EDI Relationship

EDI Relationship and Business Connections in Supply Chain

EDI Relationship example given below reflects the typical EDI workflow in the supply chain. The parties involved in such EDI Relationship are vendor, distributor and customer.

So let us imagine a company and call it The Pink Unicorn. The Pink Unicorn is the distributor of some beauty accessories and other staff. The Pink Unicorn receives regular updates about the sales and so its inventory balance is constantly updated. Therefore, inventory consumption information is regulary sent the manufacturer, let’s call it The Gnomes. The Gnomes receive the inventory balance, identifies the product demand in the definite region and can adjust its production according that demand. The transportation schedule is also planned with shipping companies, agents and carriers.

The above mentioned processes are executed via EDI relationship and it gives a very important advantage for all parties involved – speed and accuracy.

As goods are prepared by The Gnomes to shipment, Advance Ship Notices (ASN 856 document) are generated and sent to The Pink Unicorn. This way The Pink Unicorn plans shipment receiption and other operations as the company knows beforehand about the goods that are going to arrive. The shipping labels can be prepared as well. Also, outbound shimpments are being scheduled. When the shipment arrives to The Pink Unicorn all the goods are scanned and data is generated – the inventory is updated, invoices are prepared for payment.

At the same time the customer, let it be The Princess, comes to a Pink Unicorn store and buys some earrings. The information is automatically updated in The Pink Unicorn inventory system, so when The Princess comes back after a week for more earrings with her friends, the gap will be replenished by that time due to the quick EDI data exchange.

This is a simple example of how EDI can speed up business operations. Due to extremely speedy data exchange distributors and retailers can replenish goods demand and satisfy the customer. Manufacturers can plan their production in different locations and sending shipments to distributors’ warehouses. And customers have the possibility to get information when goods will be available and the exact date to come back to get more of them.

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