e-commmerce

11/16/2021
Unit-2

Maze Runner
[COMPANY NAME]
What is Supply Chain Management?
Recognizing the growing supply chain complexity, companies became highly interested
in supply chain management (SCM). They realized that they need a powerful array of
strategies that can help them cost-effectively facilitate all supply chain processes for
enhanced visibility and traceability, minimized wastes and costs, streamlined and
integrated operations, accelerated “time-to-customer,” and optimized overall
performance.
But what exactly is SCM?

Before we provide a working definition of SCM, however, it is important to understand

what SCM is not. SCM is not “inventory management, logistics management, supplier
partnerships, shipping strategies, distribution management, logistics pipeline,
procurement management, or even a computer system.”  But supply chain management
systems may encompass all these processes.
Ellram and Cooper (1993) defined SCM as “an integrating philosophy to manage the
total flow of a distribution channel from supplier to ultimate customer.” A more recent
definition from WhatIs.com states that “supply chain management is the oversight of
materials, information, and finances as they travel through the supply chain from supplier
to manufacturer, wholesaler, retailer, and customer.”  On the other hand, supply chain
management is “all about integrating and coordinating all the functions, activities,
transactions, and people interconnected in an integral value chain through which
products or services – whether physical or virtual – constantly flow back and forth from
supplier and manufacturer to distributor and, finally, to consumers.”

Supply Chain Management Benefits

Implementing effective supply chain management using powerful SCM solutions will
allow businesses to optimize the three key flows in the supply chain: product flow,
information flow, and financial flow.

Improved product and material flow

 Time-to-consumer is a crucial indicator of product flow efficiency. The less time it
takes for goods to reach the end customer, the more efficient the product flow.
However, there are many other factors to consider such as the quality of the materials
or goods that reach customers, the supply and demand balance, shipment options
and costs, and inventories.
 Effective supply chain management enables companies to improve product flow
through accurate demand and sales forecasting and also improve inventory
management to arrest the bullwhip effect and avoid underproduction. SCM also
 minimizes delays and allows full traceability and visibility into the movements of
goods from the supplier to the customer. SCM enables working strategies that can
accelerate time-to-market and optimize business speed, while ensuring high level of
product quality.
Seamless information flow
 “The effective SCM requires not only the integration of material flows but also the
integration of information flows in the supply chain (Frohlich & Westbrook, 2001;
Trent & Monczka, 1998).” Today, with customers constantly demanding for real-time
response and easy access to product and other supply chain content, information
flow should be uninterrupted. Intermittent and insufficient information flow due to a
fragmented supply chain can lead to poor supplier and customer relationships and
huge costs – to the tune of £1.2 billion per year, according to Oracle.
 Companies with effective supply chain management can remove the bottlenecks
to supply chain information flow. It can help them evaluate the quality of information
sharing, then implement solutions to best fill the gaps. SCM helps design effective
best practices to facilitate different types of supply chain information that usually
come in different formats and structures. SCM also enables accurate, timely,
complete, and relevant information flow to avoid missed opportunities and possible
risks.
 Effective and seamless information flow addresses information distortion and
miscommunication and promotes enhanced collaboration and relationship value
among supply chain stakeholders. It also helps improve visibility into all transactions
and accelerate generation of supply chain insights through past reports creation.
Enhanced financial flow
 Another pain point for supply chain players is how to improve cash flow in the
value chain, which involves “thousands of invoices and payments in a given year.”
The unpredictability and variability of financial inflows and outflows can add more
complexity to the inherently complex supply chain financial flow.
 According to Visa, generally, financial management challenges are (1) slow
processing due to manual and silo processes; (2) unreliable, unpredictable cash flows
because of lack of timely information; (3) costly processes due to compliance and
lack of employee empowerment; (4) high Days Sales Outstanding (DSO) caused by
invoice reconciliation delays; and (5) suboptimal credit decisions due to manual
processes for setting optimal limits.
 Implementing supply chain management can help companies address all these
cash flow challenges, allowing them to carefully evaluate their current processes,
identify the weakest links that slow down and hamper financial flow, and determine
the right solutions to address the problems.

