What is the Electronic Data Interchange (EDI) system?
During the last three decades, the Electronic Data Interchange or the EDI has become a synonym for the optimized chain of supply. Today, many companies from various industries and markets use it as a unique technological solution which is key for optimizing business processes. It is being used at the level of the whole company, between different companies, or as a solution for transboundary business collaboration.
By speeding up the logistics and by removing human errors from the whole process, the EDI system enables doing as much work as possible in a shorter time period. Here are some other advantages of its application in business.
Process automation through an electronic data exchange
“Its main goal is to enable the highest possible level of the supply process automation, through an integrated data exchange. “
The EDI system enables electronic data and documents exchange between business partners. Its main goal is to enable the highest possible level of the supply process automation, through an integrated data exchange.
That means that companies no longer have to use memos, fax, or e-mails to receive or to send necessary information about orders and invoices. Besides, the EDI system is also being used for providing information on products and processing payment requests.
For example, by using the EDI system, the supplier can automatically send notifications on the delivery of wanted products and provide the invoice at the same time when the products leave the warehouse.
Also, the moment a company receives a new order, the EDI system automatically sends a notification to the warehouse to start preparing products for shipping. Immediately after that, the client also gets a notification saying that the order is being processed and the delivery is on the way. All of this is done without unnecessary paperwork and wasting time.
The EDI system in affect
“With the help of the EDI system, supply becomes automated, precise, and free of errors.The moment a client creates an order; the supplier gets an automatic notification. “
Supply process automation through the EDI system has numerous advantages over the conventional processes which, unfortunately still imply a lot of paperwork and wasting time. Namely, in companies that still use “paper” orders or maybe send them via e-mail, the client can make an order only after checking the condition of the inventory. After filling in all the necessary data, the order is then being sent to the supplier via e-mail or post.
After receiving the order, which often happens even a few days later, the supplier has to manually input the data in the sales system. After order processing and the delivery, the client receives the invoice. Again via e-mail or post. After receiving it, the client then has to again manually input the data from the invoice into the accounting program and request for payment authorization.
At this point, the whole delivery system has been delayed for at least a week. And let’s not forget that there is also a high chance of human errors when manually inputting data. That means that if at any moment inaccurate information regarding a product or the price has been accidentally inputted, the whole process is even longer.
With the help of the EDI system, supply becomes automated, precise, and free of errors. The moment a client creates an order; the supplier gets an automatic notification. Thus, the time needed for order processing and delivery time is significantly decreased. Also, the buyer gets a notification as soon as the order is ready to be delivered. The supplier’s ERP system automatically creates an invoice which is then delivered to the buyer. So, the whole process takes about an hour, instead of a week or even more
The advantages of using the EDI system
“The EDI system also decreases the cost of transactions because there is no longer a need for paper, printing, copying, and sending necessary documentation. “
The EDI system brings a whole spectre of benefits for companies that use it. First of all, it enables business transactions to be done in a couple of minutes instead of several days and it speeds up business processes up to 60%
Seeing as how it removes unnecessary waste of time for the administration, the employees get more room to work on more important tasks which increases the productivity of the whole business team.
Besides, automated data exchange in the supply process ensures that the key information is sent and seen in time. Owing to significant time savings while order processing, the supplier doesn’t have to pile up stock to have requested products available at any moment. Furthermore, insight into real-time data on transactions makes it easier for making necessary decisions in due time.
The EDI system also decreases the cost of transactions because there is no longer a need for paper, printing, copying, and sending necessary documentation. That way, the company can save up to 35% on business costs alone. It also removes the possibility of human errors from the ordering process. Lost, incomplete, and inaccurate orders create bigger costs for companies on a yearly level.
Finally, by using the EDI system, companies have the opportunity to also better their relations with clients. Shorter processing and order delivery time affects creating a positive user experience and increases clients’ trust in the long run.
You are interested in other advantages of using the EDI system in business? Contact us today to be presented with the best solutions for simpler and faster business processes and a more successful business.
