Supply Chain Management EDI

Supply Chain Management EDI Basics

Supply Chain Management EDI help businesses to spend less money being tied to inventory. It gives the possibility to control and manage the supplies throughout the manufacturing process, from one organization to the next, more quickly and effectively. Monitoring and controlling the supply chain is the main task of any Supply Chain Management EDI system. It is already a well-known fact that Supply Chain Management EDI systems streamline operations from suppliers to customers. There are also other meaningful reasons like reduction in inventories, cycle time and production cost.

Supply Chain Management EDI Benefits

  • Supplier’s or vendor’s proposal sent electronically to purchasing organization (retailer, client etc.)
  • Electronic contract approved over network
  • Supplier manufactures and packages goods, attaching shipping data recorded on a bar code
  • Quantities shipped and prices entered in system and flowed to invoicing program; invoices transmitted to purchasing organization
  • Purchasing organization receives packages, scans bar code, and compares data to invoices actual items received
  • Payment approval transferred electronically
  • Bank transfers funds from purchaser to supplier’s account using electronic fund transfer (EFT).

EDI can be released through two types of implementation: Value Added Network EDI and Web EDI.

Value Added Network EDI

  • Business partners subscribe to service and use VAN’s private communication lines, mailboxes, and special software
  • VAN mediates EDI communication, translates business documents into EDI documents
  • Batches transmitted several times per day
  • Advantages:
    • Transaction integrity
    • Privacy and security
    • Nonrepudiation
    • Solid standards


  • All new EDI implementations use Web technologies
  • Reduces cost
  • Use of XML standards allows business partners to create their own tags
  • WEB EDI Advantages
    • Lower cost
    • More familiar software
    • Worldwide connectivity
    • Fast communication
    • Real time information exchange

Supply Chain Management EDI systems are most effective when all businesses in the chain link their systems and share all information pertinent to planning production and shipment, however not all organizations are willing. that is why such systems can be used beyond the sale (after-the-sale services). In the global business world web technologies are important for both B2B and B2C commerce – they provide many  opportunities for businesses all over the world.

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