Electronic Data Interchange

18 Pages 4544 Words

hipped, and an invoice would be printed, which would then be mailed back to the supplier. In this example, even if the purchased materials were shipped and received on the same day the purchase order was received, the cycle time could be as much as a week, depending on the mail and the backlog at the supplier's order entry system. With the introduction of EDI, this scenario changed dramatically. Purchasing agents would still review their material requirements and create their purchase orders, but instead of printing them out and mailing them, the purchase orders would be transmitted directly to the suppliers over an electronic network. On the supplier's end, the transaction would be automatically received and posted. This new process could allow the shipment of material on the same day the purchase order was sent. Suppliers could send their shipping documentation electronically to the buyer in the form of a shipment notification, providing the buyer with accurate receiving documents prior to the actual arrival of the material. The supplier gained an additional advantage as well, since now the invoice could be sent directly to the customer's accounts payable system, speeding payment to the supplier. Speed, Accuracy and Economy are the benefits of EDI. Whether execution of EDI was in the area of purchase orders, advanced shipment notification, or automatic invoicing, several immediate advantages could be realized by exchanging documents electronically. Information moving between computers moves more rapidly, and with little or no human interference. Sending an electronic message across the country takes minutes, or less. Mailing the same document will usually take a minimum of one day. Courier services can reduce the time, but increase the cost. Facsimile transmissions work well for small documents, but for several hundred pages, it's not a feasible option. When alternate means of document transfer are used, they suffer from the major dra...