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EDI Hard Facts #5: How EDI Improves Supply Chain Visibility

82% of respondents in Supply Chain Insights’ new study “EDI: Workhorse of the Value Chain” indicated that one of the major improvements resulting from their EDI programs was better or much better visibility of orders and shipments in the supply chain.

SCI Blog 5 - Visibility

It’s easy to understand why the visibility benefit was one of the top four. After all, in today’s fast-paced business environment, having real-time insight into transaction status is the key to enabling faster decision-making and improved responsiveness to changing customer and market demands. Businesses need to know answers to questions such as:

  • “Was my order accepted?”
  • “Which version of the order are you shipping against?”
  • “Will the order ship on time?”
  • “What is the status of my invoice?”

EDI transactions enable that vital level of real-time visibility into status of orders in the supply chain. For example, using EDI, a manufacturer in Detroit, Michigan can send a purchase order to its supplier in Japan, receive an electronic document that the item is out-of-stock, and immediately react by sending the purchase order to an alternative supplier in Brazil – all in just minutes. Armed with this information businesses can effectively manage bottlenecks, plan for delays, and proactively manage customer expectations. In short, they can resolve issues before they have a negative impact on business performance.

Here are just a few of the EDI documents that enable visibility into the supply chain:

  • Purchase Order Acknowledgment: Confirmation to the buyer that the supplier will be filling the purchase order as requested.
  • Advance Ship Notice: An electronic version of a printed packing slip that tells a buyer that goods have been shipped, how they have been packed and the estimated arrival time. This document is also referred to as a Delivery Notice or Dispatch Advice. This extremely important document is at the core of many automated business processes, such as Evaluated Receipt Settlement; Drop-Shipping, and Cross-Docking.
  • Remittance Advice: A notification from a buyer to a supplier when payment has been made, usually via electronic funds transfer. Receipt of this document enables suppliers to reconcile which invoices have been satisfied for any given payment.
  • Transportation Carrier Shipment Status Message: A notification by the carrier to the shipper or receiver regarding the status of a shipment. It can include the estimated date and time of arrival, destination point, reasons for delays, and so on.

In summary, EDI provides the foundational technology that, when combined with other collaborative commerce capabilities available today, enables dramatic strategic benefits.

In my next blog, I will continue to share additional statistics from Supply Chain Insights’ report with you.

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