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The Datacor Blog

How EDI in Manufacturing Accelerates Growth & Simplifies Workflows

October 17, 2024 by Jinelle Cioffi

In an increasingly automated world where process manufacturers are dealing with large volumes of digital transactions, more and more companies are relying on electronic data interchange (EDI).

If you already have any large Fortune 500 companies among your customer base, chances are they have asked whether you’re EDI-ready. For many, it’s a prerequisite for doing business.

What is Electronic Data Interchange (EDI)?

EDI is an established communication technology that was developed several decades ago to assist and simplify information sharing between businesses.

Predating email, it’s become a trusted electronic format that’s widely used to quickly share digitized documentation such as purchase orders, invoices, and shipping notices back and forth between customers and their suppliers. Not only does it replace paperwork, minimize human error, and save considerable amounts of time, but it also helps companies deal with large volumes of documentation quickly, securely, and simply.

There are essentially two forms of EDI – Web EDI and Integrated EDI. For those relying on traditional Web EDI, users will likely be alerted when a customer sends a document and then they’ll need to log in to Web EDI portal to download the file before manually inputting all that information into their ERP software and vice versa. For companies that potentially receive hundreds of documents a day, this can be extremely labor intensive and prone to errors. Integrated EDI automates the entire process by tying your EDI system directly into your ERP.

Whereas a smaller business may be able to manage relationships with its limited number of customers via email or physical paperwork fairly easily on a day-to-day basis, it’s just not feasible for a large business with thousands of suppliers to communicate with them individually in the same way. EDI is often used by many Fortune 500 companies that need to communicate with their suppliers in a scaled manner. Some larger firms stipulate that EDI is a requirement for suppliers to be considered.

Types of EDI Transactions

EDI Document Number Transaction Name Description
Sales Order Transactions
810 Invoice Provides the invoice for the goods shipped.
820 Payment Order/Remittance Advice Indicates payment or provides remittance information.
830 Planning Schedule with Release Capability Provides long-range material forecast or planning information.
840 Request for Quotation Request for quotation for goods or services.
843 Response to Request for Quotation Response to a request for quotation.
850 Purchase Order Contains the purchase order for goods.
855 Purchase Order Acknowledgement Confirmation of a purchase order.
856 Ship Notice/Manifest Describes detailed shipment contents and configuration.
860 Purchase Order Change Request Request to change the purchase order details.
865 Purchase Order Change Acknowledgement Confirmation of a purchase order change.
Warehouse Transactions
940 Warehouse Shipping Order Request for shipment of goods from a warehouse.
945 Warehouse Shipping Advice Confirmation of a warehouse shipment.
943 Warehouse Stock Transfer Shipment Advice Information about a warehouse stock transfer shipment
944 Warehouse Stock Transfer Receipt Advice Confirmation of a warehouse stock transfer receipt.

 

Simplifying Workflows

There are two elements to Integrated EDI: the first relates to the transmission of the documents back and forth, via the Value-Added Network (VAN), while the other manages the data processing between trading partners and transforms it into the correct format, ready for the ERP. Most companies typically have to manage these different elements through separate third-party vendors.

In response to growing demand for this type of service, Datacor decided to develop our own powerful Integrated EDI platform to simplify the process for our customers, making it far easier to establish those connections, configure the setup, and access data – without the high costs and involvement of multiple vendors, all while native to the ERP.

Integrating EDI into workflows is notoriously complex. Even though the data is transferred in a standardized format, each company uses EDI differently, so a bespoke solution is usually required. Datacor has developed this turnkey solution to seamlessly process the received data and convert it from the ANSI X12 format so it can then be read by our ERP.

We’ve had a fantastic response since the module’s launch four years ago, and our technical team is continuously looking to enhance and evolve the system and make it even more user friendly.

There are countless benefits to using an integrated EDI solution, including:

  • Time savings. Manually inputting data can be extremely labor intensive, while digitally transferring documents significantly reduces the likelihood of mistakes and human error. You're at a massive disadvantage if you don't use Integrated EDI, especially if you're dealing with high-volume customers. 
  • Greater efficiency. Integrated EDI automates processes and eliminates paperwork. It simplifies communication and reduces reliance on traditional methods such as email, fax, and phone.
  • Cost savings. With Integrated EDI, it’s far quicker to process files and there’s less room for error, thereby streamlining processes and improving workflows. Teams can therefore better use their time working on other highly skilled tasks.
  • Compliance and With Integrated EDI, all documentation has a digital footprint and is logged and stored, which offers greater transparency and traceability. Digitalization also makes it simple to share information amongst teams and keep customers better informed on progress with an order or shipment.
  • Data capture. Being able to capture, store, and analyze information about transactions allows users to make more informed decisions, assess performance, and make the necessary adjustments if needed.
  • Avenues for growth. Once you're set up with Integrated EDI, you can proactively go after new business with larger companies that you couldn’t have pursued before because of their requirement to use this communication technology.

Momentum towards using EDI technology has been building in recent years, particularly post COVID-19, with many more firms focused on digitizing – and future proofing – their supply chain. 

Datacor’s proven Integrated EDI solution helps our customers automate order and data entry at scale with their larger customers – with less hassle and at lower cost. 

If you’d like to find out more about our Integrated EDI platform and how it could help your business, get in touch with your Support Rep or Customer Success Manager, or book a demo.


Frequently Asked Questions (FAQs)

What is EDI?
EDI stands for Electronic Data Interchange and refers to the automated exchange of business documents between trading partners using standardized formats. ERP solutions use integrated EDI to facilitate the real-time transmission of data.

Why is it important?
Not only does this form of digital communication improve efficiency and productivity but is also vitally important if you’re looking to work with many larger companies as it’s their de facto way of sharing data and information.

How can EDI benefit my business? 
EDI helps automate otherwise complex and cumbersome processes, making it easier to deal with large volume transactions with bigger companies. It can reduce errors, save time, improve productivity, and offer full visibility of your orders, invoices, and shipments.

 

Topics: Datacor ERP, EDI


Jinelle Cioffi

Written by Jinelle Cioffi

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