EDI: a necessity or a luxury?

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EDI: a necessity or a luxury?

Each company, executing its business activities, creates a number of documents. The inconvenience of storage, the need for manual handling of data entry and processing, and the associated error risk make it worthwhile to communicate with partners by means of Electronic Data Interchange (EDI). EDI is one of those pieces of technology in the field of digitalisation without which efficient functioning in transport and logistics may soon not be possible.

Digitisation has taken over the logistics industry and transport. Business contacts of enterprises are based on constant exchange of information. Although the reorganisation of operations, including IT solutions, is not always a simple matter, it is known that the pace of technology implementation in the supply chain will determine which companies will grow and which ones will not.

EDI could significantly improve the company’s position in relation to its business partners and significantly reduce the costs resulting from the need to conduct correspondence.

Some time ago, the EDI system was introduced into digital supply chains. These intercomputing information exchange networks use standard electronic formats to reduce the amount of office work, while orders, invoices, and other documents are issued, sent or signed by business partners. The next step should be the analysis of electronic transactions that can be stored using new methods of data collection and integrated solutions from the IT industry, as well as the so-called Big Data. Such analyses can be very helpful in the process of making business decisions, managing supply chains, and cooperating with other companies,” says Artur Jidkov, director of the business applications department at AsstrA-Associated Traffic.

EDI is nothing but electronic transmission of structured commercial data and other documents from a computer application program or database of one organisation to an application program or database of another organisation. It operates based on the principles of electronic mail, independent of the characteristics of the hardware and software used. The transfer of highlighted objects takes place in the form indicated by the generally accepted standard (the same for companies from all industries, in all countries).

The basic elements of the Electronic Data Exchange are: electronic invoice, control of circulation of accounting documents, management of supply networks, internet portal. Among the methods, for example, an electronic signature is important. EDI is gaining popularity due to its significant advantages, including: very short data exchange time, elimination of errors in manual data entry, elimination of delays in data processing within the target organisation, automation of ordering and invoicing. The consequence is a reduction of costs (of office and operational activities), but also a better control of the exchanged documents and accompanying processes.

Being able to do this is one thing, for the exchange to happen adequately, one must first and foremost want it to happen. What conditions must be met in order for the EDI system, newly implemented in a logistics company, to work seamlessly with the existing IT applications? Jarosław Olszewski, System Architect at Sente IT Systems, emphasises that nowadays, electronic document exchange is not a standard anymore but a requirement for logistics companies’ service systems.

Data exchange between ERP class systems and logistics companies’ systems is based on micro-services. Thanks to such solutions, the burden of writing letters, preparing labels and documents for the courier, is entirely transferred to the ERP system. Such solutions allow to release one of the most valuable resources in the company, namely logistics employees, who can focus on other tasks,” says J. Olszewski.

The use of EDI requires the preparation of appropriate computer software by the cooperators, which makes it possible to cooperate with the administrative applications used in the enterprise (e.g. spreadsheets, production process handling systems, supplies).

It is about the possibility of converting sent and received data, which consists on the one hand in translating your messages into a standard EDI format, and on the other hand on adapting the received messages to the needs of the used application software, service of communication links; management of documentation circulation, the scope of which depends on the type of software and includes, for example, archiving of documents, data compression, merging and separating messages…

EDI eliminates the need for manual processing of data when handling orders, and later when invoicing or shipping goods.

According to the estimates, the costs of servicing individual transactions may fall by more than 90 percent. The costs of maintaining inventories are also decreasing. The clear bonus is the minimisation of the need for repeated data entry, which saves time and eliminates errors. With appropriate configuration of EDI systems, the process from placing an order to receiving an invoice can take as little as several seconds, which allows for a direct response to market needs.

There are both advantages and disadvantages. One of the important threats is the security of transmitted data because the confidential information being transmitted could fall into the wrong hands. Users also point to the initial costs, the need for a large financial input during the initial implementation phase.

Photo: Pixabay.com


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