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Benefits and Technology of EDI System for Efficient Business Operations

Added on -2019-09-16

This article discusses the benefits of EDI system in procurement, payment and invoicing, and receiving. It also explores the EDI technology and its advantages for streamlining business operations. The article highlights the importance of EDI in reducing errors, saving time and cost, and improving cash flow. It also provides insights into Visionet's reliable and robust EDI technology software services and solutions.
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14. Benefits of EDIThe electronic data interchange is being developed in order to resolve the issues inherent in the processing of transaction which is paper-based and also in the various other types of the electronic communication. Further, the electronic data interchange acts as a tool which encourages 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 and invoicing and in receiving (Ellram et al., 2013).4.1Benefits of EDI in ProcurementReduced status of inquiry It is very difficult to plan the activities of marketing, deliveries to customers without the particular 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 using electronic 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 the order and even the changes which will be made in the order.Automated Replenishment The purchase orders along with the documents of the follow-up like acknowledgments of the purchase order, changes in the purchase order, will be generated automatically by the system of ERP depending on the thresholds of the inventory and further will be directly sent to the suppliers without any interventions of the human. Furthermore, by the supplier’s receipt the order 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 positive relation is built among the supplier and the consumer.Integrated changes in purchase order According to the research, around 40 percent of the orders of the purchases are being automated among the supplier and the buyer. This further gives rise to the discrepancies among both the parties and inconsistency and inaccuracy occurs in the transaction process of the supply chain like invoice and the notice of shipment ("OpenText Business Network –," 2015). Furthermore, implementing the electronic data interchange changes in purchase order improvises the accuracy by enabling the better understanding among the partners of trading and also eradicating the issue of commitment towards the purchases.4.2 Benefits of EDI in Payment and InvoicingRemittance details It has been observed that the reconciliation is one of the greatest challenges in the process of settlement 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 to minimize 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 to the 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 will help in providing the accurate details along with the deductions.Eradicating the invoice Further, to eradicate the issue of handling the invoices, various organizations have started using the settlement receipts process of the evaluation. The purchaser sends the electronic data interchange order of purchase including the cost of items, and the supplier delivers the goods along with the ASN (advance notice for shipment). The buyer gets the goods, and the actual price 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 being matched with the order of purchases and the goods which are being received along with the processing of the transactions.

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