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EDI 101 \ Supplier Benefits

EDI is a productivity-enhancing tool that replaces the less efficient and error-prone human processes involved with inter-company communication. EDI provides the following benefits to the supplier:

  • Elimination of problems and delays caused by order entry errors
    Manual order entry can result in errors in as many as 50% of all documents. Errors in order entry mean missed ship dates, shipment of wrong items or quantity, and lower customer satisfaction.
     
  • Personnel Reductions
    There are estimates that as much as 70% of all computer output becomes computer input. With EDI, the supplier is relieved of the process of re-keying orders and verification of orders.
     
  • Inventory Reductions
    While EDI is often used in Just-in-time inventory approaches that place the burden of inventory on the supplier, it is possible for the supplier to achieve reduced inventory levels also. Production schedules can be tuned more closely to customer demand, to reduce goods inventory.
     
  • Improved Cash Flow
    Time taken out of the invoicing/payment cycle improves the cash flow of the supplier.
     
  • Improved Customer Service
     
  • Improved Sales Tracking - Cost Savings
    A common benefit to both buyer and supplier is cost savings. Input, a California Based Market research firm, recently published a survey of Fortune 1000 size businesses, universities, and public companies entitled The North American EDI Service. One of the results of the survey was a comparison of the cost of manually prepared and transferred document at about $40 with the EDI document cost at about $2.10.
     

That 10 fold savings per document is impressive and when you think about the millions of such documents generated in some companies, you can see why there is pressure to implement EDI.


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