Using EDI To Improve Your Supply Chain

It seems as though everything these days is being done electronically. Correspondence is performed through email and businesses communicate with one another by sending forms and bills from one computer to another. The transfer of these documents and other sheets full of data is known as electronic data interchange, or EDI.

It would be incorrect to sum up EDI as simply shooting emails back and forth. Electronic data interchange has come to encompass sending bills, checks, and other important documents with proper formatting. An exchange from person to person via something like a floppy disc or DVD can be considered a part of the interchange, as long as the intent is not to have one or both parties perform any interaction with the data. Current standards prefer that human interaction not even be a part of the equation. The only time an actual human being should have contact with any EDI documents is for the purpose of error correction.

According to electronic interchange definitions, the parties involved in transmitting and receiving correspondence are referred to as trading partners. The trading partners are responsible for conferring with each other about the forms to be sent and the purpose that they serve. This is one of the few occasions on which humans are involved with data interchange, so communications at this stage employ the use of human readable specifications. Because there is room for error before something is sent, it is up to the partners to be as specific with one another as possible so that correct transmissions are completed. For largeeer companies, there is likely to be electronic data interchange among departments, so the EDI protocol may be specific to each individual department.

It is this error correction that electronic data interchange is designed to eliminate in the first place. Shipping and billing mistakes are automatically corrected in a true EDI format. The sender's and recipient's respective computers will reconcile any discrepancies and the process can then continue properly. EDI technology not only greatly reduces costly errors, a great deal of time is saved by eliminating the need for huge amounts of paper. Since all transactions and data storage are completed electronically, it does not require someone hours to sift through seemingly endless sheaves of paper in order to sort and analyze information.

Electronic data interchange goes a long way toward saving a business time and money. Gone is the time spent with producing numerous copies of the same form and the time spent fixing faux pas. Time and effort can now be spent in a more productive fashion.

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