Electronic Data Interchanges
Electronic Data Interchanges technology is a complicated mixture of three disciplines: business, data processing and data communication. Integrated with logistics practices EDI can be defined as the electronic exchange of business data, such as purchase orders, invoices, and shipping notices, typically between one organization and another. The relationship is usually between a vendor and customer. EDI began in the 1970s and was first developed by the automobile Industry. Today is used in different industries including distribution, finance, health care, manufacturing, purchasing, retail, publishing, and shipping. EDI system is in evolution and is adapting to the current market situation. In fact, EDI is a technology that many companies are using in its logistics practices in international supply chain operations. Many businesses choose EDI as a fast, inexpensive, and safe method of sending all documents used on business. Any business application that implements EDI works in a fast, efficient and paperless environment. The traditional document flow for purchasing transactions starts with data entry by the purchaser to create a paper document to send by mail to trading partners. Once the trading partners receive the data, they keystroke the information received into a local application and then perform more data entry by entering a response into a local application. The resultant paper document is then mailed to the purchaser. The procedure is both time consuming and labor intensive because data from both trading partners has to be entered twice. EDI data is key in only one time, at the original point of entry. The data is then translated into a standard format electronically and sent to the trading partner electronically. Time for transmission is very fast in comparison to postal mail. Even on a slow modem connection the time is considerably shorter than through the postal service. EDI Benefits
"Removing unnecessary process tasks benefits the whole supply chain, allowing improved performance and cost management." By using Electronic Data Interchange systems companies have made significant improvements, benefits and savings. Over 160.000 companies have made the change to electronic data interchange to improve their efficiencies. Many of these companies require all of their partners to also use EDI. Studies have shown that manually processing a paper order can cost 70 times more than processing the same order thru EDI. The most relevant benefits are:
* Much less labor time is required and fewer errors are made because computer systems process the documents rather than processing by hand. When a company reduces manual work and administration reduce the process operating costs. * EDI is commonly used instead of faxing and mailing paper documents improving the efficiency of communicating documents. When the timing of the invoice to goods delivery is shortened it improves the invoice approval and streamlines its payment. * Fewer errors occur because computer systems process the documents rather than processing by hand * Data integrity can be secured across the supply chain because suppliers' information is automatically sent to customers' systems. Improved processing efficiency increases the opportunity to negotiate early settlement discounts, reducing the cost base for customers. * Business transactions flow faster: Faster transactions support reduction in inventory levels, better use of warehouse space, fewer out-of-stock occurrences and lower freight costs through fewer emergencies expedites.
Standards are a necessary part of EDI. Every business has application files that are used to manipulate their data in ways that are familiar to the business. The problem is that most businesses though using the same types of data do not use the same application programs or hardware and software platforms. If businesses are to be able to communicate their...