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Jul 05

The efficiency of information flows in the supply chain – EDI

supply chain ediHaving multiple formats and systems can be problematic to the data flows required within the supply chain. These problems constitute a barrier to the flow of information in the chain. Having an effective supply chain requires bi-lateral data flows throughout the omni-channel, such as using EDI. Understanding the need to increase confidence among business partners in the supply chain and a wider sharing of important information between all parties is a common goal. In order to remove the barriers to the flow of information, it is important to:

  • Implement standards for reading, writing, recording, and information flow
  • Use bar codes as an effective carrier of information
  • Implement carriers
  • Use both stationary and mobile devices to identify and enable the flow of information
  • Record both the data input and output of each process
  • Use systems designed to communicate with each other

In a complex supply chain, where the information flow is not working as it should, you will encounter many risks. The most common are delays in deliveries (where the supplier does not respond quickly enough to changes in demand) and the occurrence of either excessive stock or out of stock situations.

Discussing issues related to the supervision of information, it is impossible not to mention the automation and standardization of information flows. A Supply Chain Management (SCM) system can become more flexible, if it is structured in such a way that the information is transmitted in parallel to all the participants in the marketplace. The data can be collected and processed by every party in the supply chain.

EDI (Electronic Data Interchange) is the best solution to ensure automation and data standardization throughout the supply chain. The implementation of the ERP system in the enterprise organizes communication within the company, but only electronic data interchange allows you to connect to separate trading partner’s systems. EDI is not limited to automatically generating sales orders or invoices, but by using EDI technology businesses can benefit from a whole host of scenarios, which, in old traditional communication models were practically impossible. The introduction of EDI to the supply chain reduces costs as well as speeding up the flow of information between the various trading partners involved in the chain. Introducing EDI to your company is an investment that is cost effective, faster and less risky than the implementation of the ERP system.

On a global scale EDI has become very popular due to acknowledged benefits such as the savings associated with the elimination of the manual preparation of invoices and other documents. It also helps to avoid carrying excessive stocks and the ability to create network connections between the headquarters and warehouses of a company.

As already mentioned, the implementation of EDI is not very expensive compared to the implementation of an ERP system, but maintenance and service has already attracted considerable costs that most companies are not able to bear. Cooperating companies in the supply chain, however, have the possibility to outsource their EDI needs to a 3rd party provider. This can significantly reduce the costs associated with maintaining the system and reduce the risk of data loss.

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