Electronic Data Interchange- Making life easier!

Communication in Supply Chain

Organizations, today, maintain relationships with numerous other organizations as suppliers, customers, service providers, channel partners etc. and communication plays a pivotal role in growth and sustenance of any organization.

Organizations may be at any level of the supply chain and perhaps can be part of many supply chains, seamless and efficient information flow remains a challenge for all and slowly but surely organizations are realizing and waking up to impact of communication in this fast paced world.

Organization deal in number of products and most of the times, each product require number of raw materials which increases the complexity of the supply chain.

With the advent of ERP systems, organizations have been able to achieve seamless information flow within the organization but communication with external parties largely remains a grey area. This challenge is mainly due to different organizations using different legacy systems for their internal information needs.

Question that arises is whether it is possible to integrate the internal and external systems in such a way that it becomes easy to interact with partners and customers?

In other words, is it possible that we release purchase orders from our ERP systems and it is readily accepted by the legacy system of our supplier i.e. no need to manually feed the data in their legacy system from our POs? Similarly, is it possible that we receive invoice from the suppliers in their format and it is readily accepted by our ERP system?

The types and level of integration determines the extent to which data from customers and suppliers are visible and usable.

Standardization, exchanges of information and decisions and synergies will be byproduct of the integration between internal and external IT systems.

EDI:  Electronic data interchange is a set of standards that collectively provide a common protocol or syntax for transacting business documents electronically.

Just as a group of individuals with diverse backgrounds can use a common language (such as English) to converse with each other, EDI provides a common “language” that enables businesses with dissimilar computer-based business systems to communicate with each other.

 EDI is not a standard but has myriad variations and versions. In this regard EDI is much like English with its many regional dialects and colloquialisms.

Companies that are EDI enabled can send and receive business documents electronically with their trading partners. In simple terms, EDI enables the computer system of one company to “talk” to the computer system of another company and digitally exchange data.

Without the use of EDI, companies either mail or fax to exchange information. In this scenario, a company enters data in the system, prints it and mails/faxes it to the trading partner (customer or vendor). Then, trading partner after receiving the document must then feed the data into their applications. Waiting time and errors results in inefficiency in the way organizations operate. This inefficiency may be linked to the revenue loss, added expenditures, delays and damage to the reputation of organizations.

This system involves your data to be translated /coded into a transactional language which can then be transmitted to the trading partner via internet or some dedicated data network. These translated documents can then be readily accepted by the trading partner’s system. It is supported by syntax or protocols which are shared with the trading partners before transmitting the data. It is akin to providing the specifications of the material you are going to deliver to your partners.

Well, times will surely bring such innovations in the industry which will change the life of people for better.