By optimizing product, information and financial flow, companies can proactively create
and seize new market opportunities and mitigate risks that can negatively impact their
entire business. With an effective supply chain management system in place,
enterprises can comprehensively and continually assess their processes, identify and fill
all the gaps, lower costs, competently evolve with ever-evolving supply chains, and
enable quicker decision making.
6 Goals Of Supply Chain Management
(SCM)
1. Fulfilment Efficiency
At its most fundamental level, supply chain management’s objective is to ensure that
inventory is readily available in customer-facing positions to meet demand. Organisations
must strive to match supply and demand on time by making the best use of cross-chain
resources. Partners in the supply chain must collaborate to maximise resource productivity,
standardise processes, avoid duplication of effort, and reduce inventory levels. These
procedures will assist the firm in reducing waste, reducing expenses, and increasing supply
chain efficiency.

Cost reduction in the supply chain is an important goal, especially during periods of

economic uncertainty when businesses seek to conserve money. Efficiency efforts can be
directed at any component of supply chain operations. However, transportation and inventory
management are frequently targeted for cost reduction.

2. Customer Value Creation

Customers are the organisation’s lifeblood and necessitate the existence of a supply chain. As
a result, a core goal of supply chain management must be to constantly meet or exceed
customer needs. Customer value creation begins with a market-driven client service strategy
founded on well-understood customer expectations. These criteria should be the base to
develop supply chain strategy, design, and capabilities. As a result, service will be of higher
quality, variability will be reduced, and fewer violations will be addressed.

There are some excellent techniques available to assist in determining what customers value
the most. One of the most popular is referred to as quality functional design (QFD). To begin
developing a QFD, conduct consumer interviews to ascertain which characteristics or
qualities are most important to them. Then you match those qualities to your design to
guarantee that you’re concentrating your efforts on creating products and services that truly
fulfil your clients’ needs.

A-B Testing is another often used strategy for discovering client preferences. To conduct an
A-B Test, you must provide your customer with two options: Option A and Option B. Online
merchants frequently prefer this strategy to determine the best fulfilment solution based on
various parameters.

3. Increase Responsiveness and Flexibility

Another critical reason to invest in supply chain management capabilities is the ability to
adapt to change. The current business environment is volatile, with numerous factors
influencing how organisations run and survive. Supply chain management can assist
businesses in adapting to the challenges of globalisation, economic instability, and rising
consumer expectations, among other concerns.

Economic crises wreak havoc on consumer demand and manufacturing. Weaker firms who
cannot foresee changes in their supply chains, adapt capacity and manage inventory levels
will perish. To minimise the impact of economic downturns, firms should develop adaptive
operating models anchored by a flexible supply chain and a variable cost structure.
Additionally, the adoption of standardised procedures and systems enables the company to
rapidly scale up or down operations in response to sudden variations in demand.

Additionally, shortened product life cycles, the advent of new technologies that enable supply
chain innovation, and increased government regulation of supply chain operations such as
transportation all serve as compelling reasons to maintain agility. A responsive and adaptable
supply chain will be able to react to these changes with minimal disturbance.

4. Make Supply Chain Network Resilient

Apart from the ongoing business issues, firms frequently face abrupt and severe supply chain
interruptions. Natural disasters, labour strikes, and supplier failures are all examples of
uncommon events. These factors impede the flow of goods and expose the company to
financial and reputational harm.

Given the high cost of supply chain disruptions, it is important for businesses to manage these
supply chain risks. Along with risk mitigation measures, it is critical to building disruption
management capabilities. Organisations must have the capability to identify and overcome
disruptions and redesign procedures to mitigate future risks. For recognised risks, it is critical
to creating robust supply chains that are adaptable enough to recover from significant
accidents quickly. Supply chain managers must plan and test different scenarios for hazards
that are unlikely to occur but might be catastrophic.

