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Importance of EDI in Manufacturing

Introduction

Modern manufacturing unlike the olden days that consisted of heavy machinery, lengthy hours of work, lot of human capital has now changed. Today, companies have state of the art equipment, advanced technologies with modern automated software to carry out lean processes and keep the environment green and clean.

Manufacturing professionals have been focusing on putting efforts at the right place and right time where it matters, increase production quality and reduce waste.

Similar to a retail companies, there are multiple entities manufacturers have to work with like raw material suppliers, retail companies, warehouses, ecommerce companies, freight carriers, third-party logistics companies, transportation companies etc.Manufacturers are buyers when they are buying raw materials and sellers when selling finished goods to their consumers.

Role of EDI in Manufacturing

EDI plays a key role in exchanging documents between the manufacturers, suppliers and retailers and can be integrated into your back-office systems like SAP, Oracle, Dynamics 365, Salesforce Cloud ERPs, WMS, TMS or any accounting platforms. By introducing EDI, manufacturers can strengthen supply chain by streamlining the overall manufacturing processes, enhance visibility, reduce errors, increase productivity by reducing response times. Keep in mind that EDI is only effective if you work with the right partner that focuses on proactive error monitoring, solid experience in EDI implementation, testing and customer support.

Common EDI Documents Used in Manufacturing

Let’s talk about the most common EDI documents in the Manufacturing space you should know about and what they actually mean:

  1. EDI 830 – Planning Schedule with Release Capability
  2. This document allows the seller (could be the supplier or manufacturer depending on who is buying and selling) to plan resources such as labor and material, and to fulfill orders automatically based on the customer’s inventory levels.

  1. EDI 850 – Purchase Order
  2. This document is sent from the buyer to the seller placing an order for goods.

  1. EDI 855 – Purchase Order Acknowledgement
  2. This document is sent back from the seller to the buyer as a confirmation about acceptance or rejection of the purchase order.

  1. EDI 860 – Purchase Order Change
  2. This document is sent or received by a manufacturer to request a change to a purchase order.

  1. EDI 856 – Advance Ship Notice
  2. This document is sent by the seller with the contents of the shipment, order information, description of products, types of packaging used, carrier information.

  1. EDI 810 – Invoice
  2. This document is sent by the seller to the buyer in order to bill for goods ordered and receive payment.

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