The Pros’ of EDI


How does EDI reduce cost and increase Profits?

Shared Forecast

 

right_arrow

Inventory Turns Increase right_arrow

Lowered Costs!

Transaction Automation right_arrow Reduce Labor right_arrow

Lowered Costs!

Automated Systems Integration right_arrow Fewer errors, rework, less paper right_arrow

Lowered Costs!

Electronic Payments (EFT) right_arrow Increased Cash-Flow right_arrow

Lowered Costs!

Shared Sales & Inventory Data right_arrow Improved Product Availability right_arrow

Increased Sales!

Integration and automated data transfer right_arrow Improved Access to Quality Information right_arrow

Increased Sales!

Transaction Automation right_arrow People add value right_arrow

Increased Sales!


Definition of EDI

Electronic Data Interchange means for companies to exchange business documents, such as purchase orders, ship notofications, invoices and many other.

EDI eliminates the need for sending paper documents through traditional means — including mail, faxes or e-mail — it is a major contributor to creating a “paperless” office environment.

EDI messages adhere to a set of rules and regulations governing the flow of electronic data, known as “protocols.” The use of standardized data formats allows computers to exchange various business documents without companies needing to customize their hardware or software system.

EDI can be formally defined as ‘The transfer of structured data, by agreed message standards, from one computer system to another without human intervention’.

EDI standards were designed to be independent of communication and software technologies. EDI can be transmitted using any methodology agreed to by the sender and recipient.

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There are four major sets of EDI standards:

Today, EDI is used by a large number of businesses. EDI has a number of benefits. Cost is one of the main benefits. Processing one paper based order usually costs between US$ 50.00 and US$80.00, depending on the complexity of the order, where as processing the same EDI based order will cost less than $2.00.

Another benefit is time. A paper order can take up to 2 weeks from the time it is issued by the purchasing entity, send to the vendor and entered into the vendors system and shipped. The same order can now being processed in less than a day. This in return will allow to keep more efficient stock levels, better use of warehouse space which in return means reduced warehousing cost and improved cash flow.

EDI BENEFITS

► Speed

► Accuracy

► Simplicity

► Security

► Faster sell-buy cycle time

► Improved Cash Flow

► Reduced Order Lead Time

► Reduced Inventories

► Ability to have Just-In-Time (JIT) Production Runs

► Improved Customer – Vendor relationships

Common EDI Transactions Within The Retail Industry

Most common EDI Transactions within the retail industry

ANSI-X12

EDIFACT Transaction Name

Transaction Description

212 Motor Carrier Delivery Trailer Manifest This transaction set can be used to allow motor carriers to provide consignees or other interested parties with the contents of a trailer, containing multiple shipments, that has been tendered for delivery. It is not to be used to provide the recipient with data relative to a full truckload shipment.
214 Transportation Carrier Shipment Status Message This transaction set can be used by a transportation carrier to provide shippers, consignees, and their agents with the status of shipments in terms of dates, times, locations, route, identifying numbers, and conveyance.
810 INVOIC Invoice The transaction set can be used to provide for customary and established business and industry practice relative to the billing for goods and services provided.
812 CREADV DEBADV Credit/Debit Adjustment The transaction set can be used to notify a trading partner of an adjustment or billback and may be used to request an adjustment or billback. It identifies and contains the details and amounts covering exceptions, adjustments, credits, or debits for goods or services.Often has variations for LTL (less than truck load, FTL (full truck load) and SP (small package).
820 REMADV Payment Order/Remittance Advice The transaction set can be used to make a payment, send a remittance advice, or make a payment and send a remittance advice. This transaction set can be an order to a financial institution to make a payment to a payee. It can also be a remittance advice identifying the detail needed to perform cash application to the payee’s accounts receivable system. The remittance advice can go directly from payer to payee, through a financial institution, or through a third party agent.
824 Application Advice Used to notify trading partner of transaction errors.
846 INVRPT Inventory Inquiry/Advice Used to notify a trading partner of on hand inventory.
850 ORDERS Purchase Order The transaction set can be used to provide for customary and established business and industry practice relative to the placement of purchase orders for goods and services.
852 Product Activity Data The transaction set can be used to advise a trading partner of inventory, sales, and other product activity information.
855 ORDRSP Purchase Order Acknowledgement The transaction set can be used to provide for customary and established business and industry practice relative to a seller’s acknowledgment of a buyer’s purchase order.
856 DESADV Advanced Ship Notice The transaction set can be used to list the contents of a shipment of goods as well as additional information relating to the shipment, such as order information, product description, physical characteristics, type of packaging, marking, carrier information, and configuration of goods within the transportation equipment. The transaction set enables the sender to describe the contents and configuration of a shipment in various levels of detail and provides an ordered flexibility to convey information.
860 ORDERCHG Purchase Order Change Request This transaction can be used: (1) by a buyer to request a change to a previously submitted purchase order or (2) by a buyer to confirm acceptance of a purchase order change initiated by the seller or by mutual agreement of the two parties.
864 Text Message The transaction set’s purpose is to provide communication to the recipient in some human-readable form. The recipient’s network will dictate what capabilities are available for delivery of the information.

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