IQMS Blog for Manufacturing ERP Expertise

EDI in the Lean Supply Chain

Posted by John Asi on Fri, May 07, 2010 @ 01:13 PM

Successful companies have always been on the search for ways to streamline their business processes and run their daily operations as efficiently as possible.   These companies know that their success as a business relies on how efficiently they interface within the supply chain and adapt to demand as needed.  The brutal economy that crippled companies around the world last year and the slow recovery that has followed has forced many companies to evaluate how they operate within the supply chain and find ways to increase their productivity while keeping the cost of doing business down.  EDI is a powerful tool in streamlining business processes and providing cost savings in the right environment.

So one might ask, "What is the wrong environment?"  Good question.  Too many times the consideration for using EDI does not go beyond the effort needed to get an EDI file in-house and possibly formatting a report to output some needed information from the data because a trading partner requires communication through standard EDI documents.  Another situation may be the result of a legacy system that has been in place for many years with no one understanding what the magical "EDI box" really does other than it regularly outputs reports containing business critical information.  From there a user might take that information and key in any orders and then call it a day and a job well done if they entered all the data correctly.  In either case EDI has not proven its usefulness as a powerful and effective cost saving business tool.

Finding the "right" environment in which to implement EDI is not very difficult.  It does require a little investment of time, a good understanding of internal business processes, and the right tools to make the most effective use of EDI within the corporation.

The time investment comes in the form of doing the research and understanding what documents a trading partners can work with and if those documents are used in sufficient quantity such that they consume a significant time to handle manually.  A simple example of this is an automotive manufacturing delivery schedule (X12 862 or EDIFACT DELJIT).  While receiving 1 or 2 on a weekly basis may require several hours to process manually, handling 20 or more of these documents becomes a significant process.

Understanding internal business processes is critical in order to adequately define business rules that are needed to correctly translate and process EDI.  Knowing how key data elements are used within the company will help in configuration and support of the EDI process.

Ultimately, the most important piece in the equation is having the right tools available to make effective use of the EDI process and the data it provides.  EnterpriseIQ and its integrated eCommerce module is such a tool.  The eCommerce module is capable of processing both inbound and outbound transactions.  Being integrated makes it possible to take inbound EDI data directly into the system and automatically create forecast schedules and firm sales orders and output order acknowledgements (855), shipping notices (856) and invoices (810) just to name just a few transactions.  With the powerful MRP engine in EnterpriseIQ, the system can create work schedules and purchase requirements based on the data provided by the EDI transactions.  Add the ability to take purchase requirements and generate outbound vendor purchase forecasts/orders (830 and 862) through the eCommerce module, EnterpriseIQ shows its strength.  Another tool available within the EnterpriseIQ suite is EServer.  This tool is used to completely automate the defined business process for handling EDI from start to finish.  Specific actions can be defined to allow processing of acknowledgements, orders, notices, reports or any other requirements to effectively monitor and process the data flowing through the system.  Utilizing EServer with the eCommerce module and the MRP engine allows EnterpriseIQ function seamlessly and efficiently within the supply chain while reducing the amount of time required handling manual processes, eliminating the chance for human induced errors, and keeping data and material flowing where it needs to.

Any company looking to streamline their processes and better fit into the supply chain should take the time to research how EDI might help them cut costs and become more efficient.  While EDI may not be a fit for every company, knowing how they interface within the supply chain can provide valuable information and other opportunities to look for efficiencies.

Review how automotive supplier Nissen Chemitec America is utilizing eCommerce solutions by reading their case study.

Tags: ERP, manufacturing ERP software, IQMS, EnterpriseIQ, eCommerce/EDI, Automotive ERP, Supply Chain