Modern technology has made it possible for businesses to operate and conduct transactions in a much more convenient and quicker manner. This is particularly important for those businesses. Need their supply chain management to be as efficient as possible. Electronic data interchange, EDI, is one of the innovations that makes this possible. Thanks to edi companies, the world of supply chain management has been Transformed.
What Is an EDI Company?
EDI companies give their clients the opportunity to exchange business documents among themselves and other businesses using computers. Simply put, it’s means two separate computer systems can exchange data with each other. In a sense, EDI helps to replace traditional mailing and faxes, making communication much quicker.
How Does it Work?
It is not uncommon for people who are first introduced to edi to wonder whether there is any need for this type of system when we now have email. In reality however, EDI does far more than solely communicate messages. It is used within the supply chain, meaning that it helps to render this more efficient. When a purchase order is raised, it has to go through various interfaces and programs before the goods are actually received by the client and paid for. What EDI does is streamline this entire process, ensuring that each step along the supply chain is contacted at the right time and in the right manner.
The Benefits of EDI
To understand the benefits of EDI, it is best to look at the process involved in an order. When a purchase order is raised, it has to be sent to the inventory department, who then send it to the shipping department, who send it to the client and send a notice to the finance department, who send an invoice, which is then paid by the client, which the finance department confirms. If done on paper, each of these steps takes time. In fact, if the purchase order was sent on paper comma the client could have to wait for as long as 14 days before the order is shipped. EDI makes this almost instant because all the communication is done automatically.
Speed is not the only benefit of EDI. It is also incredibly affordable. A paper purchase order can cost as much as $70 for a single exchange in time and materials. An EDI purchase generally costs no more than $1. Then, there is the fact that using these automated systems means there is less chance of human or era, making the supply chain more accurate. Last but not least, it improves networking and partnership working, while at the same time improving business control and increasing productivity.
Clearly, EDI is a necessity in any business that has a supply chain. It helps improve productivity and bring down costs, two key factors of importance for increasing profitability. All business still has to do is make sure that they find a high-quality EDI company to work with.