EDI Advantages In Union Pacific Railroad Business Environment
EDI advantages show that companies can be more competitive in today’s global business environment.
- Sending an electronic message across the country or around the world requires only seconds or minutes rather than days. Once the message is received, information is available for use immediately without costly and time-consuming hand preparation.
- EDI improves accuracy. Every time information is copied from one place to another, there is opportunity for error. Electronic transfer eliminates the need for copying information from one paper document to another, or for re-keying it into a computerized business application.
- Once the information is entered correctly, there is no additional opportunity for error since it is electronically entered into all other applications without further human intervention.
Overhead costs are reduced by eliminating or reducing human handling in such areas as:
- Mailroom sorting and circulation.
- Repeated keying of information.
- Manual reconciliation of different documents (purchase orders, receiving notices, invoices, etc.)
- Document mailing, telephoning or faxing of information.
Document processing costs are reduced with savings in areas such as:
- Reduced postage and handling costs.
- Reduced costs for printing forms.
- Reduced costs for sorting, distibuting, filing and storage of documents.
Inventory carrying costs are reduced through lowered inventory levels achieved by:
- Reducing order processing and delivery cycle time.
- Reducing uncertainty in order cycle time.
Other costs may be reduced, such as:
- Transportation costs, particularly premium freight charges.
- Error costs, which may be as much as five times the cost of processing the document correctly in the first place.
Improved Customer Service. Strengthend Supplier Relationships
Because information is available on a “real time” basis, and is more accurate, concerns and questions of customers can be addressed more effectively. Cooperation and coordination required to implement EDI tends to build trust between trading partners. The sharing of information which results from EDI, strengthens the ties between partners and encourages stronger levels of commitment. Improved responsiveness to customer concerns, which EDI makes possible, can lead to increased sales.