Improving Manufacturing Efficiency with Electronic Data Interchange (EDI) Automation

Over the past four years, manufacturing companies have faced numerous challenges, including labor shortages, congested ports, and shipping delays. These disruptions have had a significant impact on production and profits, causing a decline of up to 13%. Given these difficulties, it's no surprise that manufacturers are turning to automation as a solution to enhance their processes, boost productivity, and ultimately increase their profits. It is projected that by 2025, automation will have taken over 50% of manufacturing tasks.

Automating manufacturing processes goes beyond the factory floor. Back-office tasks such as invoicing, purchasing, and shipping often use paper-based procedures that can benefit from automation. Replacing manual processes with electronic data interchange (EDI) automation can improve productivity and increase manufacturing efficiency. It can help manufacturers remain competitive in an evolving landscape.

What Is Electronic Data Interchange (EDI) Automation?

EDI is a standard electronic format that enables information, such as shipping documents or purchase orders, to be exchanged between companies. Since its first use in 1965, EDI standards have expanded beyond purchase orders and invoices. The standards now include requests for quotations, loan applications, and delivery information.

Before EDI, documents were created and processed manually. Information could take hours, days, or weeks to deliver. Errors occurred as data was transferred from one system to another. For example, an invoice amount of $137,689.00 is entered into the accounts payable system as $137,669.00. When the invoice is paid, it is $20.00 less than the billed amount. The cost to identify and resolve the error could far exceed $20.00.

Because data is sent from computer to computer using standardized formats, the information is more accurate and arrives faster than paper-based solutions. With the added information, manufacturers gain greater visibility throughout their enterprise. They can make more informed decisions that can improve operational efficiency.

Streamlining Manufacturing Data Exchange

According to Deloitte, manufacturers must pursue their digital transformations to increase efficiencies and build resilience. They must deploy technology to streamline operations to compete in an uncertain economic environment. They need to direct their focus to creating and supporting smart factories.

For example, Schneider Electric, in Lexington, Kentucky, built the first smart factory in the United States. Part of that process included EDI automation. By replacing manual processes, Schneider Electric achieved operational efficiencies and improved productivity. With greater visibility, employees were able to redirect efforts to higher-value tasks, resulting in a stronger bottom line.

Schneider Electric is only one example of how EDI automation can streamline operations and build resilience. By reducing errors, increasing productivity, and improving visibility, EDI solutions can help manufacturers remain competitive.

Reduce Errors

Data entry errors cost businesses close to $13 million per year. EDI automation can help reduce costs by ensuring accuracy on an array of transactions. Whether managing inventory or delivering shipping instructions, EDI eliminates costly errors that can result from manual data entry. 

Complying with customer requirements can be time-consuming. Errors can result in delayed shipments or payments. Delivering products in an international market means understanding custom regulations. With EDI, manufacturers do not have to worry that their shipments will be delayed in customs. The technology can ensure that the correct documentation is transmitted to the appropriate customer or partner.

Automating invoicing means fewer errors and better cash flow.  Integrating EDI solutions with accounting systems allows billing information to be sent through EDI automation without manual re-entry of data. The invoice is generated, sent to the EDI solution, and delivered to the customer for payment in an automated sequence that takes seconds rather than hours or days. Faster, more accurate invoicing can shorten the payment cycle.

Increase Productivity

Fewer errors reduce the time employees spend correcting them. That time can be spent on other tasks, increasing their productivity. Automating repetitive tasks also boosts employee morale, which can improve productivity.  When surveyed, 42% of employees said that technology would not only speed up processes but it would make for a better work environment.

EDI automation can expedite the delivery of business documentation. Many manufacturers still scan or fax documents to their customers. Emailing a scanned bill of lading still requires someone to scan it and someone to print or display it. With EDI, the information is sent directly from one computer to another, where the data can be forwarded to the appropriate system for processing. 

Automating the process means hundreds of documents can be sent to multiple recipients in a matter of minutes. Productivity increases as processes are completed faster without employee intervention. Operations become more seamless for improved efficiencies.

Gain Visibility

Almost overnight, manufacturers learned they lacked the visibility needed to manage their operations. They didn't have adequate tools to see into their supply chains and couldn't make informed decisions to avoid disruptions. They lacked the data needed to assess partner performance and reliability.

EDI automation can help provide that visibility. Transmitting product orders electronically allows manufacturers to optimize production cycles. It eliminates manual ordering, improves scheduling, and reduces lead times. Integrating EDI and inventory management enables real-time inventory tracking, helping to maintain consistent levels to avoid stockouts. 

For manufacturers to have comprehensive supply chain visibility, they need information on where incoming raw materials and outgoing finished items are in the delivery cycle. EDI automation can exchange shipping data with partners and carriers for improved visibility. Real-time tracking of raw materials can help factory operations. If key components are delayed, changes in operating schedules may be required.

Similarly, knowing where products are in the distribution efforts enables manufacturers to make adjustments to ensure timely delivery. Integrating the data with other enterprise-wide systems can provide the needed information for making data-driven decisions.

Experience Manufacturing Efficiency

EDI automation facilitates digital transformation for manufacturing. It eliminates paper-based processes that are time-consuming and prone to errors. It reduces the time spent in resolving error-created issues and expedites the delivery of information for improved productivity. When viewed as part of an enterprise-wide transformation, EDI automation provides the visibility manufacturers need to pivot quickly in a competitive environment.

EDI technology offers the manufacturing industry a solution that meets today's needs but positions it for the future. Contact our knowledgeable team to learn more about seamless, error-free manufacturing data exchange.

EDI automation revolutionizes manufacturing by streamlining operations, reducing errors, increasing productivity, and providing greater visibility. Embrace EDI technology to stay competitive as automation transforms the manufacturing landscape. Explore the benefits of seamless, error-free manufacturing data exchange.