Written by Act Data Services, Inc. 1-800-ACT-DATA
EDI, also known as Electronic Data Interchange is the fabric that connects many organizations’ disparate systems together. Using EDI, an organization can automatically place orders with another, even though they might have incompatible systems. Here are the main benefits of the system:
The cost savings from using EDI are massive. Take paper based ordering for example. In a standard process orders will need to be cleared and then printed out. This purchase order will then need to be mailed to the supplier. The duplicate copies will then need to be filed and stored for later reference. The supplier will then receive the paper order and respond in kind with confirmation. This entire process can consume as much of 35% as administrative overhead.
Another benefit is accuracy. When people work directly to send orders etc, there is always the chance of human error. Even a single error can have consequences from costs to delays. In an EDI based system, orders can be automated to avoid any chance of human error. This applies to both sides of the system, for the organization placing the order and the supplier. How many vendors are supported will depend on the edi provider.
The improvement in speed with EDI is massive. Normal transactions which would have taken hours, or even days if posting was involved now take seconds and to edi internet. This increase in speed and responsiveness will lead to less stocks as orders can now be placed automatically when certain levels are reached.
Act Data is an electronic data interchange solutions provider for retail and supplier environments.