EDI

EDI (Electronic Data Interchange) is a standard format for exchanging business data, the data could be finance data or health related information as we handle in healthcare industry.

EDI message contains a string of data elements, each of which represents a singular fact, such as a price, product model number, and so forth, separated by delimiter. The entire string is called a data segment. One or more data segments framed by a header and trailer form a transaction set, which is the EDI unit of transmission.

Benefits of the EDI Process

1.Reduced data entry errors: EDI does not involve data entry at multiple points. In the traditional process, a sender creates a purchase order on the system, prints the order, and then faxes or mails it to a trading partner. The receiver then rekeys the same information on his or her computer. The process is prone to data entry errors. This procedure is repeated when invoicing takes place. With EDI, data goes directly from one computer to another without involving a human being.

2· Reduced processing cycle time: The biggest advantage is the reduced processing time of the complete cycle. As soon as orders are entered into the system, they can be processed on the receiving side in seconds. There is a considerable savings in the processing time of document transfer.

3. Availability of data in electronic form: Data from EDI is in electronic form, which makes it easy to share across the organization.

4· Reduced paperwork: The entire EDI process can be handled without using a single piece of paper.

5· Reduced cost: Time is money. Any savings in time is directly linked to savings in money. The initial cost of an EDI setup is certainly higher compared to the paper process, but over a long period it is very cost−effective.

6· Reduced inventories and better planning: Companies do not have to keep a safety stock for the time taken with order processing. Changes to planning schedules can be communicated instantaneously. MRP (Material Requirements Planning) can take into account a shipment in transit as soon as an Advance ship notice (EDI 856) transaction is received.

7·Standard means of communication: Because EDI enforces standards on the contents of data,uniform naming standards and field sizes have emerged. Such consistency leads to clearer communication and less ambiguity.

8·Better business processes: Compared to traditional methods of exchanging business documents, EDI is certainly a better way of communicating with your trading partners. Companies are willing to share information and participate in inter−organizational issues. This environment enhances supply−chain management.

9·Competitive advantage: In many cases, companies that have implemented EDI have an advantage over their competitors, especially when dealing with government agencies or large corporations.

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