5. Recognise True Competitors

The next objective of the supply chain managers is to find the right competitors. In this
digital era, true competition may not be the ones that organisations assume they are. For
example, many traditional brick-and-mortar retailers have been reluctant to recognise that
their most aggressive competition is not another brick-and-mortar retailer but an online
marketplace – Amazon.

To determine who their actual competitors are, organisations must shift their focus away from
the product or service they provide and towards the problem they solve. Dr Clayton
Christensen of Harvard Business School coined the term ‘Jobs to Be Done’ Theory to
describe this method. Consider the “task” that the product or service performs for clients and
whether other products or services could do the same function better, faster, or cheaper.
These alternative sources are the organisation’s true competitors, and they must build and
manage their supply chains in such a way that their product performs the same function as
their competitors’.

6. Increase Financial Success

One of the most obvious goals of supply chain management is to contribute to the
organisation’s financial performance. Historically, cost-cutting strategies have focused on
streamlining stock levels to reduce inventory carrying costs, automate fulfilment operations
to reduce labour costs, and consolidate orders to reduce freight costs. By contrast, leading
firms today leverage the supply chain to increase differentiation, sales, and market
penetration. Their objective is to maximise shareholder profit and competitive advantage.

A dual focus on cost control and revenue development enables C-level executives to
understand the supply chain management’s organisational value. As organisations place a
greater strategic focus on financial goals, their ability must evolve from a collection of day-
to-day operations to a strategic process led by supply chain managers. 
 FUNCTIONS OF SUPPLY CHAIN MANAGEMENT
The five functions of supply chain management include the following:

1. Purchasing

The first function of supply chain management is purchasing. In the manufacturing

process, raw materials are required to produce goods and products. It is important that
these materials are procured and delivered on time so that production can begin. For
this to occur, coordination with suppliers and delivery companies will be required to
avoid any potential delays. 

2. Operations

Demand planning and forecasting are usually required before materials can be

procured, as the demand market will dictate how many units to be produced and how
much material is required for production. This function is important in supply chain
management as organizations must accurately forecast demand to avoid having too
much or too little inventory that will lead to losses in revenue. Therefore, demand
planning and forecasting must be tied in with inventory management, production, and
shipping to avoid such mistakes. 

3. Logistics

Logistics is the part of supply chain management that coordinates all aspects of
planning, purchasing, production, warehousing, and transportation so that the products
will reach the end-consumer without any hindrances. It is helpful to have adequate
communication between multiple departments so that products can be shipped to
customers quickly and at the lowest cost. 

4. Resource Management

Production consumes raw materials, technology, time, and labor. Resource

management ensures that the right resources are allocated to the right activities in an
optimized manner. This will ensure that an optimized production schedule is created
to maximize the efficiency of the operations. When calculating the available capacity,
you should consider the capabilities of each resource and determine whether they can
perform the work that is scheduled on it. This will ensure that you are not over-
promising orders and that your production schedule is feasible and accurate.

5. Information Workflow
Information sharing and distribution is what keeps all of the other functions of supply
chain management on track. If the information workflow and communication are
poor, it could break apart the entire chain. Many disruptions that arise in supply chains
can be prevented by increased visibility and communication. Having a consistent
system that is used by all departments will ensure that everyone is working with the
same set of data and will prevent miscommunications and time spent updating
everyone on new developments. 

Characteristics of A supply chain:

Proactive Use of Big Data
With the onslaught of information on the Internet and its applications, data will
prove to be an important aspect of future supply chains. Supply chain service
providers and supply chain managers (SCM) will be able to use data to
identify inefficiencies, create proposed solutions, and implement such
solutions. Furthermore, the use of such data can be applied to creating
verifiable forecasts for needs in inventory.

Inventory Optimization
Having too much, or too little, of a given item is detrimental to a supply chain,
and research suggests the service parts supply chain will become more
prevalent than current supply chains. Inventory optimization relies on
accurate, precise forecasts for needed items. However, it also requires an
extensive evaluation and rapid identification of sudden changes in the market,
which will impact manufacturing, shipping, and all other aspects of the supply
chain process.

