Driving Connectivity and Efficiency with EDI in Supply Chain Management

Supply chain partners must coordinate with each other. That requires communication between business systems, even when each business uses a different backend system and organizational data structure. Electronic data interchange (EDI) is the industry standard way that this communication and coordination is made possible, so EDI and supply chain management go hand in hand.

The way that EDI works is relatively simple and straightforward.

EDI is a connection protocol between two business systems that sets the rules and standards for sharing electronic data. This includes the transmission rules, document format, message flow, and software that is used to send and receive the documents. The EDI standard also dictates mandatory information that must be included in an electronic exchange, as well as optional information for a particular document that can be included.

The advantages of using EDI and supply chain management together include:

• Efficiency: Data sharing becomes automated.
• Accuracy: Errors are reduced by eliminating manual data entry
• Cost savings: Time and resources are saved by not having to process documents.
• Visibility: Better insight comes from real-time visibility.
• Coordination: Collaboration improves with automated data sharing.

While there are newer integration methods, such as APIs, EDI is an essential industry standard widely used for sharing information among supply chain partners.

Intelligent EDI and Supply Chain Management

When paired with a modern ERP backend, EDI and supply chain management can do even more.

The automation, artificial intelligence, and added visibility baked into modern ERP can interface with EDI connections and make them more intelligent and efficient.

Some examples of how a modern ERP solution can make EDI and supply chain management more intelligent:

• Anomaly Detection with AI. The AI within an ERP solution can monitor EDI interactions and identify unusual transaction patterns such as mismatched purchase orders or invoices. These can then be flagged for faster, smarter error handling.
• Event-driven Notifications and Workflows. EDI data can be combined with rule-based or AI-driven triggers that send out notifications when specific events occur during data interchange. Workflows can also trigger automatically depending on the data that is sent or received through EDI.
• Real-Time Analysis. Predictive analytics within ERP can analyze EDI data in real-time and spot potential delivery delays, supplier performance issues, or shortages that might impact operations. The system can even be configured to automatically act on these signals, for instance, by rerouting a reorder to an alternate supplier.
• Centralized Monitoring. ERP can remove the “black box” nature of typical EDI activity by showing EDI history and the root cause of any failed data exchanges for a more complete picture of the interaction between the company and a given supplier. ERP can then automatically restart the EDI interaction or send a notification to the right user/role for correction.

SAP Cloud ERP Makes EDI Easier and More Intelligent

When it comes to EDI and supply chain management, SAP Cloud ERP takes away much of the pain typically associated with setting up EDI integrations for the supply chain. The secret sauce is the templated EDI connections for SAP Cloud ERP that are available on the SAP Business Technology Platform (BTP) online marketplace.

Templated EDI integrations are pre-made connectors and configurations that address common scenarios that businesses face, saving time and effort. They act as a springboard, allowing a business to link its ERP to other systems quickly and efficiently while avoiding custom code development and the setup headaches that often come with establishing an EDI integration.

Through the BTP, supply chain operations can also more easily create custom EDI connections to any business system where there are no templated integrations.

Through embedded AI and system-wide automation, SAP Cloud ERP natively supports all of the smart EDI functionality mentioned above as well, helping to marry intelligent EDI and supply chain management.

For an invoice sent via EDI, for instance, traditionally, a supplier would send the invoice through EDI, it would be manually reconciled with a purchase order and goods receipt, and then tax and regulatory compliance would be handled outside the system.

With SAP Cloud ERP,  however, this invoice would be automatically matched against purchase orders and goods receipts using machine learning-based 3-way matching, and then it would automatically handle tax in real-time with the correct taxing authority and validate the invoice against the relevant country-specific tax regulations.

Another example is an advanced shipping notice (ASN) from a supply chain partner.

Traditionally, a supplier would send an ASN over EDI, then this would be used for preparing the warehouse for receiving. But with SAP Cloud ERP, the ASN could flow directly into the company’s warehouse management system and both notify the warehouse automatically and supply real-time GPS tracking, carrier updates, and predictive estimated time of arrivals. If there are delays or route deviations, or temperature excursions in the case of a cold chain, SAP Cloud ERP can then automatically reallocate or send out an alert based on the exception.

Learn More about SAP for EDI and Supply Chain Management

SAP Cloud ERP levels up EDI and supply chain management, both by making EDI connections easier to integrate and by increasing EDI’s power through system intelligence.

Discover how SAP Cloud ERP can help your business with EDI and more efficient supply chain management by calling one of our experienced ERP consultants at (801) 642-0123 or by writing us at info@nbs-us.com.