4. implementation of EDI SYSTEM.

Added on - Sep 2019

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14. Benefits of EDIThe electronic data interchange is being developed in order to resolve the issues inherent in theprocessing of transaction which is paper-based and also in the various other types of theelectronic communication. Further, the electronic data interchange acts as a tool whichencourages the organizations in order to re-engineer the flow of information and the processes ofthe businesses. Furthermore, the benefits of EDI are given in procurement, payment andinvoicing and in receiving (Ellram et al., 2013).4.1Benefits of EDI in ProcurementReduced status of inquiryIt is very difficult to plan the activities of marketing, deliveries to customers without theparticular acknowledgment of the acceptance and the receipt of the order. Further, it is time-consuming to keep track of the status of confirmation and the receipts all the time. But, by usingelectronic data interchange acknowledgment of the purchase order, functional and the changes inthe purchase order into the process of business, the buyers can eradicate the queries of the status.Furthermore, they get notified automatically when the supplier receives, rejects or confirms theorder and even the changes which will be made in the order.Automated ReplenishmentThe purchase orders along with the documents of the follow-up like acknowledgments of thepurchase order, changes in the purchase order, will be generated automatically by the system ofERP depending on the thresholds of the inventory and further will be directly sent to thesuppliers without any interventions of the human. Furthermore, by the supplier’s receipt theorder is uploaded to the system of order management of the supplier. Also, this helps in reducing
2the cost of inventory. The payments are received much earlier, and as a result, the positiverelation is built among the supplier and the consumer.Integrated changes in purchase orderAccording to the research, around 40 percent of the orders of the purchases are being automatedamong the supplier and the buyer. This further gives rise to the discrepancies among both theparties and inconsistency and inaccuracy occurs in the transaction process of the supply chainlike invoice and the notice of shipment("OpenText Business Network –," 2015). Furthermore,implementing the electronic data interchange changes in purchase order improvises the accuracyby enabling the better understanding among the partners of trading and also eradicating the issueof commitment towards the purchases.4.2 Benefits of EDI in Payment and InvoicingRemittance detailsIt has been observed that the reconciliation is one of the greatest challenges in the process ofsettlement for the relationship between the buyer and the supplier along with the high volumes of
3transaction. So, the buyer consolidates the various invoices to a single payment in order tominimize the fees of banking along with the simplified process of the approval. Further, the bankwill inform the customer with the help of the regular statement like a credit is being received tothe account in a particular amount from a respective customer. Therefore, the only solution to theproblem of reconciliation is an implementation of remittance detailed advice of EDI. This willhelp in providing the accurate details along with the deductions.Eradicating the invoiceFurther, to eradicate the issue of handling the invoices, various organizations have started usingthe settlement receipts process of the evaluation. The purchaser sends the electronic datainterchange order of purchase including the cost of items, and the supplier delivers the goodsalong with the ASN (advance notice for shipment). The buyer gets the goods, and the actualprice is being calculated. Further, along with the ERS, there is no requirement of the invoice, andthis helps in saving the cost and the time in a shipment of goods. Further, the ERS is beingmatched with the order of purchases and the goods which are being received along with theprocessing of the transactions.
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