Scenario: You're working with a large Food Service Management Company and they say, "We want the data of what you sold to our operators." The new wave of EDI is the capturing of data that is rebatable to Food Service Management Companies or large Food Service chains e.g. Subway, WAWA etc. Because of this new trend I'm seeing all over the market I though it was time to revisit the concept of EDI and what it really means. Remember EDI is never standard its always customized to the receivers format and delivery method. 
What is EDI? EDI stands for Electronic Data Interchange and is a paperless method of transferring such data as purchase orders, forecasts, and invoices between companies or "trading partners". Very few companies use the same paper document format and since one company's Invoice form looks different from another, the same often holds true with computer systems. Information stored in one company's computer system may be in a different format than another and so on and so on. EDI solves this problem by creating a commonly understood format of the data so that one company's computer system will be able to transmit to the others with minimal human intervention. The most commonly used standard EDI documents in North America are referred to as ANSI ASC X12.
The internet has enabled EDI transactions to be transmitted between trading partners in an extremely efficient manner. That is where the concept of a Value Added Network (VAN) comes into play. A VAN is a mechanism that eases the transfer of EDI transmission between trading partners. Think of a VAN as a virtual post office, one that allows a business to send EDI formatted data to their trading partners at any time day or night. The VAN will then hold the file of transmitted transactions until the trading partner to whom it is addressed retrieves it at a later time. (Grocery EC and Itrade Network are two examples of VANs).
Why should any of this be important to you? By the end of the decade of the 90s, EDI was already affecting almost every business in the U.S from General Motors to JC Pennys. One of the main reasons for the growth in popularity is what you could call the "Domino Effect" within industries, where large companies in the center of an industry (the Albertsons, Con Agras, and Pepsi Co's of the world) convince their suppliers' partners to adopt EDI. Soon, the second tier suppliers require EDI links to the third tier suppliers and so on and so on. Now the trend has reversed and customers are
The most tangible benefit of EDI is it saves money. It's estimated that processing a purchase order or invoice costs about $5 in paper, postage, handling, personnel and other costs. EDI lowers the cost of handling that same document to about $0.13.
With EDI, paper transactions can be replaced with electronic transmissions thus saving both time and money. But things are never as simple as they seem. The truth is that there are two types of EDI in the world and in order to maximize EDI benefits you have to select the best type for your business.
The above diagram is an illustration of the first type of EDI, more commonly known as Non-Integrated EDI or Manual EDI. Non- Integrated EDI is when EDI messages are sent automatically but messages are then printed out by the recipient for further processing. Imagine that your trading partner is Albertsons and they send you a Purchase Order for 250lbs of sausage. The Purchase Order would be sent by their system to the VAN (Value Added Network) and then forwarded to your system for processing; unfortunately you don't have EDI translation software (because you use Non-Integrated EDI) so the EDI message can not flow seamlessly into your software system. The result is their Purchase Order hits a brick wall and your staff must then print it out and manually enter the information listed on their Purchase Order into your system for processing.
The above diagram is an illustration of the second type of EDI, more commonly known as Integrated EDI. This is where EDI messages are sent automatically and are received by the recipient for automatic processing. At the end of the day the effectiveness and success of EDI is measured by the degree of integration of EDI as the communication mechanism for you and your trading partners. The extent of this integration is the true measurement of what makes an EDI investment truly successful. The flow of EDI depends on the sophistication of your systems and your EDI software. EDI programs that integrate with your internal systems are much more preferred over software that requires the re-keying of data. Once you understand the differences between Non-Integrated and Integrated EDI you can begin to see the how the benefits only work in your favor if you have EDI fully integrated into your food software package. Users with fully integrated systems experience a wide range of tangible benefits including but not limited to:
- Reduced Lead Time/Quick Response
- Increased Warehouse Efficiencies
- Increased Transaction Handling/Processing Accuracy
- Increased Salesman/Buyer Productivity
- Reduced Administrative and Clerical Costs
| Comments |
|
3.26 Copyright (C) 2008 Compojoom.com / Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved."
| < Prev | Next > |
|---|
