EDI in Your Business: Manufacturing
Every manufacturing enterprise is looking for new ways to improve efficiency. In the age of the digital economy, there is a growing need to integrate data throughout the supply chain. Luckily, there are also increasing opportunities to do this, namely through electronic data interchange.
Integrating data between manufacturers and suppliers is a surefire way to improve efficiency, leading to more revenue and lower costs. EDI mapping makes this integration possible. By automatically processing business communications like purchase orders, invoices, schedules and shipping notifications, EDI software cuts down on the need for manually completed forms.
EDI Basics discussed a major electronics manufacturer that was able to cut costs of processing an order from $38 to $1.35 using EDI transactions. By automating time-consuming, repeated tasks, an EDI system lets employees focus on more valuable undertakings such as serving clients. EDI also limits the chances of human error, allowing orders to be processes faster and more accurately, minimizing recalls or returns.
EDI transactions that are common to manufacturing include:
- X12 810: bill to customer for goods shipped.
- X12 830: material release.
- X12 850: materials purchase order.
- X12 940: warehouse shipping order.
Deepak Singh of Manufacturing Business Technology noted that in a manufacturing environment, the amount of data shared back and forth between a manufacturing plant and its many supplies and partners is immense. Without EDI integration, these external partners often connect with various departments, sharing different types of information with each of them.
In turn, many of these departments develop their own communication standards and practices. This leads to a problem that many enterprises face as they expand: silos. Without different standards of B2B communication, silos can slow down many processes and develop bottlenecks at critical points. Silos are problematic in any industry, but with logistics especially crucial in manufacturing, they can be particularly frustrating. Singh pointed out it's for this reason that 30 percent of manufacturers will be investing substantial amounts to increase visibility and analysis of data exchanges, according to IDC FutureScape: Worldwide Manufacturing Predictions. EDI is the key to breaking down walls between departments and developing streamlined data exchanges.