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EDI Tech Corner

EDI Overview

  • The EDI process provides many benefits. Computer-to-computer exchange of information is much less expensive than handling paper documents. Studies have shown that processing a paper-based order can cost $70 or more while processing an EDI order costs a dollar or less. Much less labor time is required. Fewer errors occur because computer systems process the documents rather than processing by hand.

    EDI transactions between companies flow faster and more reliably than paper documents. Faster transactions support reduction in inventory levels, better use of warehouse space, fewer out-of-stock occurrences and lower freight costs through fewer emergency expedites.

    Paper purchase orders can take up to 10 days from the time the buyer prepares the order to when the supplier ships it. EDI orders can take as little as one day.

    Drawbacks are few and far between, but there are some. For example, companies choosing to implement both paper and EDI processes must manage both of these processes. However, as stated before, using EDI is much more efficient than using paper, lending strength to the argument against paper documents. Also, companies must ensure that they have the resources in place to make an EDI program work; however, the need for these resources (or their hiring) may be offset by the increased efficiency that EDI provides.

    Here is an example of how the electronic data interchange process works. A buyer prepares an order in his purchasing system and has it approved. Next, the EDI order is translated into an EDI document format called an 850 purchase order.

    The EDI 850 purchase order is then securely transmitted to the supplier either via the internet or through a VAN (Value Added Network). The buyer’s VAN is a like an electronic post office that interconnects with the supplier’s VAN. The VANs make sure that EDI transactions are sent and received. The supplier’s VAN ensures that the supplier receives the order. The supplier’s computer system then processes the order. In the case of CalltechSolutions’ clients, our partners provide VAN transportation and our servers provide all of the software and hardware required to process EDI documents. Only internet access and email are needed.

    Data security and control are maintained through out the transmission process using passwords, user identification and encryption. Both the buyer’s and the supplier’s EDI applications edit and check the documents for accuracy.

  • To learn more please contact us or call 877 EDI 4 YOU (334-4968) | EDI Tech Corner
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