I am sure you are familiar with the world-class Just-In-Time manufacturing of Toyota. If you are, then you are also aware of what an incredible competitive advantage Toyota has gained from fine-tuning their manufacturing processes. Certainly, this smooth efficient way of manufacturing couldn’t have happened without being able to transfer information to all the right stakeholders at the right time.
Electronic data interchange (EDI) has been around for over 40 years in manufacturing, automotive, and warehousing. The electronic information sharing across information systems has enabled trading partners to communicate better with each other and significantly improve the way they are cooperating with each other.
EDI is still significant in these industries. It is widespread across these industries and it will continue to have a strong presence. However, the modernization of EDI has been lagging behind. EDI Value-Added-Network (VAN) and point-to-point integration are still commonly used for distributing business-critical information.
Globalization means that EDI is more important than ever
The automotive industry has traditionally been global. While car manufacturers are located in countries like Japan, Germany, Italy or in the United States, for example, they have been working with suppliers around the globe. The suppliers are often situated in countries like China, India, Brazil, just to name a few, where integration skills are rather rare. Today, other industries are exceedingly globalized. This is the same for manufacturing and warehousing. Manufacturing goods in Europe and in the US has become extremely expensive
When the number of trading partners is increasing, it is important to have a solution in place that can ensure the fast on-boarding of new parties so the information can flow through information systems and supply chain management systems (SCMS) in real-time.
Ultimately, supply chain management is all about integrating the stakeholders’ activities, capabilities, and resources to ensure that goods are getting from A to B according to the plan. To achieve this, it’s crucial to be able to connect any information and supply chain management systems rapidly. It doesn’t only allow for sharing information, like invoices for example, but it will help to provide a single truth about shipments.
To have this single truth at their disposal, supply chain management departments need to collaborate with information technology providers that assist with the system and data integrations to transcend the boundaries of supply chain participants.
Connecting with customers, suppliers, manufacturers, 3PLs, or even with competitors will lower costs, increase the speed of information transfer, and reduce errors, thus improve data quality.
To improve the communication across trading parties, organizations need to find integration technology providers that can supply them with managed, scalable B2B system and data integration solutions.
Moving to the cloud
A growing number of organizations have been moving their EDI to the cloud. Why is this shifting happening right now?
First, integration platforms have matured during the last few years. An integration platform is a perfect tool for connecting any systems and applications – whether these are legacy on-premise ones or cloud-based SaaS applications. As cloud adoption is accelerating, but on-premise systems are remaining important, building hybrid integrations across them cannot be overlooked.
Second, integration platforms can be used for much more than just transmitting information between systems. An integration system can be used for orchestrating processes, managing the data for data integrity, and it can tackle complex integration challenges that would be almost impossible to implement with hand-coded integrations.
To outsource the implementation of EDI, top-level support is inevitable. When you are looking for a new EDI service, it’s crucial that the new provider would offer a reliable service with the ability to phase-in and possibly with no downtimes.
Earlier, it was an important factor that the solution could be easily maintained, however, in the new world of integration platforms, your vendor will take care of development, deployment, and maintenance as well. Creating new connections need to be easy, but a modern solution also needs to be able to handle the harmonization and validation of data.
Harmonizing heterogeneous data
As businesses become globalized and the number of trading partners is growing, heterogeneous data is causing a headache for many. There are many different standards and formats that complicate the communication.
Using an iPaaS for EDI becomes extremely useful when you communicate with parties that are using a variety of message formats. Some may use EDIFACT, while others communicate with ANSI X12 or some may have adopted more modern communication formats, such as XML and JSON. Some companies or industries have developed their very own proprietary formats. For instance, the automotive industry is using ODETTE for communication.
Harmonizing the data makes the life of all stakeholders easier – after all, who doesn’t like to receive messages in their preferred formats?
iPaaS can work with any data formats. The solution can be built so that it would automatically translate one data format to another before transmitting the information to an endpoint. Let’s say you are using XML for communication, but one of your customers is using JSON. In this case, the solution will ensure that your customer will receive all communication from you in JSON, and the JSON message that they send to you will be converted to XML.
The benefits of cloud EDI
While some may think that their current EDI solutions are working just fine, moving the solutions to the cloud can bring added value to your operations. It doesn’t only help you to improve your relationship with your ecosystem by being able to connect with them in a fraction of traditional on-boarding times, but you will be able to offer them to receive information from you in their preferred format in real-time.
Additionally, the solution can come with data validation functionality to eliminate errors in the data that would slow down the operations.
When you use iPaaS for communicating with your stakeholders, you will be also able to receive business intelligence that will help you in decision-making, planning, and forecasting.
Improving the efficiency of your EDI solutions will provide you with a competitive edge, improved operational efficiency, reduction of costs, process orchestration and the possibility of optimizing processes and operations.
Examples of EDI Transactions
Below there are a few supported EDI transactions – if yours is missing from the list and you would like to receive more information, feel free to reach out with your questions.
Warehouse EDI Transactions – ASC X12
883 - MARKET DEVELOPMENT FUND
884 - MARKET DEVELOPMENT FUND SETTLEMENT
886 - CUSTOMER CALL REPORTING
891 - DEDUCATION RESEARCH REPORT
940 - WAREHOUSE SHIPPING ORDER
943 - WAREHOUSE STOCK TRANSFER SHIPMENT ADVICE
944 - WAREHOUSE STOCK TRANSFER RECEIPT ADVICE
945 - WAREHOUSE SHIPPING ADVICE
947 - WAREHOUSE INVENTORY ADJUSTMENT ADVICE
990 - RESPONSE TO A LOAD TENDER
Car Manufacturing EDI Transactions – ODETTE
DELINS - Delivery Forecast / Delivery
EXHAND - For Delivery Schedule Exception Handling
CALDEL - JIT Delivery
SYNCRO - Sequenced Delivery
KANBAN - Delivery
FORDIS - ‘Ready for Dispatch’ Advice
AVIEXP - Dispatch Advice
INVOIC - Invoice
STOACT - Inventory Report
TRINAD - Forwarding Instruction
CONSUM - Consignment Consolidation
ORDERR - Purchase Order
ORDCHG - Order Change
REPORD - Order Response
PRILST - Price List Based
REMADV - Remittance Advice
STATAC - Account Statement
CALL-OFF - Call-off schedule
ENGDAT - Engineering data
Manufacturing EDI Transactions – X12
810 - INVOICE
820 - PAYMENT REMITTANCE ADVICE
830 - PLANNING SCHEDULE WITH RELEASE CAPABILITY
850 - PURCHASE ORDER
855 - PURCHASE ORDER ACKNOWLEDGEMENT
856 - ADVANCE SHIP NOTICE
860 - PURCHASE ORDER CHANGE
997 - FUNCTIONAL ACKNOWLEDGEMENT
If you are interested in this topic, download our 'The Most Common EDI Challenges" eBook: