By Hiten Shah & Anjana S
In the quest to achieve a paperless society, Electronic Data Interchange (EDI) has long been a leading technology. It predates the emergence of Internet and now a chief electronic network connecting just about every business to every other. Earliest used of EDI were internal to companies, used private networks, and enabled a multi-location company to use a common accounting system regardless of location. Also, heavily deployed to track parts of inventories within a business.
Electronic Data Interchange (EDI), is the inter-organizational exchange of business documents in a pre-defined structured format. EDI permits trading partners to generate, receive, and process data with little or no human intervention. With EDI, standard business documents that were previously sent on paper through the mail can be transmitted instantaneously using telecommunication capabilities.
EDI provides a faster, more accurate, and less costly method of communication with customers compared to other methods, such as mail, telephone, and personal delivery. The nature of EDI is to follow a rigid security and data management protocol, while at the same time being flexible, in order to pertain to multiple business models.
EDI is a mixture of three distinct disciplines:
The marriage of these disciplines allows for the "paperless trading" that comprises EDI technologies. The driving force behind EDI is efficiency made possible by avoiding the handling and rekeying of data on paper.
By moving from a paper-based exchange of business document to one that is electronic, businesses have major benefits such as:
As shippers, carriers, and brokers all aim to integrate and exchange information as fast as possible, EDI has been a requirement in Transportation and Industry. Transportation companies who are EDI compliant can communicate seamlessly and electronically with all parties in the supply chain process.
With EDI, routine high volume communications can be automated allowing dispatchers and accounts receivables staff more time to focus on more productive/profitable tasks and provide clients with better customer service. EDI eliminates a dispatcher from having to manually key information into the dispatch operational and billing system, which results in saving time and money while eliminating any costly data entry mistakes.
Companies can use EDI to integrate with various transportation management systems or direct carrier systems to tender and re-tender loads, transmit and receive appointment time and status.
EDI provides direct electronic communication between shipper and 3PL computer systems using national and international telecommunication networks and requires agreements between trading partners. The communication is typically done through a VAN (Value Added Network) using international EDI standards such as the American National Standard Institution (ANSI) or EDI for Administration, Commerce and Transport (EDIFACT).
3PL providers use EDI to send invoices, bills of lading, confirmations of dispatch, shipping details and any other information that linked organizations choose to exchange. It provides highly accurate and timely information about customers' logistics creating business efficiencies by not needing staff to manually collate information.
An overlooked part of running an efficient logistics supply chain is not just the physical movement of product, but how the related data is managed as well. Using this data to your advantage is a smart, quick way to solve many common logistics problems —and EDI is the best mechanism for managing the logistics data in your network.
In our next white paper you will learn more about —
Problems of Implementing EDI and how to overcome them