As a result of digitization, ever more attention is being paid to factors such as connectivity, transport and data monitoring within companies’ supply chains. But how can these be managed?
The dematerialization of documents and the management of electronic information flow (purchase orders, forecasts, shipping notices, invoices, etc.) have completely revolutionized business processes. Electronic data interchange (EDI) is a great ally to make this happen.
EDI, or electronic data interchange, is a system that allows the exchange of standardized data between the information systems of participants in a business relationship, without the need for human intervention.
EDI technology makes it possible to exchange electronic documents in a direct way, called computer-to-computer, freeing human resources from repetitive and low value-added activities.
What is EDI technology for?
What distinguishes EDI from other data exchange systems is the standardization of documents exchanged through a common language, following industry standards, (EDIFACT in the large-scale retail trade, ODETTE in the automotive sector, ASC X12, etc.).
As a result, it is possible to carry out all the transactions that usually take place between partners, by exchanging the following documents electronically: orders, transport documents, shipping notices, invoices, inventories, price lists, and many more.
With EDI, it is possible to exchange electronic documents in business relations between companies and customers, distributors, suppliers, logistics operators, public administration, etc.
Initially used in the automotive industry, EDI systems are now widespread in many other sectors, such as retail, pharma, oil & gas, transport, tourism, manufacturing and healthcare.
The main advantages of EDI
Thanks to the many business advantages that EDI brings, it is gradually replacing all traditional means of data exchange, such as mail, fax and email.
EDI systems enable companies to:
- Eliminate paper documentation, reducing the related management costs
- Free up human resources from time-consuming and low value-added activities
- Optimize the commercial, purchasing and administrative departments of companies offering or buying goods
- Promote greater accuracy in data exchange, thanks to the reduction of human errors
- Assist real-time alignment of the commercial and fiscal situation between partners
- Provide translations, mapping and exchange of EDI documents with all business partners
- Manage the EDI onboarding process or migration of new business partners
EDI technology is accessible to any company of any size and level of technological development. The transition to EDI is particularly advantageous for companies that develop a large volume of regular and standardized transactions with multiple business partners.
With the ever increasing expansion of EDI to cloud computing technology, it is no longer required to search for, purchase, install and configure EDI hardware and software.
It's essential for enterprises to have total control over data flow. This ensures business continuity with a flow of information between partners and visible automation of key business process, saving companies valuable time and money.
For more information about Electronic Data Interchange, download our latest ebook.
Author: Vincenzo Cirillo