Flexibility
As the global economy becomes more interconnected with newer, emerging
markets, the number of corporate players within the supply chain will increase.
This leads to one ultimate problem: how will more orders be fulfilled at today’s
pace? This is where flexibility will become important. Flexibility refers to the
ability of the supply chain to adapt to the changes within the market, political
climates, and other events, which would otherwise affect the supply chain.

Rapid Fulfillment
The widespread increase in connectivity, particularly through mobile devices,
has taught consumers to believe in the power of their voice and demand
instant gratification. Obviously, instant transport has not yet been invented, so
the alternative remains ensuring orders are processed without error, quickly,
and via the fastest method of transport. Tomorrow’s supply chains will need to
combine varying methods of transports to gain a competitive advantage to
giving consumers their rewards: intricate shipping and tracking details and
their products.

Customization
Customization is a tricky aspect of a best-in-class supply chain. At first glance,
it seems most appropriate to define customization as individual ERP systems
for each supplier, distributor, or retailer within the supply chain. However,
customization refers to how unique supply chain processes may be
implemented across the supply chain to provide consumers with what they
want. For example, an order of new mobile devices may need to be fulfilled
within 24 hours and all appropriate packaging may be manufactured on-site at
the shipping facility. Additionally, increases in the number of individual
businesses within the supply chain will lead to a more diverse group of
products to manufacture and, subsequently, repair. As a result, the service
parts supply chain will need to be able to adapt and create customized parts
to meet this growing demand. Crowdsourcing venues, such
as Kickstarter and GoFundMe, have given ordinary people the power to
gather funds to create new products and services, which will also influence the
need to ensure customizability is a top priority for the supply chain.

Sustainability
Sustainability will be a driving force in a best-in-class supply chain. The Earth
has a finite amount of fossil fuels left, and future supply chains will have no
option other than using renewable forms of energy. Some renewable forms of
energy to use will depend on the geographic location of the varying aspects of
the supply chain. However, most areas will be able to benefit from the use of
photovoltaic cells to produce energy from sunlight. Other areas may take
advantage of volcanic activity in the form of geothermal energy, and other
places may enhance technologies to use biodiesel, which comes from the
decay of living tissue. Additionally, governments may implement strict
requirements for moving toward renewable sources of energy for
manufacturers in the coming years. Although some argue this will not happen,
consider the recent sunset of the incandescent light bulbs. It started in
manufacturing, and it has trickled down to individual homes. The same
process will occur with renewable energy resources, and tomorrow’s supply
chain leaders will need to be ready for a proactive role.

Compliance and Visibility

The last, and perhaps the most significant, aspect of a best-in-class supply
chain will focus on maintaining compliance and visibility. Compliance involves
adherence to any applicable local, state, and federal laws for supply chain
entities. However, end-to-end visibility can eliminate all of the potential issues
by allowing others to see into the supply chain. Essentially, this equates to a
way of self-assessment and monitoring of supply chain processes, which
leads to greater compliance.

Supply Chain Strategy:

Supply chain management (SCM) should enable companies to develop and
execute strategies that efficiently integrate the management of all the players
in a supply chain — suppliers, manufacturers, distributors, and customers —
so that production and distribution are accomplished at the lowest possible
total cost while meeting customer needs. In reality, though, companies
struggle to achieve success in managing their supply chains.

