EDI was a technology developed over 30 years ago, but the usefulness was not discovered by supply chain and logistics businesses until much later. Communicating with customers and suppliers via fax and mail was cumbersome and riddled with errors from inaccurate manual data entry. These errors resulted in significant chargeback fees, making it difficult for many supply chain businesses to remain profitable. Warehouse operators have discovered the usefulness of EDI communication and it has now become an industry standard.
EDI or electronic data interchange is a communication method that provides a variety of standards for exchanging data via electronic means. Both the sender and the recipient must use the same standard set for the communication to be successful. This method has become the top choice of many supply chain businesses because it reduces the human intervention needed to create and send documentation, reducing errors as well.
EDI can be transmitted either peer to peer (directly from sender to recipient) or via a VAN (value added network) where a 3rd party receives the data, translates it and sends it along to the final recipient. Both methods are equivalent in their capabilities.
When transmitting documents specific document components must be included. These vary based on document type and standard set being used. There are many standard types, but the most popular for the supply chain industry is the ANSI ASC X12. This standard alone has 275+ transaction sets available.
There are five simple steps to completing an EDI transaction: 1. Create the original document 2. Send document using specified file type 3. Document is read by system to determine recipient 4. Document is translated and reformatted to make file readable for recipient 5. Final document is received and entered automatically into WMS of data management system. All of this is completed with little to no human intervention.
Before considering implementing EDI do your due diligence. Determine how your operation will use EDI and who should be liable for any errors and/or issues. Generating a detailed trading partner agreement to be signed by both parties helps to protect both businesses in the case of any problem or dispute and outlines how various scenarios will be handled.
If your business would like to improve data availability, increase response rates, increase daily activity volume and much more contact Datex EDI experts today to learn more. www.datexcorp.com firstname.lastname@example.org or 800.933.2839 ext 243.
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