August 29, 2007

The Benefits of EDI

Unfortunately, some companies may view EDI as a nuisance or as one more necessity for doing business. Their view quickly shifts when they gain a better understanding of EDI and its benefits. Instead of viewing EDI as an expense, they learn to see EDI as a cost saving business development tool. With new technology and new approaches to how EDI is conducted, the cost and the time that once hindered companies have been greatly reduced.

Web based EDI systems are designed to help small to medium size businesses advance into the ever changing world of EDI.

Accuracy: EDI data is received exactly as transmitted, so you eliminate re-keying errors. As a result, you will have fewer product returns, lost orders, backorders, and credit/debit memos.

Traditionally, the manufacturing, and sale of new products and services involves a long paper trail from start to finish. Each step usually involves some sort of data entry to make the whole system match up along the way. EDI simplifies this process and makes it possible to accomplish the following:

• One-time data entry

• Reduced errors

• On-line data storage

• Faster management reporting

• Automatic reconciliation

Informed Decision Making: More accurate information leads to improved decision making procedures.

Competitive Advantage: If you are able to receive point of sales data allowing you to keep the shelves stocked while saving transaction costs for your customer, you will have a competitive advantage over non-EDI competitors. This helps build long term relationships with your customers.

Customer Service: Responding to customer needs is the key to continued long term customer relationships. EDI insures that information is accurate and readily available for maintaining a high level of service within a competitive market place.

EDI saves a lot of time and time is money. Without EDI unnecessary amounts of time are consumed in order to complete the necessary paperwork to process a specific transaction. In our fast paced world, we often overlook this fact until it’s too late…we need to allow time for the document to get from our hands to the appropriate person or department. Otherwise, customer service is jeopardized.

EDI transactions are faster, more efficient and accurate. EDI enables us to process business data up to the last minute because it is processed instantaneously through electronic transmissions. The data is transmitted in an electronic format that allows for uniform communications with all your trading partners, including customers, suppliers, carriers, and financial institutions.

Enhanced Partnership: Once you become EDI compliant, even if it may have been reluctantly induced through pressure or urging from your customers, you are the real winner in this win-win situation. EDI makes doing business with your company easier and more cost effective. This will advance you from being merely a vendor to a full business partnership where both sides work together for mutual profitability. This enhanced partnership will bring about the following:

• A reduction in deductions and credits for mistakes

• An improvement in the number of quality purchase orders

• Hours saved in paper administration and data keying

• An improvement in the speed to retail of new items, price change and promotions

• Major improvements in retail scanning accuracy

Improved Cash Flow: EDI allows you to instantly turn over invoices on purchase orders and immediately begin transmitting electronic funds transfers (EFTs) to your account. This will greatly reduce your turnaround on outstanding account receivables.

Inventory Control: EDI will decrease the cost of storing inventory because it reduces the lead-time necessary to process an order. As EDI is further integrated into the organization, you will be able to move towards a Just in Time (JIT) environment.

Labor Cost Reduction: Data entry, manual reviews and reconciliations, sorting, copying, filing documents and, most importantly, errors are significantly reduced by limiting the number of person hours involved in processing an order from bid request to invoicing.

Responsiveness: Integration of EDI with point of sale information allows you to respond more quickly to immediate changes in market conditions.

Paper and Postage: Since transactions are completed electronically, EDI will eliminate the expense of paper, envelopes, preprinted forms and postage.

Shipping: EDI communicates with bar codes that allows for tight tracking of inventory. This eliminates isolated or small shipments which could be more efficiently shipped with other parts of the order. EDI provides quick and accurate information. Better shipment planning, through a well designed EDI system, saves you time and money.

Streamlined Processes: With EDI, information is shared, human intervention is reduced, customer response is increased, and you gain the ability to respond to the market fluctuations almost instantaneously.