Then it's time to rethink your EDI strategy

Inefficiencies within supply chains and wider trading networks are the silent killers of the business world. Left unchecked these inefficiencies can stifle growth, undermine trading partnerships and quietly sap profits.

At a time when trading networks are stressed like never before, it’s important to leave no stone unturned addressing these inefficiencies.

SMEs that have invested in solutions such as electronic data interchange (EDI) are able to leverage rich data insights. These insights can reveal process bottlenecks and challenges and often provide the solution, giving companies equipped with EDI a significant competitive advantage over their peers.

In simple terms, an EDI solution enables trading partners’ computer systems to automatically exchange standardised documents electronically. Compared to conventional labour-intensive and error-prone paper and email-based systems, EDI software is more efficient in a number of ways. For example, EDI-powered processes are cheaper, faster, more accurate at processing and sharing critical information across your entire trading network, giving you greater control of your wider operations.

Efficiencies delivered by EDI

To fully appreciate the efficiencies that EDI can deliver, we look at the challenges faced by Stephan (a typical Transalis customer), when he started his new role as financial director with a medium-sized retail brand.

Stephan’s trading partners were a complex mix of online retailers, manufacturers and distributors. However, his company lacked real-time visibility across its trading network, and this was causing real problems.

Without real-time data provided by EDI, Stephan’s warehouse colleagues were routinely struggling to reconcile orders with the emailed advanced shipping notices (ASNs) as they arrived on premises. Often his warehouse staff were totally unaware shipments were inbound, let alone what they contained.

When shipments did arrive, staff had to find the correct emailed ASNs and invoices, before manually reconciling and checking them off against received goods. This proved to be a very time-consuming and error-prone process.

The task of accepting goods from one large truck took between one and three hours for the warehouse team to complete. And with multiple deliveries every day, labour costs were unacceptably high as time was being routinely wasted. Additional staff and warehouse capacity also had to be on standby because the warehouse manager didn’t always know when a new delivery was due to arrive.

Real-time visibility transforms warehouse operations

Compare this confused situation with the efficient regime made possible by cloud-based EDI. Thanks to EDI, real-time visibility across Stephan’s trading network now means he and his colleagues are fully aware of what deliveries are expected, when, their contents, location and their current status. This is because EDI automatically sends and receives all transactional documents in a safe, fast and fluid manner. These documents include ASNs, invoices, purchase orders and remittance advices, to name but a few.

Thanks to EDI real-time visibility, Stephan’s warehouse is now enjoying unprecedented levels of efficiency. The optimum number of staff are on duty when they are needed to process in-bound shipments. This process takes minutes rather than hours for each truck. No extra warehouse capacity is required and stock can be safely stored in the right environment just minutes after its arrival onsite.

Due to the fact that Stephan’s colleagues have accurate oversight of what stock is due to arrive and when, his company has also been able to optimise its inventory levels. It uses real-time updates to set up benchmarks and alerts to promote optimal resource allocation and prevent shortages or excess stock issues.

EDI overcomes disconnected systems

Disconnected systems are another major source of inefficiency, leading to problems such as wasted time and money, human input error and low-confidence data.

Supply chain EDI, however, can connect a wide range of systems including enterprise resource management, process control and warehouse, transport and category management.

Suzi is an operations director for a medium-size online retailer. Her challenge was that she had multiple disconnected supply chain systems. This meant every volume or delivery-time change request had to be processed using at least three different systems, simply to confirm the request and align with a supplier’s internal systems.

Each of these stages added far more complexity and inefficiencies to the process than was necessary, increased opportunities for human error to creep in, as well as taking longer and costing more in unnecessary resource.

The implementation of an EDI solution helped Suzi streamline her company’s workflows overnight. Volume and delivery-time changes are now accurately and swiftly duplicated across multiple systems automatically. Request and response messages are sent and received digitally through the EDI solution with minimal human intervention.

EDI reduces human intervention improves efficiency

As these two examples show, EDI reduces human intervention in supply chain processes. This leads to a reduction in labour costs and the opportunity to redeploy staff to more value-added activities. Electronic data interchange also leads to shorter processing and delivery times and this can help make a ‘lean’ or ‘just-in-time’ supply chain model possible.

EDI, in itself, does not necessarily speed up the order-to-cash cycle. It does, however, effectively expedite the admin involved to make the payment process faster and more efficient. EDI also greatly increases order accuracy, ensuring documents are right first time, every time, triggering fewer stock-outs and cancelled orders.

When it comes to increasing trading network agility, EDI makes it quick and efficient to onboard new trading partners. SMEs can hone their supplier networks to ensure they have just the right number of trading partners spread across the right geographic areas to optimise network efficiency. This flexibility also ensures SMEs have the flexibility to avoid efficiency-sapping supply-chain bottlenecks, which is especially important during the kind of disruption we’ve experienced during the pandemic.

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