EDI technology in logistics has established itself as a solution capable of promoting fluid and standard communication between all the players working in the supply chain: suppliers and transport agencies that distribute orders. This article looks at how EDI got into logistics and what benefits the incorporation of this technology into the supply chain brings.
What Is EDI?
The first definition of EDI (English acronym for Electronic Data Interchange ) refers to the technology used for the electronic exchange of documents between companies through a standard format. In EDI transactions, with which the business of paper documents is eliminated, information is transferred encoded in a common form from one company’s software to another, avoiding possible reading errors or loss of data.
In 1968, the Transportation Data Coordination Committee (better known by its shortening in English TDCC) was made to foster guidelines in the business. The TDCC coordinated message organizations, codes, and correspondence conventions. In 1975, he distributed the primary documentation on EDI frameworks. Like this, this strategy for correspondence was taken on in areas, for example, the car one to guarantee the without a moment to spare stock of unrefined components to the creation lines, or the monetary one, to work on bank moves.
It has also arrived at the medical services area, where it is vital to ensure clinical supplies to medical clinics and the drug business to accomplish productive correspondence between labs. The spread of the EDI framework in an ever-increasing number of organizations and nations depends on principles that ensure that messages can be sent, comprehended, and perceived by any conversationalist.
The Use Of The EDI System In Logistics
The utilization of EDI in strategies has standardized the need to accelerate data streams and direct every one of the players working in the production network. In the inventory network, EDI satisfies a few capacities. From one perspective, it permits providers to impart the things they will get in the distribution center to organizations.
Then again, it assists organizations with sharing the orders they should convey to move offices. To do this, organizations produce the supposed Advanced Shipping Notice (ANSI X12 EDI 856), an electronic archive that remembers nitty-gritty data for the substance of the shipment.
Advantages And Disadvantages Of EDI In The Supply Chain
Incorporating EDI technology into logistics brings the following benefits:
- Agility and safety. It ensures a secure exchange of information between all the players that make up the supply chain. By digitizing data exchange, companies save time and eliminate costs and possible errors resulting from manual information management.
- Efficient communication. It uses a format shared by the sender and the receiver, which simplifies the electronic data exchange. Thanks to standardization, technical barriers are overcome. Also, avoid manually checking information as data flows between applications.
- Information in real-time. Activate an instant information exchange between different companies. In this way, for example, the warehouse Manager can know, in advance, which items his suppliers will send him to plan the operational cycles of the warehouse.
- Simplicity in administrative practices. It allows precise management of delivery notes and invoices, reducing administrative costs. In this way, it is possible to check whether the items received coincide with those that the suppliers had communicated in the warehouse.
- They scheduled operating cycles. With a fluid flow of information, the actors that make up the supply chain can better plan their operating processes. For example, suppliers can organize raw materials according to the volume of work in the production lines.
- Improvement of business relations. Businesses don’t need to interpret the information they receive, so invoice and purchase order management is done more quickly.
Despite this, this technology also has some disadvantages:
- Initial investment. Digitizing the exchange of information, relying on a value-added network and software to encode and send data, requires an initial investment that can cause some reticence.
- Adaptation is necessary. Companies that exchange data with the EDI system must have specific requirements. Furthermore, the EDI system is currently not flexible to cope with market changes.
EDI In Logistics: Optimization Of Information Flows
The electronic trade of information works with powerful correspondence between every one of the entertainers that make up the inventory network, the construction of which can be mind-boggling, joining altogether different working cycles. With EDI in operations, arranging all processes to accomplish better productivity is feasible. Digitization has turned into a partner of distribution centers since it assists organizations with controlling cycles and accomplishing precise discernibility of items.
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