When was the last time you received an invoice in the mail? Or sent a business document via fax? For some businesses, this is still commonplace, believe it or not. But for many, this harkens back to a bygone area.
Instead, many businesses are shifting to the modern, efficient technologies of Electronic Data Interchange (EDI), especially using EDI in their supply chain—enabling them to streamline their operations and keep up with the logistical demands of today’s customers.
What is EDI?
Electronic Data Interchange, or EDI, involves the electronic transfer of business documents (called transactions) between two entities or trading partners. When businesses utilize EDI, they can easily send messages, invoices, and other essential documents electronically without the security issues or hassle of mailing physical documents, using a fax machine, or even sending email attachments.
EDI can take various forms, and the type utilized will depend on the business’s goals. Some will use web-based portals to exchange information or outsource EDI to third parties. Others may build their own in-house EDI software. But how do businesses use EDI in the supply chain?
EDI in Supply Chains: How It’s Used
Today, EDI in the supply chain has become the accepted practice for many ecommerce businesses. That means it’s helped standardize communication for companies around the globe, even if they may have different internal processes. EDI in supply chains is used primarily for various document needs associated with supplier transactions, including:
- Invoices
- Purchase orders
- Warehouse shipping orders
- Advanced shipping notices
- Order status reports
- Warehouse shipping advice
By using EDI in its supply chain, businesses don’t have to wait for paper documents to arrive, which could take a long time and be a cumbersome process to modify and approve. Instead, they can quickly transfer documents securely and automatically, boosting their logistics efficiency and reducing the potential for human error.
The Advantages of Using EDI in Your Supply Chain
While there may be additional costs and setup time associated with incorporating EDI into your supply chain, businesses who take the plunge can gain a variety of benefits that outweigh the initial transition, including:
Timely and Accurate Communication
When you already have a complicated supply chain to navigate, the right communication between suppliers is critical. But when you’re dealing with paper invoices, emails, and phone calls, the communication process can be extensive and time-consuming. Not to mention the level of manual entry required to record the data shared between businesses can lead to costly human error!
However, with EDI in your supply chain, you can communicate accurately and in real time through automated processes, enabling you to make faster decisions as trends and markets shift.
Up-To-Date Inventory Management
EDI can seamlessly integrate with your company’s inventory management software, which means you can expect more accurate and up-to-date inventory data when working with your suppliers. As a result of EDI in your supply chain, your business can optimize inventory levels for the year to avoid any overstocking or stockouts associated with changing demand.
Fast, Efficient Processing
With EDI in your supply chain, you can say goodbye to the days of slow manual order processing. EDI’s automation capabilities can speed up transactions dramatically as orders are processed between each supplier’s computer systems, taking only a matter of minutes to complete instead of several days. This allows businesses like yours to become more efficient, resulting in faster order processing, more streamlined delivery, and happier customers.
Reduced Costs
As processes become more efficient with EDI in the supply chain, this creates space for businesses to reduce costs and save money. Electronic transfer of data means companies don’t have to spend countless dollars on paper, printers, ink, writing materials, postage, and file storage. At the same time, businesses can save on human resources needs by eliminating manual order processing, freeing up employees to prioritize more valuable responsibilities.
Better Visibility and Security
With order processing and important documents all stored in one place, EDI in the supply chain makes this vital data easily visible for all parties involved. As a result, companies can more readily track orders and monitor shipment statuses. However, EDI also enhances the security of this data, allowing only authorized access to important documents and information while offering audit trail and encryption capabilities. Data security has never been more vital, and EDI helps you ensure you’re managing sensitive information safely.
Integrate EDI With the Right WMS Technology and Logistics Expertise
Incorporating EDI into your supply chain can make your business’ logistics more cost efficient, accurate, and streamlined. However, to get the most out of its impact and keep up with today’s fast-changing business environment, you need to combine EDI with modern WMS technology and reliable logistics expertise.
At Smart Warehousing, our third-party logistics (3PL) services and leading inventory management solutions can help your business outshine the competition and give you total supply chain peace of mind. To learn more, contact us today.