Electronic Data Interchange (EDI) systems can massively simplify the order management process. However, they also require a system capable of processing and analysing a far greater data load than other applications. To work successfully with an EDI, an order management platform must have a framework in place to successfully capture order data, extract relevant information and deliver it to the right departments.
What Is An EDI?
An EDI is essentially a document exchange system that cuts most of the steps out of procurement. Traditional purchasing looks something like this:
- Buyer creates purchase order
- Buyer sends purchase order to supplier via fax or email
- Supplier receives purchase order and enters details into their system
- Supplier generates invoice
- Supplier sends invoice to buyer through fax, post or email
- Buyer enters invoice information into their accounting system
This is a lengthy process with a hefty paper trail and plenty of scope for human error. With Electronic Data Interchange all human involvement is removed. The buyer’s computer system and the supplier’s computer system communicate directly to issue purchase orders and receive invoices.
Lost In Translation
Unfortunately, many commercial order management systems lack the capacity to process EDI data effectively. This is because EDI systems rely on a handful of standard file formats, including EDIFACT, TRADACOMS, ebXML and others. Within each file type are different versions, such as ANSI 5010, which are updated on a regular basis. For EDI to work, both the buyer’s and supplier’s system must use the same standard format. If not, either or both partner must utilise an EDI translator – usually a third party application or a specific business service. Legacy order management systems are simply not dynamic enough to adapt to different EDI file formats.
Needless to say, this presents a barrier to EDI use in many supply relationships, with the result that most businesses depend on manual processes to capture these orders.
This is an inefficient use of time and can easily create order backlogs. It also opens up the order process to omissions and errors, especially when staff are working under high pressure during busy order periods.
EDI Compatible Software
Fortunately, a number of software applications do allow automated integration of EDI orders, even between companies that use varying file formats and versions. This includes our modular Prodigy Software System, which captures EDI receipts and automatically translates the order without the problems inherent in manual handling.
There are three main advantages of working with EDI receipts that can give your business a competitive advantage:
1) Reduced order costs: Orders can be received and invoices issued in a fraction of the time needed for manual input, boosting output and saving employee time.
2) Improved accuracy: With little to no human input needed, purchase orders are far more accurate, reducing the problem of waste and incorrect orders.
3) Higher Efficacy: With higher throughput comes the potential to redeploy staff resources and IT assets to other functions, reducing your dependence on paper documents and allow you to streamline other parts of your supply chain.
Find Out More
To find out more about how to incorporate EDI data streams into your order management strategy, please download our free e-book: Achieving Growth, Productivity & Profitability In The Food Services Industry by clicking here.