Electronic Data Interchange (EDI) is the computer-to-computer exchange between two or more companies of standard business documents in electronic format.
There are two basic elements which comprise EDI:
Using these basic concepts any company or institution can enter the world of EDI.
Without the benefit of EDI, the steps to transact a purchase are as follows:
1. A buyer reviews data from an inventory or planning system.
2. The buyer enters data into a purchasing order.
3. The buyer creates a paper/electronic copy of the PO.
4. The buyer mails the PO to the supplier.
5. The supplier receives the PO and enters it into their order system.
6. The buyer calls the supplier periodically to determine if the PO has been received and processed.
The time taken to create, send, input and validate a purchase order can take from several hours up to five days, if sent by traditional mail.
Consider the same document exchange when a company places its purchase orders electronically using EDI:
1. The buyer reviews the data and creates the PO.
2. The PO is passed to the EDI software where an electronic version of the PO is created, automatically validated and transmitted to the sender within minutes.
3. The supplier’s EDI system receives the PO.
What can take up to five days with paper and the postal system takes only a few minutes by eliminating the paper handling and human involvement from the process.
Remember, purchase orders are just one of the many uses of EDI.
• Shorten lead times
• Reduced order cycle time means reduced lead times for goods and services and allows considerably lower stock inventory collection
• Reduced overhead required either to detect or to reprocess erroneous documents
• Reduced costs by avoiding to resend goods or services that are late or lost
• The process takes minutes instead of days
• The PO goes from the buyer’s computer through a network to the supplier's computer with no human intervention at all. There is no need to copy or transcribe the PO upon receipt, eliminating the possibility of data entry error.
• The electronic document has not been handled by any mailroom staff, postal or delivery service or data entry staff, hence no delays or mistakes are possible.
In just a few steps, you could enable EDI service:
Document type: Purchase Order
File format: EDIFACT
Used protocol: AS4
If you are using the Commerce-Connections EDI Service, the cost is as follow:
Installation charge: £1,500 , Monthly charge: £300
Price will be discounted if you are integrating with more than one trading partner.
Assume one staff monthly salary is about £1,700, you can save around £15,300 a year.
Prices may vary depending on your company’s requirements. Please make an online enquiry to talk to one of our sales representatives.