EDI for Manufacturing: How to Simplify Your Processes
Electronic data interchange (EDI) remains instrumental for exchanging documents within the manufacturing industry. Across a company’s digital ecosystem, from trading partners to customers, EDI is the de facto standard when it comes to purchase orders, invoices, shipment notices, and other common documents.
While manufacturers are far from the only industry to rely on EDI, it is fundamental for the manufacturing industry when communicating with trading partners. EDI can enhance and streamline effective communications through automation, which frees up manufacturers to focus on more important tasks like product innovation, quality control, and customer service.
How EDI Helps Manufacturers
As a manufacturer, what if you could:
- Reduce the time it takes to connect to suppliers, logistics partners, and distributors?
- Reduce chargebacks for data exchange errors?
- Increase monitoring and visibility across your global ecosystem?
- Reduce costs for operational maintenance and annual support of legacy and end-of-life solutions?
Because EDI is the standard across multiple industries, EDI manufacturing is an essential tool for interacting with a complex ecosystem. Manufacturing companies must have the ability to perform modern EDI in order to effectively work with the various trading partners, including suppliers and vendors, customers, distributors, fulfillment organizations, and retailers,.
Benefits of EDI
EDI provides the reliable communications that manufacturers require. In fact, there are numerous benefits the manufacturing industry can gain from embracing and optimizing their EDI data exchanges. These include:
- Increased business efficiency through automated transaction workflows
- Reduced dependence on manual data entry and a reduced number of data errors
- Cost savings through reduced chargebacks and SLA violations
- Expedited order-to-cash, procure-to-pay, and load-tender-to-invoice processes
Additionally, legacy EDI systems and services, including EDI through a VAN, can get expensive due to transaction fees and leave numerous. Taking control of your EDI directly – and even outsourcing EDI as a managed service with a trusted vendor – allows manufacturing companies to regain control of their critical data exchanges, gain visibility into the processes, and stop worrying about the cost of fluctuating transaction volumes.
Four EDI Documents Typically Used in Manufacturing
So, what are some of the most common EDI documents used within the manufacturing industry? Obviously, each company is going to have its own set of needs based on its ecosystem, but there are some recurring documents that will likely be used by most manufacturers. Here are four.
1. Purchase Order
A purchase order (PO) is the most common EDI transaction set because it’s used when a customer buys something from a manufacturing company. Within the EDI purchase order, it contains information including which specific items were ordered as well as the quantity of the item to be manufactured. It also includes pricing information as well as shipping details.
2. Functional Acknowledgment
An EDI functional acknowledgment (FA) is the document used when a vendor notifies a customer acknowledging that it successfully received a purchase order. It is a receipt that the EDI document was either received or rejected. This allows for customers to resubmit the document quickly if it was rejected, and it helps avoids any potential costly delay in processing.
3. Purchase Order Acknowledgment
The Purchase Order Acknowledgement (POA) is an outbound EDI document that essentially confirms what was included within the purchase order. The manufacturing company is telling the customer that they received the PO, and they will in fact take the job. The POA confirms the order electronically and indicates whether it was rejected. Customers also can update their systems in order to make any changes to the document as needed.
4. Advanced Shipping Notice
An EDI advanced shipping notice (ASN) alerts a customer when a manufacturer is shipping an order. Inside the advanced shipping notice are details of the contents and packaging of a shipment, which includes carrier elements, quantity and item information, and tracking numbers for the package. This allows customers to more easily schedule inbound deliveries and reduce the time receiving shipments into inventory.
The Fresh Approach to EDI Manufacturing
Modern EDI, however, is more than a document standard or format; it’s a B2B data exchange mechanism that also includes the processes surrounding:
- Partner onboarding
- Data orchestration
- SLA management
EDI integration, then, is essential for manufacturing companies looking to streamline how they communicate with customers, trading partners, and other members of their digital ecosystem. The ability to submit and receive purchase orders, invoices, and other EDI transaction sets isn’t enough. Companies stand out when they bring on new business faster, embrace responsiveness and agility, and proactively troubleshoot errors.
How to Get Started
Modern EDI is core to a successful digital transformation strategy, one that gives companies the flexibility to reshape how they use technology to interact with customers, trading partners, suppliers, and applications. A modern integration platform, then, supports the manufacturing industry through a combination of elegant B2B integration capabilities, including data transformation and data movement solutions that support formats beyond EDI as well, including XML, flat file, and JSON, and all the secure protocols and communication channels – AS2, SFTP, HTTPs, and APIs – that drive today’s manufacturing processes.
Cleo Integration Cloud enhances end-to-end manufacturing processes, including order-to-cash, procure-to-pay, and load-tender-to-invoice, by creating one-to-many ecosystem data exchanges between any internal system, cloud, and trading partner application.
Modern EDI manufacturing doesn’t have to be a pipedream. Learn how to leverage hybrid cloud integration to speedily onboard new partners and applications, reduce integration bottlenecks, and strengthen connections with suppliers, logistics partners, and retailers.