Among the many issues that make supply chain effectiveness challenging are
complexity in mass customization, product line proliferation, shorter product
life cycles, pressure for faster innovation, stress from quicker technology
cycles, tougher, non-negotiable service levels, extended global supply chains,
abundant channels and markets, and business cycle variability. With 40 to 70
percent of costs embedded in the typical supply chain, it is critical that
companies manage their supply chains optimally to achieve the highest
returns now — and in the future, as the business environment changes.
Companies with successful SCM programs employ eight basic best practices:

1. Start with strategy, but be practical. Go ahead — ask the “what if” questions
about your supply chain. This will help you assess alternatives. But remember
that the best supply chain strategy is one you can accomplish. Make it
specific, not general; practical, not conceptual. Include elements of process,
technology, organization, control philosophy, and metrics. Think through the
details. It’s not enough to say that you want to employ global sourcing; to
actually implement the strategy, you must specify the components, the
countries, and the suppliers.
2. Manage the entire supply chain with a focus on the customer. SCM should
span all links in the supply chain, from suppliers to logistics providers to
distributors to production facilities and warehouses to customers. This entire
network should be aligned to achieve the same goals: serving end customers’
needs and, to the greatest extent possible, delivering products that customers
want when they want them, and at the prices they are willing to pay.
3. Get on the CEO’s agenda. A top-down SCM approach — that is, an initiative
endorsed and led by the chief executive officer — is critical to securing senior
management buy-in and ensuring that the strategy will yield good results. A
Booz Allen Hamilton survey found that companies that assign SCM to
functional leaders achieve 55 percent less in savings than those whose CEO
plays a hands-on role in linking SCM to overall corporate strategy.
4. Control trade-offs between cost and service. Smart trade-offs between cost
and service are critical to the effective design of the supply chain network and
to achieving the goal of satisfying customer needs. For example,
overemphasis on service can lead to excess inventory and capacity.
Alternatively, when too much attention is paid to cost, service elements —
stock on hand, quality, customer satisfaction, and on-time delivery — can
suffer, which can hurt sales. Supply chain design should address these
questions: What kind of inventory, plants, warehouses, people, capabilities,
and suppliers are needed? Where should they be located? Should they be
owned or should they be outsourced?
5. Ensure that key stakeholders communicate. The objectives of business
functions frequently conflict. This can weaken the supply chain so much that in
short order it affects the company’s performance. For example, sales may be
dead set on meeting quarterly revenue targets, regardless of the inventory
implications. Or manufacturing managers may be entirely focused on cost
reduction, while completely disregarding its effects on customer service. With
these different perspectives competing against one another, cost, service, and
revenue are not optimized. Open discussion among business units and a
management-led initiative to achieve a carefully crafted supply chain strategy
are essential to ensure that decisions are made to benefit the corporation as a
whole.
6. Be smart about customization. Customers are demanding ever more
customized products and services, but customization adds expensive and
wasteful complexity to the supply chain if it is not carefully planned for and
managed. More part and product configurations mean more suppliers, more
inventory, and shorter production run times. Before burdening the supply
chain with these costs, assess the value of the additional products or services
to the customer and the company. Complexity can be reined in through
effective product architecture and by fully understanding all associated costs.
7. Understand the value and risks of technology. Information technology should
not be used to replace broken links in the supply chain. Processes
complementing the company’s SCM strategy must be designed first — then
the right technology infrastructure can support the strategy. Managers may be
tempted to eliminate the critical human element and rely only on software to
manage the supply chain. But software can’t possibly understand a company’s
strategic plan, or intelligently adjust the supply chain when it fails to match
customers’ needs. In SCM, there is no substitute for knowledgeable, hands-on
managers; technology can help provide data to make good decisions.
8. Adapt to changing business realities. Many SCM initiatives fail because
they’re constrained by the existing supply chain structure. In those cases, the
supply chain is tweaked, based on a limited short-term perspective, when it
needs to be optimized by radically altering practices and processes. Frequent
reexamination of the supply chain, with no limits placed on the assessment, is
necessary if companies are to ensure that the supply chain strategy remains
effective. Economies evolve, markets evolve, and channels evolve, and so
must the supply chain. What works in one business environment may be
unsuccessful in another. Continual adaptation of the supply chain to support
frequently changing business realities — particularly new product
introductions and new business launches — is a critical step to enduring
market leadership.

