Logistics was coined by the military to describe the complicated organization involved in moving troops and equipment from one place to another. Similarly within the supply chain, logistics is about getting everything from goods to equipment to people from one place to the other. Logistics is no easy matter. Things have to be in place when they’re needed, and they have to be there in the right quantity.
Vast in scope, both the supply chain and the logistics within it involve all the departments of a company and outside entities. This includes manufacturers, suppliers, distributors, wholesalers, and retailers. A great deal of information has to be passed back and forth between all of these entities. Basically instructions, this information is about the goods and raw materials needed, the quantity they’re needed in, where they’re needed, and instructions about transportation. These instructions take the form of purchase orders (POs), invoices, shipping notifications, insurance documents, licenses, and more. For large-scale logistics operations, transmitting these documents between companies is best handled electronically, through a digital system called Electronic Data Interchange (EDI).
What is EDI, and how does it work?
EDI enables businesses to send digitized documentation directly from the computer of one company to the computer of another company. In order to be able to do this, and to do it instantly, EDI software converts these digital documents into a standardized format that allows them to be first transmitted, and then read, by the computer system of the receiving company.
There are three stages to EDI:
- Preparing documents, making them EDI ready.
- Converting the EDI-ready documents into EDI documents.
- Transmitting the converted documents to the receiving company.
Preparing in-house documents
The POs, invoices, and shipping instructions are either digitized or collected from their digital storage and converted to an electronic file that has the information needed for EDI. This makes them EDI ready.
Converting the EDI-ready documents
This is done with an EDI translator, software that puts the documents’ data into globally-recognized EDI formats. While there are quite a number of these formats, there are four that are used the most: X12, EDIFACT, TRADACOMS, and ebXML.
Transmitting the EDI documents
For this to happen, EDI messaging protocols are used. Examples of these are AS2, OFTP, and SOAP. For the EDI system to work, both sender and receiver have to be using the same protocol.
The role EDI plays in logistics and the supply chain
It saves time.
EDI software gets documentation to the relevant companies and departments within companies quickly, keeping them on the same page and the wheels of the supply chain running efficiently. This speedy communication makes it easier to forecast needs and results in better business decisions being made.
It makes the supply chain process more efficient.
With EDI, suppliers, distributors, shippers, and every other entity that’s part of the supply chain can communicate with each other in real time. This cuts out chances of delays happening in receiving, dispatching, warehousing, or transportation.
It makes it easier to monitor and track goods.
Because EDI uses a uniform format, it’s easy for relevant parties to search for information, and it’s easy to track and keep on top of purchases, orders, and bills of any kind. As a result of this, you can reduce errors in purchasing and shipping.
It streamlines logistics and the supply chain.
EDI is able to retrieve data from internal computer systems instantly and send it out securely. When you automate POs, invoices and the like with EDI, it speeds everything up and reduces errors, streamlining your supply chain.
EDI software integrates seamlessly with in-house systems like Enterprise Resource Planning (ERP), accounting software, your Warehouse Management System (WMS), and Customer Relationship Management (CRM) software.
How Cin7’s EDI helps supply chain management and logistics
Cin7’s EDI capabilities are robust, and the system has a large EDI network. A one-stop-shop, Cin7’s system will get you:
1. Automated workflow
Cin7 EDI automates order processing and shipping by:
- Setting triggers for automation and reducing manual data entry.
- Using an advanced messaging system that streamlines integrations with your trading partners and 3PL warehouses.
2. A one-stop-shop automated system
Cin7’s inventory management software has it all, inventory management, order management, and EDI. When businesses set up their EDI with Cin7, they can:
- Seamlessly manage orders and scale up your business.
- Reduce shipping costs and save time by optimizing cartons. Print Serial Shipping Container Code (SSCC) and generate Advanced Shipping Notifications (ASNs).
- Keep their product catalogs up to date and track orders in real-time with a centralized and intuitive EDI dashboard. You’ll have absolute inventory control, and your order fulfillment will be at its optimum level.
3. Multiple fulfillment models
Cin7 EDI supports ship-to-store and 3PL.
- Integrate with product distributors, 3PL providers, and commerce channels.
- Fulfill orders effortlessly with an intuitive EDI dashboard.
- Fulfill several orders simultaneously with a cartonization feature that picks the right box for items.
4. Prebuilt-in EDI mapping and protocols
- Map order workflow between yourself and trading partners around the world.
- Send EDI documents with these protocols: X12 American National Standards and EDIFACT- European Standards.
We’ve shown how EDI facilitates both the supply chain and the logistics that move it along by producing and transmitting documentation quickly. EDI eliminates mistakes that can be made when people input data and ensures that different players in the supply chain are kept in sync by getting the same information, at the same time.
To learn more about Cin7 EDI, book a demo.