While supply chains differ from one manufacturing company to the next, data still needs to be exchanged between suppliers, manufacturers, and customers. This is why Electronic Data Interchange (EDI) is such a critical component of modern manufacturing. EDI is a document exchange protocol. It involves a company’s entire digital infrastructure and is by and large considered the standard when it comes to purchase orders, invoices, shipment notices, and other documents frequently exchanged between trading partners. Here are the Top 5 EDI documents for manufacturing and why you should be implementing their use in your trading partner cycle.
EDI can be summarized as a process by which computer systems exchange business documents quickly and securely in a standard electronic format. Some examples of those electronic formats include those from ANSI, EDIFACT, TRADACOMS and ebXML. This is a simple definition but the concept of EDI documents for manufacturing extends from communications to design, as well.
“While EDI is an infrastructure of a supply chain management system for QR (Quick Response) and ECR (Efficient Consumer Response), it is also a technology that supports concepts such as computer-aided design (CAD) and computer-aided acquisition and logistic support (CALS), a higher-level concept of CAD. EDI is based on standardization of electronic data exchange. There are many organizations that make rules for the standardization, such as ANSI (American National Standards Institute), EDIFACT (Electronic Document Interchange For Administration, Commerce and Transportation), CII (Center for the Informatization of Industry), EIAJ (Electronics Industries Association of Japan), and VICS (Voluntary Interindustry Commerce Standards Association). The rules differ depending on the types of applications for each industry that are installed on the infrastructure of EDI.”
“Understand Supply Chain Management through 100 words“
by Zenjiro Imaoka
Published by KOUGYOUCHOUSAKAI
The Top 5 EDI Documents For Manufacturing
From start to finish, your trading cycle is likely to include these 5 EDI documents 95 percent of the time. However, this is also dependent on your particular manufacturing industry. We’ll go more into that later. For now, here are The Top 5 EDI Documents For Manufacturing:
In Electronic Document Interchange (EDI), an EDI 810 is the electronic version of a traditional paper invoice. Used primarily in the manufacturing and retail industries, an EDI 810 Invoice is sent by the vendor or supplier to a retail partner or distributor to request payment for products and/or services.
utilizing the EDI 810 invoice offers several benefits to both the supplier and the purchaser. These benefits will depend on the transaction’s level of automation and integration on either party’s system. These benefits can include:
- Increased efficiency, reduced time to complete transactions, and decreased volume of paper flow
- Less time spent in manually submitting invoices on the supplier’s end
- Less time spent manually entering invoices on the purchaser’s end
- Increased resources to focus on value-added work for both supplier and purchaser
- A significant reduction, if not outright elimination, on errors associated with manual entry
- Reconciliation against orders/shipments to verify correct invoice amounts
- Better order fulfillment
- Faster payment
An EDI 810 is the electronic version of a traditional paper invoice. Used primarily in the manufacturing and retail industries, an EDI 810 Invoice is sent by the vendor or supplier to a retail partner or distributor to request payment for products and/or services.
EDI 830 offers plenty of benefits to both the purchaser and the supplier. when implementing electronic trading of the inventory advice benefits can include:
- Better visibility into when a product is out of stock or no longer being made and the ability to advise other actions as a result
- Better management of e-commerce drop shipping
- Communicates when items will be available if out of stock
- Better forecasting when planning warehouse levels and ordering
- Easier Management of details on eCommerce websites, for instance, when items are out of stock, quantities available, or remove the items from the website
- Enables ordering of non-stock items and special orders
The EDI 850 Purchase Order (PO) is most commonly utilized when placing an order for goods or services. The 850 is most widely used in general merchandise, while its counterpart, the EDI 875 Purchase Order, is reserved for grocery items.
EDI 850 offers plenty of benefits to both the purchaser and the supplier. When implementing the use of electronic purchase orders, benefits can include:
- Reduced in the volume of paper-based processes
- Reduced time to complete transactions on both ends of trading partnerships
- Reduced time invested in manual processes, such as order submissions and PO entry
- Increase in value-added work as resources are freed by automation of manual processes
- Fewer data entry errors
- Optimized fulfillment
- Reduced on-hand inventory for retailers
An EDI 855 Purchase Order Acknowledgment is essentially an electronic version of a phone call or fax that informs the submitter of a purchase order the supplier will be filling the order as requested.
EDI 855 offers plenty of benefits to both the purchaser and the supplier. When implementing the use of a Purchase Order Acknowledgement, benefits can include:
- Visibility into a supplier’s commitment to fulfilling an order
- Quicker routing of acknowledgments and changes with automation
- Improved organization of order information between suppliers and partners
- Reduction of issues post-invoicing
- Easy confirmation of supplier-fulfilled orders direct to end consumers
An EDI 856 Advance Shipment Notification (ASN) is most commonly utilized as a method of shipment confirmation between a supplier and retailer. The 856 provides visibility for inbound shipments, automation of receiving, and confirmation for direct vendor-to-consumer shipments.
EDI 856 offers plenty of benefits to both the purchaser and the supplier. When implementing the use of ASN, benefits can include:
- Increased visibility into shipment progress and contents
- Increased shipment accuracy
- Increased fulfillment rates
- Easy cross-referencing between PO and shipment
- Reduced need for safety stock
Additional EDI documents utilized by some manufacturers include those who operate Third-Party Logistics (3PL or TPL). These manufacturers often find EDI document 940 – Warehouse Shipping Order and EDI document 945 – Warehouse Shipping Advice particularly useful. In the case of Aviation and Aerospace Manufacturing industries, an EDI document 862 – Shipping Schedule is always used, while an EDI document 850 – Purchase Order (PO) is not.
Why You Should Care About EDI Documents For Manufacturing
While EDI revolves around document routing it does a whole lot more for your organization than simply sending documents electronically. The efficiency and security of electronic document interchange increase your productivity, minimize waste, and ensure the integrity of your trading cycle. Not only this, but you can add the fact that you are automating tasks that are generally non-revenue generating, which leaves more time for value-added activity in the organization. The result is more valuable partnerships, increased supplier satisfaction, and higher reliability rates of internal processes. Here are just a few of the incredible benefits of EDI:
- Audit trails
- Contingency planning
- Use of acknowledgments
- Electronic document management
- Activities of supporting networks
- User access controls to systems and networks
- Cryptographic techniques for authentication and confidentiality
In short, If you plan to run an organized and efficient manufacturing business, you cannot afford to overlook the utility of implementing EDI documents for manufacturing. Fortunately, Encompass Solutions, Inc. can help you with that. For more information on Encompass Solutions’ EnTrust EDI solution, read about our Rapid EDI Implementation.
About Encompass Solutions
Encompass Solutions, Inc. is an ERP consulting firm, NetSuite Solution Provider and Epicor Platinum Partner that offers professional services in business consulting, project management, and software implementation. Whether undertaking full-scale implementation, integration, and renovation of existing systems or addressing the emerging challenges in corporate and operational growth, Encompass provides a specialized approach to every client’s needs. As experts in identifying customer requirements and addressing them with the right solutions, we ensure our clients are equipped to match the pace of Industry.