The interchange of electronic company documents improves the speed of the transaction and transparency, while reducing the amount of money and lost work hours which is spent in traditional procedures of the supply chain. Taking only the financial dimension into account, the benefits of the implementation of EDI are impressive. However, the reduction in cost is not the only benefit obtained from using EDI.
Let us, then, investigate the benefits of EDI more analytically:
The expenses associated with paper, printing, reproduction, storage, archiving, sending and retrieval of documents are reduced or eliminated after switching to document interchanges via EDI. It has been calculated that the net cost of interchanges can be reduced by at least 35%, counting only the savings in consumables!
By viewing the whole picture of the management of an order, a large electronic device manufacturing company has calculated the cost of processing an order in the traditional way to be $38, in contrast to just $1.35 for an order processed using EDI.
Errors from mistakes due to unreadable faxes, lost orders or erroneously received telephone orders are completely eliminated, thus saving the staff of a company precious time that would be used for handling these disputes.
Speed and precision
EDI can speed up key activities of a business, proven by at least 60%. The interchanges occur in minutes in contrast with days or even weeks of the time it took to manage disputes, approvals and lost documents.
The quality of the data is improved, achieving a reduction of mistakes by at least 30-40%, eliminating errors from unreadable handwritten papers, lost faxes/mail and mistakes in entry.
The use of EDI can reduce the cycle time from the placement of an order to a settlement/payment of the documents, improving transactions, cash flow and the relationships of business partners.
Increase in business performance
The automation of tasks which in the past were based on paper allows the staff of the business to focus on higher value tasks, giving it the tools to be more productive.
The quick processing and movement of business papers results in the guarantee of smooth operation between the responsible departments of the chain and a smooth flow of goods in the warehouse, either on the supplier side, who avoids being out of stock due to the correct handling of orders, or on the client side, who knows when they will receive the goods and in what quantities, thus helping in reducing the number of cancelled orders.
The automation of the interchange of data between computing systems in a supply chain can guarantee that the critical data of a business is delivered on time and can be monitored in real time. Sellers benefit from improved cash flow and reduced order cycles.
The reduction in processing time and delivery time of orders means that companies reduce the inventory that remains unmoved in their warehouses. The goods are replenished and the stock is constantly under control.
The largest benefits of EDI in a strategic business level
EDI allows viewing the status of each transaction in real time.
That, in turn, allows for faster decision making and improved response to the continuously changing needs of clients and purchases, and allows companies to adopt a business model which is based on demand and not only on supply.
It shortens the delivery times of the products and fosters trust between business partners, which is now based on automation of their cooperation.
It improves the possibility of companies to enter new markets, as EDI provides a common business language that makes it easier for the company to conduct business anywhere in the world.
Finally, EDI promotes corporate social responsibility and improves the energy footprint, as well as reducing CO2 emissions.