Hitesh Baraiya | Lead Solutions Architect, SEEBURGER
The Importance of EDI/B2B Modernization In Supply Chain Operations
Electronic Data Interchange, or EDI for short, is the standard for the electronic transfer of business
documents including purchase orders, invoices, and shipment notices between participants in a supply
chain.
In the context of the supply chain, EDI is used to automate the flow of data across various systems and
organizations and to enable the sharing of information between enterprises. EDI eliminates the need for
time-consuming and error-prone manual data entry and paper-based transactions by connecting
businesses electronically using standardized electronic formats and protocols.
By facilitating electronic data interchange (EDI), organizations in the supply chain can expedite their
processes, lessen the likelihood of mistakes and delays, boost inventory management, and strengthen
cooperation with their business partners. By automating many of the repetitive operations involved in
supply chain management, it can assist to cut costs and enhance efficiency. Since EDI and supply chain go
hand in hand, modernizing EDI systems results in a high-performing supply chain.
Supply chain key areas that will be highly impacted by EDI modernization:
Common supply chain documents related to above key areas, can be exchanged with the use of EDI
include the following:
Orders (EDI 850)
Order Acknowledgements (EDI 855)
Order Changes (EDI 860)
Shipment Notifications (EDI 856)
Invoices (EDI 810)
Price/Sales Catalogs (EDI 832)
Payment Order or Remittance Advice (EDI 820)
Requests for Routing Instructions (EDI 753)
Routing Instructions (EDI 754)
Organizational Relationships (EDI 816)
Planning Schedules with Release Capability (EDI 830)
Shipping schedule (EDI 862)
Price Information (EDI 879)
Product Activity Data (EDI 852)
Warehouse shipping order (EDI 940)
Warehouse inventory Adjustment Advice (EDI 947)
In addition to the EDI documents listed here, there may be many more EDI documents that can be
utilized in a variety of contexts to simplify supply chain operations. For more information, please take a
look at https://en.wikipedia.org/wiki/X12_Document_List.
EDI Modernization:
– Order Management
– Inventory Management
– Transportation Management
– Report Management
– Financial Management
– Warehouse Management
Supply Chain Management (SCM): How Does Modern EDI Integration Help?
The following are some of the benefits that can be gained through modernizing EDI to assist with supply
chain management.
Real-time Document Exchange
Trading partners can communicate information and carry out transactions in real-time, which removes
the need for extraneous, time-consuming, and error-prone procedures.
Cost-Effective and Time-Saving
Trading partners are able to avoid time-consuming, resource-intensive operations and save their
operational expenses by automating the transfer of data along the supply chain. The implementation of
EDI speeds up activities throughout the supply chain, such as ordering and purchasing, freeing up staff to
focus on other important business responsibilities.
As opposed to a paper-driven process, using EDI typically results in a transaction being completed in a
matter of seconds, whereas using the traditional method could take up to an hour or longer to accomplish the same operation.
Real-time Updates Make Sure to Control Inventory at Its Peak
EDI has earned a well-deserved reputation for its ability to assist businesses in maintaining ideal inventory
levels. This enables businesses to not only satisfy current demand but also optimize their stock levels for
the future. Businesses can utilize the most recent information to establish benchmarks and alerts that
promote effective resource allocation and prevent shortages or excess inventory concerns. This is made
possible by having access to real-time data, which strengthens their position.
More customer satisfaction
Using EDI to streamline partner interactions leads to quicker product fulfillment, better order accuracy,
and fewer instances of out-of-stock situations. Shorter sales cycles, faster order confirmation, and
increased consumer faith in your capacity to consistently provide outstanding service are just a few
examples.
Gaining an Edge in Competition
Using EDI is a smart move for establishing a competitive edge in today’s cutthroat marketplaces because
it offers significant time and money savings as well as improved inventory management and partner
relationships.
EDI with Supply Chain: What’s next?
Since its inception, the EDI has undergone significant development. What began as a straightforward
method for electronically exchanging purchase orders has since developed into a robust, multi-functional
technology that automates and enhances practically every area of the supply chain. EDI will continue to
play a crucial role in supply chain operations and will continue to adapt to meet the shifting demands of
the market in order to meet the growing demand for flexibility and resiliency in the supply chain.
The utilization of modernized B2B integration capabilities in conjunction with disruptive technologies and
solutions such as application programming interfaces (APIs), the Internet of Things (IoT), blockchain, and
artificial intelligence (AI), in order to deliver innovative levels of multi-partner supply chain collaboration,
is likely to be the EDI outcome that will have the greatest impact in the near future.
The evolution of EDI formats is occurring in tandem with the emergence of government mandates and
industry efforts. Latest Pan European Public Procurement Online (Peppol) standard to enable cross-border
business to government eProcurement or requirements for e-invoicing continue to evolve as more tax
administrations demand real-time access and approval of invoices and as new laws on invoice data
retention, integrity, and authenticity become more prevalent in various geographic regions.
As the technologies of integration mature, you can anticipate greater widespread adoption as well as
innovation across a wider range of industries and geographical locations.