How EDI Can Benefit Logistics & Supply Chain Operations?

We have entered the age of automation. The more you automate your business, the more significant the benefits. In today’s challenging multi-channel business environment, retailers, manufacturers, and logistics providers must analyze and share the collaboration on orders, invoices, shipping, catalogs, pricing, and other mission-critical information faster and more accurately than ever before.

Globalization has increased the opportunity of export and import that has ultimately increased the growth for thousands of companies. 

The world market runs on products and services conceived outside of their territory. A product produced thousands of kilometers away can be competitive when compared to others in the country. Any strategy or planning involving the logistics and the supply chain phase needs to take into consideration. Hence, operations such as stock management, shipping to suppliers, invoice payments, or order processing have become easier through Electronic data interchange (EDI) and to integrate these solutions business owners are actively looking for companies that offer proficient product engineering services, to accomplish their objective.

Let us know in detail about:

Electronic Data Interchange (EDI)

EDI is intended to facilitate the computer-to-computer exchange of data among multiple business trading partners. EDI solutions have been around for roughly 50 years, originally developed by the U.S. transportation industry to standardize electronic transactions between vendors and customers. The major benefit is that it is entirely paperless and requires no human participation and ultimately saves businesses countless dollars. Incorporating EDI solutions into the business eliminates the repetitive cost-, labor- and time-intensive tasks such as purchasing, printing, processing, and delivery of paper documents. EDI allows B2B businesses to transact together electronically. It also helps businesses, irrespective of its size, with any kind of technical and business requirement, and provide support and resources to manage.

How EDI Can Transform Supply Chain Management

EDI is useful for efficient and effective supply chain management because it can help reduce lead time, save documentation processing cost, eliminate procurement errors, clarify inventory status information, and enhance strategic alliances throughout the supply chain.   

The common documents EDI facilitates in the supply chain: -

• Orders
• Order Acknowledgements
• Order Amendments
• Shipment Notifications
• Invoices
• Remittance Advice
• Requests for Routing Instructions
• Routing Instructions
• Organizational Relationships
• Commission of Sales Reports
• Planning Schedules w/ Release Capability
• Price/Sales Catalogs
• Requests for Quotation
• Specifications/Technical Information

Read Also: Know Different Types of EDI Services and Which One Suits Your Business Better?

Let us see how EDI can transform logistics and supply chain management: 

Real-time Transactions

EDI helps in real-time transactions between trading partners and eliminates redundant, time-consuming, and error-prone tasks from the equation.

No Human Intervention

Generally, the transactions handled by humans get lots of errors as this tends to be manual work which at times may lose focus and results in errors. EDI software solutions eliminate those risks since all information is exchanged electronically and is accurate which results in faster confirmation.

Cost and Time Savings

Processing of paper documents such as printing, copying, delivering, filing, storage, and postage, to name a few, all incurs cost and additional time. EDI solutions comparatively take seconds for the same task which is done in hours with a paper-driven procedure.

Reduced Waste = “Greener” Business Practices

The paper-based process is a great loss to the environment as this requires cutting down multiple trees. Hence, EDI services can be called ecosystem-friendly.

Streamlined Communication Between Trading Partners

EDI helps in enhancing sales partners and customer relationships. Through this, sales cycles are shortened, orders are taken and confirmed more rapidly, and customers gain more confidence in your ability to deliver superior service.

Real-time Updates

Real-time updates help in multiple ways, it helps in time-to-time updates of inventory and the stock. It ensures companies can meet immediate demand as well as optimize stock levels as per the demand. 

How EDI can Transform Logistics Sector

EDI software allows communication between the different supply chain stakeholders based on a common language, set by global standards. EDI is a data communications system that helps the communication of data and compliance requirements between the client, the vendor, and the distributor flow smoothly. It provides information in real-time that can avoid delays in the processes involved in dispatching and receiving products as well as transporting them to storage. EDI document is assigned in EDI public format to one of several transaction numbers. This allows logistics and supply chain providers to improve the overall order data transfer process and the seamless automation of B2B workflows between both internal and external systems, applications, and cloud ecosystems.

EDI transmission is widely used in the logistics sector by.

• Exporters
• Freight Forwarders
• NVOCCs
• Customs Brokers
• Exporters

Manufacturers or exporters receive a purchase order from their client through email, which is an EDI mode or they may utilize an EDI system with the UN/EDIFACT standards.

Freight Forwarders

Freight forwarders prepare shipping documents. Invoices and Packing Lists are prepared by the exporters and sent to the freight forwarders to prepare a shipping instruction and a House Bill of Lading. Freight forwarders also need to submit a cargo manifest for every bill of lading issued. Freight Forwarders use the EDI systems in place to submit a cargo manifest.

Customs Broker

A customs broker is a mediator between the customs officer and cargo owners. They submit custom declarations for any item imported or exported to-and-fro the country. Customs brokers use EDI systems that transmit a different array of data for a different audience altogether. Also, the customs officers use the transmitted EDI information to run risk assessments on the cargo transported.

NVOCCs

NVOCCs submit shipping manifests to the customs officers via an EDI EDIFACT standard (CUSCAR).

UN/EDIFACT offers data standards for:

• Booking Requests
• Booking Confirmations
• Shipping Instructions
• Shipment Status
• Verified Gross Mass

The Future of Electronic Data Interface

Any logistic company looking to integrate EDI software solutions is on the right path of growth and may find further benefits by investing into such solutions. The world is changing and with it the future of EDI. EDI is pretty popular in the supply chain industry, with somewhere between 59 and 85% of companies adopting this technology. The presence of the internet is stronger now than it’s ever been, and businesses are becoming more tech-savvy every day. This increases the enhancement in the use of EDI in the companies. However, this data also depicts that 41% of the companies are still using manual solutions. Hence, there are a lot of opportunities for the EDI to make its place in this industry. 

EDI will be the core document exchange capability to support innovations like the Internet of Things (IoT), blockchain, and artificial intelligence (AI). EDI replaces the paper exchange and maximizes the efficiency of electronic consistency. Now it is on you, how you utilize the efficiency of EDI by integrating it into your daily processes.