission of documents in a common electronic format between two business partners. Read our EDI primer for more.) 

Global Reach

Today’s vehicles are built from thousands of parts distributed by suppliers all over the world. EDI enables automotive companies to onboard fabricators quickly no matter where in the world they reside. Some automobile makers use low-cost suppliers or those from emerging markets, who lack robust information and communication technology skills. Car manufacturers have to provide simple-to-use EDI tools in order to trade documents with these suppliers. 

Traceability

With so many moving parts in automotive, it’s imperative for businesses to have a clear picture of where things are located at all times. EDI allows businesses to see at any point where a shipment is and when exactly it will arrive. Delays and hiccups are known instantaneously, flagged, and fixed, so companies can adjust and not lose valuable time. 

Essential for JIT Manufacturing

An EDI system is essential to achieve just-in-time (JIT) manufacturing. Also known as Toyota production system (TPS) or lean manufacturing, JIT is a set of best practices developed to ensure production lines all over the world run flawlessly. This methodology has been widely adopted in the automotive industry for decades. EDI allows the transparency needed for JIT manufacturing: Companies enjoy the visibility of inventory levels at all times and the notification of when shipments are scheduled to hit the production line.

Tiered Supply Chain

Cars and trucks are assembled from thousands of parts that come from suppliers via a tiered structure. Tier 1 produces the major systems and modules of a vehicle; devices that are close to being end-products. These companies are often located near to a car manufacturer in order to best comply with JIT manufacturing. Tier 2 companies make the components used in the assembly of the Tier 1 modules. Further back in the process are the Tier 3+ suppliers, also known as part suppliers. They make the individual raw materials needed to create the components and modules. 

Those involved throughout the chain must adopt industry-compliant EDI and adapt to specific business rules that various automotive manufacturers and Tier 1 suppliers employ.

Perfect Synchronization

You can see just how many different players there are in the automotive industry. Like a dance team that is completely in sync with everyone nailing their moves at the correct time, auto requires all participants to hit their deliveries and, therefore, the production line, at the right time. EDI makes this perfect synchronization a reality. 

EDI is integrated into the suppliers’ and manufacturers’ internal management systems. The data is translated into the language required by a company’s software program; automatic messages are created, sent, recorded, and stored without human involvement. Production isn’t hindered with a slow down because advanced ship notice (ASN) messages are constantly exchanged between partners, meaning issues are flagged and fixed immediately. 

In the automotive sector, ASNs are necessary to verify that the merchandise being sent by the supplier matches up with the business partner’s purchase order. If there’s a disagreement, the client is notified ASAP by way of EDI, and the situation is rectified.

Thus, the production line will keep moving flawlessly. 

Reduce Chargebacks

In theory, everything keeps on trucking along, but bumps in the road do exist. The automotive industry is known for issuing huge fees if EDI isn’t perfect and delivery windows aren’t met. Manufacturers are aware of any slow-downs because they’re highlighted in monthly detailed trouble reports (DTRs), information they send to their suppliers. When ASNs aren’t received on time or when products don’t arrive in their JIT delivery window, the manufacturer issues chargebacks — hefty fees for these missteps. 

A BOLD VAN solution in place offers peace of mind with its alert system, notifying clients when anything is not acknowledged or received. The client can rectify the situation immediately. A transition to BOLD VAN is simple. To find out how to get started, contact BOLD VAN by calling 844-265-3777 or emailing info@boldvan.com.

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