During the 1970’s and 1980’s the computer industry and many retailers were infatuated with Electronic Data Interchange or EDI as it’s often commonly referred to. These days, EDI is a much maligned and often overlooked technology because it’s seen as costly, complicated and cumbersome. Contrary to this popular myth though, EDI can drive tremendous savings and efficiency improvements throughout a supply chain and/or trading community.
If you’re new to this three letter acronym, please find the following description from Wikipedia – Electronic Data Interchange (EDI) is the structured transmission of data between organizations by electronic means. It is used to transfer electronic documents from one computer system to another, i.e. from one trading partner to another trading partner. It is more than mere E-mail; for instance, organizations might replace bills of lading and even Cheques with appropriate EDI messages. It also refers specifically to a family of standards, including the X12 series. However, EDI also exhibits its pre-Internet roots, and the standards tend to focus on ASCII (American Standard Code for Information Interchange)-formatted single messages rather than the whole sequence of conditions and exchanges that make up an inter-organization business process.
Whilst the mere description of EDI may fill you with dread, there really isn’t anything to fear. Long gone are the days where you had to employ teams of technical people and invest in expensive technology. Electronic trading relationships with customers, suppliers or partners can now be setup within hours and the business benefits reaped within days.
Imagine if you will a company sending all of its invoices electronically, properly matched and guaranteed to reach its customers computer systems within seconds. This is what EDI can do and it has a major effect of reducing average days of debt, streamlining accounts departments, improving cash flow and decreasing operating expenditure.
Retailers have effectively used EDI for many years although there are still many industries that have yet to experience its benefit. Chemicals and pharmaceuticals for example is a vertical market awash with paper documents, data and information that needs to flow up and down its supply chain. In addition, because of regulatory and compliance issues, a lot of this data needs to be stored for retrieval on an as required basis.
By adopting EDI and using structured messages and exchanging these electronically in real-time with its partners, customers and suppliers, many of high-costs of doing business within Chemicals and Pharmaceuticals could be eradicated.
EDI is a well grounded methodology and proven way to drive significant supply chain improvements. Almost in secret, a small group of vendors have been addressing the pitfalls that blighted its uptake a decade ago and dare I say it “resurgence is just around the corner”.
Learn more about Supply Chain Management. Stop by our site where you can find out all about Perceptant and what we can do for you.
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