Using EDI in Logistics Integrations

Using EDI in Logistics Integrations

Logistics can be complicated. The amount of information that changes hands can be overwhelming, and the lack of efficient systems to handle critical documentation can result in lost time, lost revenues, and poor customer relationships. A good EDI system can in the handover of important logistics documents.

What is EDI?
EDI, which stands for electronic data interchange or sometimes interface, allows for the seamless exchange of documents between businesses in a standardized format from one computer to another.

Benefits of Using EDI in Logistics
When important documents are transported in paper form, there’s a lot that can go wrong. They could be lost or damaged. Transporting these documents electronically means that they’re guaranteed to get where they’re going unscathed.

When paper documents are exchanged in the supply chain, they must then be input into logistics software systems. Any time people are responsible for handling information, there is an understandable margin for error. EDI can improve accuracy as there are no data entry mistakes when the data is input into computer systems automatically, plus processing documents electronically is faster.

EDI also costs less than managing paper documents. Part of this cost effectiveness is due to the time saved, but is also saves on space, printing costs, savings due to early payments since EDI makes receiving and paying invoices easier. It’s more difficult to place a numerical value on improved relationships with business partners, but there are certainly monetary benefits to improving customer service.

What Does Successful EDI Integration Look Like in Logistics?
For EDI to be successful in supply chains, documents must be standardized. That means companies who need to exchange information must get on the same page. Without this standardization, computers at one company may not be able to effectively process documents from another company.

Types of Logistics Documents that Can Be Transferred Using EDI

  • Bills of lading
  • Purchase orders
  • Invoices
  • Acknowledgements
  • Shipment updates
  • Trailer manifests
  • Other shipping communications

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Independent research shows that improved supply chain management can yield:

  • 25 – 50% reduction in total supply chain costs
  • 25 – 60% reduction in inventory holding
  • 25 – 80% increase in forecast accuracy
  • 30 – 50% improvement in order-fulfillment cycle time
  • 20% increase in after-tax free cash flows
  • Supply Chain Mapping

  • Review Market Conditions

  • Determine Operational Inefficiencies

  • Outline Opportunities

  • Implement Changes

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