The Advantages of EDI in Logistics and Supply Chain

Orders, invoices, catalogues, instructions, sales reports, quotations, and more – the list of documents required in logistics management is endless. Logistics and supply chain is heavily reliant on documents for transactions and communications. But this increased paperwork translates to the increased expenditure of time, money, and resources. And don’t forget the risk of errors.

Electronic data exchange (EDI) is a computer-to-computer exchange of business documents, which allows you to eliminate cumbersome paperwork, reduce costs, and improve efficiency.

In this article, you’ll learn about the key benefits of EDI in logistics and supply chain.

Let’s jump right in.

Cost Savings

First things first, EDI helps you save costs. As discussed, logistics management comprises copious amounts of paperwork, including printing, storage, reproduction, postage, and retrieval. All this can add significantly to the overall logistics expenses. Utilizing an EDI system enables you to lower your transaction costs by 35-45%.

Besides, manual administration of documents is susceptible to illegible faxes, incorrectly taken orders, or lost orders, which can add up to the losses. EDI eliminates human involvement, thereby alleviating the risk of losses.

Lastly, manual documentation can eat up your valuable resources. For instance, you’ll need to have an employee present to handle the tasks, along with machinery, to print, send, and receive paper documents. EDI automates the entire process and allows you to make better utilization of your resources.

Improved Speed and Accuracy

Electronic data interchange can accelerate your supply chain procedures by up to 60%. For example, it can speed up exchange transactions to a few minutes, instead of waiting for days in case of postal service. Apart from speed, EDI also enhances data quality by delivering a minimum of 30-40% reduction in transaction errors. It excludes mistakes emerging from illegible handwriting, keying/re-keying errors, or lost mail/faxes.

Using EDI can also help you reduce the order-to-cash cycle time by 20-30%, thus, improving business partner relationships and transactions. In addition, using EDI enables you to handle a significantly larger task load with better accuracy.

Improved Business Efficiency

EDI automates paper-based tasks, which allows you and your staff to focus on more productive, higher-value activities. Besides, it helps you and your transport management provider to spend more time on hand-getting shipments where they need to go, instead of spending hours juggling through paper documents and email communications.

Another benefit of EDI in supply chain management is the quick and accurate processing of business documents, which results in fewer stock-outs, cancelled orders, and re-working of orders. It ensures you’re able to send business-critical data on time and track it in real-time.

EDI further allows you to improve cash flow and reduce order-to-cash cycles, along with shortening order processing and delivery times to reduce your inventory levels.

Streamlined Communication Between Partners

Communication plays a key role in the success of logistics operations. However, paper-based documentation impedes communication between trading partners. In addition to streamlining transactions, EDI also advances all types of trading partner interactions.

This results in improved partner-customer relationships and more sales. For example, EDI allows you to shorten your sales cycle. So, you can take and confirm orders more rapidly, giving your customers confidence in your ability to deliver remarkable service.

Peak Inventory Management

Maintaining optimal inventory levels is one of the hurdles most logistics managers face. Not having the right inventory levels means you won’t be able to meet your customer demands, which will lead to losses and a degraded reputation.

EDI helps you maintain ideal inventory stock levels for the future. It provides you access to real-time updates and latest market trends, which you can use to streamline proper resource allocation and manage shortage or excess inventory levels.

Promotes Strategic Planning

One of the major hurdles logistics companies and managers encounter is the lack of transparency and visibility into the status of transportation transactions. EDI resolves this challenge by offering real-time visibility into transportation transactions, which, in turn, promotes faster decision-making and enhanced responsiveness to changing market demands and customer preferences.

EDI also conduces to strategic business planning in the following ways:

  • Cuts down the lead times for product improvements and new product delivery
  • Enhances corporate social responsibility and sustainability by replacing paper-based procedures with electronic methods. This helps you save money and carbon dioxide emissions.
  • Enables you to enter new markets and territories by providing a common business language for facilitating business partners across the globe.

Conclusion

We live in the era of digitization, where businesses need to evolve and amp-up their operations. Electronic data exchange allows you to gain more information on your fingertips in the quickest possible time. You can trace orders and see their status in real-time.

EDI also helps you manage your inventory levels and enables you to keep up with the fluctuating market demand. On the whole, EDI promotes strategic planning and gives your businesses an edge over others.

CloudGen has the right smart solution called SmartEDI, which can perfectly fit into your Logistic needs and make the business happen in the most acceptable desired format. Our team of experts never fail to satisfy customer expectation and always maintain maximum delivery excellence.

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