What is EDI?
EDI, which stands for electronic data interchange, is the intercompany communication of
business documents in a standard format. The simple definition of EDI is a standard
electronic format that replaces paper-based documents such as purchase orders or invoices.
By automating paper-based transactions, organizations can save time and eliminate costly
errors caused by manual processing.

In EDI transactions, information moves directly from a computer application in one

organization to a computer application in another. EDI standards define the location and
order of information in a document format. With this automated capability, data can be
shared rapidly instead of over the hours, days or weeks required when using paper documents
or other methods.

Today, industries use EDI integration to share a range of document types — from purchase
orders to invoices to requests for quotations to loan applications and more. In most instances,
these organizations are trading partners that exchange goods and services frequently as part
of their supply chains and business-to-business (B2B) networks.

Benefits of EDI
EDI applied to the different working systems in companies provides important
benefits, resulting in more streamlined and efficient operations. These benefits
include important cost reductions, which depending on the level of
implementation can be as high as 90% compared to the same process carried
out in hardcopy documents.

Automation of operations
The printing of commercial documents, their handling,
classification, inserting into envelopes, franking, sending,
registration in ERP, etc. All of these tasks are dramatically
reduced or even disappear.

Quicker response times

EDI documents are sent and received in seconds. Total or
partial automation of the associated processes also means
that registering documents in the ERP, validating quantities
or prices, or cancelling appropriate amounts, can be carried
out almost instantly.

Information accuracy
The information exchanged is based on standards known to
the sender or receiver, thus ensuring their correct
interpretation regardless of nationalities or activity sectors. In
addition, fewer typical mistakes are made when entering
data or interpreting illegible faxes, avoiding loss of
documents, errors when taking telephone orders, etc.

Cost cutting
Automation of operations, faster response times, fewer
errors, no more use of paper… All these enhancements
result in a much more efficient management system and a
drastic reduction in costs.

Team optimization
With EDI technology it is possible to handle a much higher
number of commercial operations with less manpower. The
phasing out of tasks associated with management of paper
documents frees up these teams to carry out tasks of greater
added value.

Integration of procedures between all trading partners

The interchange of electronic documents is agreed between
sender and receiver: This sets up a communication flow with
common procedures and working models, clarifying the
commercial relation and allowing operations on the basis of
known and shared management models.

Process status visibility

Replacing paper with e-documents facilitates monitoring. We
can integrate transactions such as acknowledgement for
orders, invoices, amendments to purchase orders, status of
payments pending, etc. Moreover, sending documents
through private networks such as EDICOMNet (EDICOM
Value Added Network) provides permanent knowledge of the
status of messages in terms of their receipt, processing,
reading, etc.
 Improved service to end user
Implementing EDI involves the application of optimum work
flows and response times. The possibility of receiving
advance receipt notification prior to the delivery of goods
allows, for example, the planning of resources and needs for
unloading or redirection. It also helps adjust production and
delivery plans, so improving the final service received by the
customer.

When considering EDI for the first time, it is important to weigh the advantages and
disadvantages. But even more important is choosing the right provider that can help you
get started and scale up as your business grows, while always committing to providing
the most up-to-date features and security measures. If you would like to leverage EDI to
streamline your operations, OpenText offers EDI solutions that let you efficiently,
reliably, and securely share data across a wide variety of EDI message types and
communications protocols

Benefits of EDI

1.      Better Speed:

 
EDI decreases the time it takes for an employee to make invoices and handle
purchase orders manually. Timing is crucial when it comes to processing of an order.
With EDI, businesses can speed up their cycles by 61% creating an allowance for
more automation process that significantly reduces, if not eliminated, time delays
related to manual processes that entail you to compare, enter, and file data. Records
management is reorganized and made more effective with simultaneous data
updates. Transferring documents electronically improves transaction speed and
perceptibility while reducing the cost involved in manual approach. Stock levels are
also kept regularly updated and visible.
2.      Business Efficiency.
 
