EDI provides many benefits to businesses that choose to implement this technology. One of the foremost reasons businesses choose EDI is for the significant cost savings. Costs throughout the organization, not just in one area, can be reduced by simply switching to EDI. EDI is the transmission of online data which includes invoices, advance shipping notices (ASNs) and purchase orders between two or more organizations without human intervention or manual data entry. The process of transferring these types of data can be done in 4 easy steps using EDI. The process begins with the document being prepared in the agreed upon format, then is translated into EDI format and transmitted to the trading partner. Once received, the trading partner will transfer the EDI data back into a usable format. This is all done automatically by your established EDI network.
There are seven major areas where the implementation of EDI has proved to be a strong cost savings tool. These areas include:
Chargebacks – Chargebacks are fees that a supplier receives from their customer for instances such as damage to inventory, late shipments or partial shipments and much more. Using EDI to automatically transfer data reduces data entry errors which, in many cases, cause these types of errors.
Advance Shipping Notices (ASNs) – ASNs significantly reduce processing time which reduces costs related to labor.
Financial transactions – Transmitting payments and invoices via EDI has the potential to reduce the cost of a financial transaction by up to 90%. This could result in an average yearly saving of $117,000.00.
Order processing – Implementing EDI can reduce order-to-shipment time by up to 50%. This will increase customer satisfaction and further reduce processing costs as man hours are reduced.
Transaction costs – The use of paper will also be reduced after implementing EDI because paper-based documents will no longer need to be generated, reducing costs such as paper, ink, filing, postage and document retrieval.
Error correction – Hours spent searching for lost inventory or manually searching for and correcting errors within your database will be reduced as the data transmitted within the EDI files will transfer automatically to the proper fields, eliminating manual entry where errors occur.
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