Do you understand the value Electronic Data Interchange (EDI) brings to your store or supply chain management? Whether you have EDI or plan to explore new ways to optimize supply chain efficiencies in 2020, you need to know the benefits. Many EDI users don’t truly understand the value of EDI. It’s more than getting easier access to your large manufacturers who require EDI for business. We’re going to walk you through some of the hidden benefits of EDI. And why you need to take a step toward the supply chain improvement technology in the next year.
Saving Cost in the Supply Chain
If you’re new to EDI, the most powerful benefit of using EDI to handle supply chain management partners is the cost savings. For EDI power users, this is the primary reason they moved to the more automated business process. Here’s how it works.
Because files are transferred electronically from one computer system to another computer system instead of through traditional paper methods, they will save on paper expenses. There will no longer be a need to use paper, printing, fax, mailing, or storage for their documents. And the best part of files being automatically transferred electronically is there is no manual data entry. Now employees can be challenged to do more proactive, value-add, business-critical work instead of wasting valuable talented employees on mindless data entry. And while your employees are being challenged to develop, grow, and do great things for the business there is less chance of errors due to data mistakes, chargebacks, illegible faxes, and lost emails.
Speed Up Your Fulfillment
Now that we have your attention, let’s talk about the speed of doing business. In the age of faster and better, how do you speed up your supply chain? You may try to speed the human quotient but that creates more errors. We’ll talk about that later. But here is how EDI improves the speed of business in your supply chain management.
There are some critical files that flow between a retailer and manufacturer during the PO and fulfillment process. Traditionally, the files are relying on a manual process and the traditional mailing system. Your supply chain can only move as fast as your team and the postal service. But with EDI, speed is no issue.
These files, like purchase orders, purchase order acknowledgments, and other order forms, are transferred within seconds. Which means orders are placed within seconds. In turn, the raw materials can be ordered almost immediately. This all makes the furniture manufacturing start earlier and ship faster. And most importantly, invoices are sent faster and paid just as fast. The order-to-cash cycle time is much faster by using EDI. And isn’t that the main reason why we are all in business?
Strategic Planning Your Supply Chain
Now for companies who already use EDI, you may understand these basic values of the supply chain management cycle. But are you using EDI to be more strategic in your company?
Using EDI will give retailers and manufacturers access to real-time data. This is extremely valuable because now they can make fast decisions based on changing customer and market demands. Data can also be used to create scorecards to track how their vendors are performing based on their internal business goals. Instead of following the industry, you can be leaders in the industry.
If you’re ready to explore some of these benefits for your company, no matter what size, let us talk with you about your trading partners and EDI challenges.
Author: Rita Chheda