For the reason that human error is lessened, businesses can profit from improved
levels of proficiency. Rather than place attention on common and tedious activities,
staffs can dedicate their attention to more significant value-adding tasks. EDI transfer
guarantees immediate processing and eradicates time wasting related with manual
entering, receiving, and sending orders. Improved quality of data provided by EDI
lessens data entry errors, improves accounts activity times as procedures become
efficient and can be made available for forecasting.
3.      Collective Productivity.
 
The EDI technology permits more business to take on more operations with less
human resources. Business teams can handle tasks with advanced additional worth.
With EDI, the whole process is completed in a matter of seconds. This is due to the
reason that automated process allows for instant completion of tasks like registering
and balancing validation.
4.      Cost Savings
 
This is amongst the most popular benefits of EDI. With EDI, the costs for processing
business documents get at least 35% cut, but it can be much more remarkable in
case of electronic invoices, with 90% savings a possibility. Then again, this extreme
economic saving is due to transactions automation, and, also the less involvement of
paper usage. EDI reduces your operating outlay by removing the costs of document
retrieval, filing, mailing, paper, postage, printing, recycling, reproduction, and
storage. EDI significantly reduces administrative, maintenance, and resource costs.

5.      Enhancing Financial Ratios.

 
With the Implementation of EDI, transferring and getting e-invoices takes place
almost instantly. EDI also adds automatic authentication and checking procedures,
which enable rapid dispensation at the endpoint, aiding estimate cash necessities. In
appreciation of this foresight, customers can take advantage of quick payment
rebates and the dealer’s liquidness is enhanced.
6.      Environment-Friendly Services.
 
The movement from paper-based services to the use of electronic transactions
available on EDI decreases CO2 discharges. Thus, the use of EDI encourages
corporate social accountability and help organization achieve sustainable supply chain
management.
7.      Information Availability on Process Status.
 
Replacing paper with e-documents makes it easy to maintain and track data. EDI
safeguards traceability and transactions integrability like changes to purchase
orders, invoices, pending payment status, receipt acknowledgment, and other similar
events. Additionally, sending data through private networks, make available lasting
control over message status about processing, reading, and receipt, etc.
8.      Improved Accuracy
 
Apart from inadequacy, the manual approach is also highly susceptible to error,
usually ensuing from entering and re-keying errors, indecipherable handwriting, and
improper document management. EDI considerably improves your business data
quality and removes the problem of re-working orders by bringing at least a 30% to
40% drop in transactions errors. The use of ethics acknowledged by both parties
(receiver and sender) guarantee correct interpretation of data, irrespective of activity
sectors or nationalities.
9.      Operations Automation.
 
The benefits of EDI tool considerably lighten the burden on management. Several
tasks, like enveloping, franking or registering, printing out business documents,
would fade entirely. EDI’s adaptableness modernizes the communication flow and
improves typically business relations with other trade partners.
10.  Refining Service to Partners and End Users.
 
Implementation of EDI implies the application of optimal workflows and response
time. The Implementation of EDI benefits the end user most of all, as manufacture
plans and distributions become much more accurate. EDI also enlarges your
customer base and managing trade partner relationship due to its quicker goods and
services distribution.
11.  Security
 
EDI boosts the level of protection for any transactions by strongly allocation data
across a more extensive variation of communicating protocols and safety standards,
hence, reducing supply chain risks. Your trading partners would profit from the
seamless movement of data and accessibility to the technology creates prospects for
newer business breaks.
5 Limitations of EDI
 
While countless businesses enjoy the benefits of EDI, some companies are still
cautious to try it out due to the following limitations of EDI.
1.      Cost of Implementation.
 
It is true that EDI provides massive cost savings benefits but for small businesses re-
designing and implementing software applications to fit in EDI into current
applications can be quite costly. Such limitations of EDI must be considered if you
plan on implementing such system.
2.      Electronic System Safety
 
EDI also necessitates substantial investment in computer networks and security
systems for maximum security. Any EDI system installed would require protection
from hacking, malware, viruses, and other cybersecurity threats.

