UK retail grocery sector saves £650 million per year in costs by using EDI
GS1 UK surveyed the top 15 UK grocery retailers to find out the extent to which the sector is using EDI for purchase order, despatch advice and invoice documentation and to identify any opportunities and further benefits that can be gained. They have estimated that in 2009 there were 27 million purchase orders transacted in the sector between retailers and their suppliers. 87% of these purchase orders used an electronic order message, 84% were invoiced electronically while 38% were included in an electronic despatch advice or Advance Shipping Notice (ASN).
In total, GS1 UK’s research has found that the UK retail grocery sector saves £650 million per year in costs by using EDI instead of manual, paper-based processes for its orders, invoices and despatch advices.
Cost savings 1: Electronic purchase order messages vs. paper-based orders Industry research conducted at GS1 UK identifies a £14 per order cost saving gained when using EDI compared to manual processes including phone, fax, post and email to order stock from suppliers. These cost savings are gained through the reduction in disputes caused by inconsistent data, reduced administration and paper work, faster moving stock and less compliance checks needed. By using electronic order messages for 87% of its purchase orders, the UK grocery sector has saved £332 million in 2009.
Cost savings 2: Electronic invoice messages vs. paper-based invoices S1 industry research also identifies a £8.50 cost saving per invoice when companies use EDI instead of paper-based invoices. Companies can gain these cost savings through the elimination of invoice paperwork, data entry and storage costs and the reduction in the cost of disputes management, administrative work and validation. By using electronic invoice messages for 84% of its purchase orders, the UK retail grocery sector has saved £193m in one year.
Cost savings 3: Adopting EDI despatch advice/ASNs Many businesses today don’t offer the service of sending a despatch advice automatically and only provide delivery notes with the goods. According to our research, only 38% of suppliers send their buyers a despatch advice using EDI. Industry research identifies that the sector can save £12 per order in cost if an electronic despatch advice is sent to trading partners before the order is delivered. These cost savings can be realised through faster moving stock, truck optimisation, improved logistics, reduction in administrative work, fewer instances of stock going missing, fewer delays and less disputes. Based on industry implementation levels of despatch advices (38%), a further cost saving of £124m has been achieved by adopting EDI over manual, paper-based methods.