EDI Planning: Sponsoring and Analyzing Business Needs
EDI planning is a major step in EDI Implementation project. The objectives of EDI are to satisfy business needs, for example, improve procurement processes, increase supply chain efficiency, and reduce float time in financial or medical claims transactions.
The problem with EDI being an IT project is that it gives the perception to other business units that EDI is a technical subject and we will leave it to the technical folks to figure out. Even though the bulk of the work of actually delivering the EDI solution falls to IT people, the business stakeholders and the project sponsors should be heavily involved in EDI planning.
It is the EDI planning and business process requirement that goes into the EDI implementation guidelines and not the other way around. Whether you have the role of implementing a full blown EDI solution for your company or if you are just adding a new transaction, try to make sure that your project sponsor is a business process owner and not your technical team lead or IT Director.
Analyze Business Needs
The following steps should be taken during EDI planning in order to gather data about existing business processes:
- Create a list of business transactions currently processed. These may include sales orders, purchase orders, invoices, warehouse picking slips, and etc. In addition to this, add all the supporting processes such as emails, faxes, telephone calls of these transactions.
- Survey and interview all the business functional areas where these tasks are being performed manually. The best result comes from asking the people who are actually doing the work. Make sure to cover all basis of the manual business process. For example, in addition to someone doing manual data entry of orders or invoices, find out how they manually process exceptions and discrepancies. Make sure to get the error-rates and how much they can be costing the company.
- Identify all the tasks involved in processing a paper document. Remember it’s not just the process of manually inputting paper documents into the order-entry application. For example, the following 5 steps are required for an incoming paper purchase order. A PO, for example, might be received (via fax or mail); distributed by the mail department or whoever sorts the incoming faxes/mail; undergo data entry to convert it to an electronic document; discrepancies and changes would have to be managed, and copies of the PO would need to be sent to the A/R clerk in Accounting for payment and to any other department that might need a copy.
- Analyze the existing Information System. What kind of applications are used, what kind of infrastructure exists, can the information be exported or imported to and from the Information System?
Once the data gathering part is complete, the following steps should be taken to determine rest of the EDI planning processes:
- Eliminate Redundant and Repetitive Tasks: For example, a business transaction such as an invoice may require multiple supporting paper and manual processes. In order to confirm the invoice totals, the accounts payable clerk may require a receiving confirmation slip for the warehouse; the AP clerk may also need to see a copy of the original purchase order. Consider all the pieces of information, such as item numbers and quantities. In this scenario the same pieces of information appear several times repeatedly.
- Document the information flow of documents between functional areas and external entities. For example, the buyer sends out a Purchase Order to the vendor and a copy to the A/P clerk. The warehouse receives the shipped goods from the vendor and sends a receiving slip to the A/P Department.
- Develop EDI Implementation Guidelines for your company.
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