An established business tool across the food industry, Electronic Data Interchange (EDI) is gaining traction across the wider spectrum of wholesale companies. Here, we look at some of the reasons why.
Greater operational insight
In addition to improving speed, cost and accuracy, EDI can impact the business in a number of other ways, improving operational efficiencies and tightening relationships with your trading community.
In order to successfully transmit, interpret and process transmissions automatically, there needs to be a significant degree of co-operation and analysis within your trading partner ecosystem. EDI can make that happen.
In order to ensure the supply of accurate and timely data throughout the system, all parties need to be in clear agreement over business procedures, data requirements and usage, communication methods, operational windows and testing schedules prior to anyone implementing EDI. This increased attention raises data awareness throughout your business environment. Embracing EDI as a business tool gives organizations valuable awareness of the processes happening outside their walls, and the influence they have on how effectively they run their business.
Understand your customers
Although not a reporting tool, a thorough implementation of EDI supports detailed monitoring of customer behaviour, tracking of transportation carrier performance, understanding of product availability from vendors and of customer buying patterns. Large volumes of accurate timely data underpin effective planning and decision making. Suppliers can closely align shipping with order receipts, while manufacturers can schedule production tightly with demand. Throughout the network, businesses are empowered to use resources effectively and strip out inefficiency and waste. EDI can make the lean philosophy a reality.
Understand and improve cash flow
As a result of this, it can also have a dramatic effect on cash flow. As more of a company’s applications are integrated into EDI, invoices are created with greater accuracy and received by the customer quicker. Both lead to them being paid faster. With payments and receipts processed quicker, cash flow insight is more accurate – allowing planning decisions to be made with confidence (are we in position to take advantage of this discount or not?). With your real time cash position to hand, and a detailed overview of pending payments, you know exactly how much liquidity is available at any given time.
In part five of this series, we’ll consider the role EDI can play in making integrated supply chains a reality.