In this fast-paced world, technology has been used as a strategic tool by manufacturing firms to improve their competitiveness and operational efficiency. One such useful technological innovation is Electronic data exchange (EDI).
EDI can be defined as “the computer-to-computer exchange of business documents in a standard electronic format between business partners". It is strategically important as good information systems play a cardinal role in helping manufacturers survive in the digitally competitive era.
By introducing EDI into their operations, manufacturers can tighten their supply chain efficiencies and reduce overhead. They can use an integrated EDI approach to allow information exchange across various departments, such as sales (tracking a purchase order), accounts & finance (sending notifications of payments), inventory control (executing product planning), and more.
Manufacturers can also rely on EDI systems to accelerate the efficiency of the company by minimizing problems associated with supply chain management including, out of stock, low inventories, stock loss, to name a few. Additionally, manufacturing enterprises can employ EDI integration to strengthen their supply chain activities, building strong and smooth vendor-customer/partner relationships.
For quite long, EDI integration software has been used by manufacturers to streamline business-to-business (B2B) transactions, enhance value creation, and save time to gain a competitive edge. EDI tools enable organizations to reap a wide range of benefits, from delivering automated workflows, increasing visibility into supply chain operations, to promoting customer satisfaction.
In doing so, EDI software uses 6 simple steps:
Step 1: A sender exports a document, purchase order in this case, from an in-house application or system.
Step 2: The purchase order is then converted into an acceptable EDI format with the support of data mapping software or other EDI translators.
Step 3: The EDI document is next run through a validation software to ensure structural accuracy.
Step 4: The data gathered from the EDI document is transmitted to a VAN with the help of communication protocols, such as AS2, SFTP, etc. that can be built into either same validation software or another application. It can also be transferred straight to the client through a direct connection over similar protocols.
Step 5: The receiver gets the document and verifies, authenticates, and decrypts the file to ingest EDI document into systems.
Step 6: A message disposition notice (MDN) is sent to the sender to acknowledge delivery.
Using common steps mentioned above, manufacturers can:
With the ability to reengineer information flows and business processes, EDI integration can help manufacturers create magical digital moments at scale by boosting productivity, revenue, market reputation, and growth.
If the benefits are so many, isn’t it high time to implement EDI in your manufacturing business structure?