3.      Preliminary Setup Consumes Time

 
Not only is the implementation of EDI system expensive to install, but it also
consumes a considerable amount of time to set up the essential parts. Thus, such
limitations of EDI can hinder fast-tracking of services if urgently required.
4.      Several Standards to Maintain.
 
Numerous businesses looking to implement EDI also consider the several standards
involved. These limitations of EDI do not allow small businesses to exchange data
with larger establishments that make use of latest edition of a document standard.
Some known measures include ANSI ASC X12, GS1 EDI, HL7, TRADACOMS, and
UN/EDIFACT.
5.      Suitable Backup System
 
EDI implementation also requires regular maintenance as the business functionality
is highly dependent on it. Some robust data backup system is needed in case of
system crash or for statistical purpose. Such limitations of EDI can cost some
substantial amount to implement.
Types of EDI
Different Types of EDI and a Range of Approaches to Enabling EDI Across a Trading
Community.

Electronic data interchange (EDI) is one of the most common forms of structured exchange
of business documents between organizations by electronic means. There are many different
types of EDI and a range of approaches to enabling EDI across a trading community.
Whether looking at EDI for the first time or expanding an existing EDI infrastructure to
support a variety of business partners across the globe, there is a method of utilizing EDI that
will suit your business needs, technical capabilities and budget. Many larger companies adopt
hybrid EDI solutions to connect with their business partners, dependent on size, importance
and frequency of their transactions.

Direct EDI/Point-to-Point
Brought to prominence by Walmart, direct EDI, sometimes called point-to-point EDI,
establishes a single connection between two business partners. In this approach, you connect
with each business partner individually. It offers control for the business partners and is most
commonly used between larger customers and suppliers with a lot of daily transactions. Read
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EDI via VAN or EDI Network Services

Provider
An alternative to the direct EDI model is an EDI Network Services Provider, which, prior to
the Internet, was referred to as a Value-Added Network (VAN). Many businesses prefer this
network model to shield them from the ongoing complexities of supporting the varying
communication protocols required by different business partners. Read More »

EDI via AS2

AS2 is an Internet communications protocol that enables data to be transmitted securely over
the Internet. EDI via AS2 delivers the functionality of EDI with the ubiquity of Internet
access. Read More »

EDI via FTP/VPN, SFTP, FTPS

FTP over VPN, SFTP and FTPS are commonly-used communication protocols for the
exchange of EDI documents via the Internet. Any of these can be used to connect to business
partners directly (Direct EDI) or via an EDI Network Services Provider. Read More »

Web EDI
Unlike EDI via AS2, Web EDI conducts EDI using a standard Internet browser.
Organizations use different online forms to exchange information with business partners.
Web EDI makes EDI easy and affordable for small- and medium-sized organizations and
companies that have only occasional need to utilize such a service. Read More »

Mobile EDI
Users have traditionally accessed EDI by a private network such as a VAN or the Internet in
order to send and receive EDI-related business documents. Mobile EDI has had limited
adoption, in part due to security concerns with mobile devices across an EDI infrastructure,
but mainly due to restrictions with the mobile devices available. The screen quality and size
of devices has been unsuitable, but there is a growing industry developing software
applications (‘apps’) for downloading onto mobile devices so it is only be a matter of time
before you will be able to download supply chain and EDI related apps from private or
corporate app stores. Read More »

EDI Outsourcing
EDI Outsourcing (also referred to as B2B Managed Services and B2B Outsourcing) is a fast-
growing option that enables companies to use external specialist resources to manage their
EDI environment on a day-to-day basis. This is in part driven by companies wanting to
integrate to back office business systems such as Enterprise Resource Planning (ERP)
platforms. Many companies do not want to use their internal resources to undertake this
ongoing type of work so they outsource it instead. Read More »

EDI Software
Implementing EDI software behind a company firewall is sometimes the preferred option.
This approach assumes that a company has the correct internal resources to be able to
implement the software and maintain it on an ongoing basis. Read More »