Supply chain management (SCM) electronic data interchange (EDI) integration improves communication i

While electronic data interchange (EDI) isn't typically integrated directly with SCM, the two can work together through an ERP system. SCM EDI integration leads to better communication with suppliers and customers.

EDI or electronic data interchange -- the standards based exchange of business information -- doesn't usually touch a supply chain management (SCM) implementation directly. Instead, SCM EDI integration generally occurs through an ERP system.

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According to Dennis Gaughan, an analyst with AMR Research, the supply chain and value chain both involve integrating information from multiple enterprises. "Companies need to communicate with suppliers to place orders or to gain better insight into demand so they can be more responsive," Gaughan said.

He pointed to recent AMR research on B2B practices which showed that one-third of the data in company ERP system came from external sources and much of that came from EDI and the B2B infrastructure. "The importance of integrating this data flow can not be discounted," he said.

EDI typically includes purchase orders, invoices, advance ship notices and similar transaction documents. It first began to achieve widespread adoption more than 20 years ago, though today EDI tends to be "under the radar" for many IT decision makers since it is a familiar and well-established business technology. More often than not, the EDI infrastructure is taken for granted, though Gaughan dismissed predictions that EDI is on the way out.

There are however, EDI trends that will impact SCM and EDI integration. For example, he said companies today "are starting to recognize that people running the EDI infrastructure are reaching retirement age and managers may have trouble finding those skills in house."

At the same time, some organizations are expanding their EDI infrastructure to reach around the globe, which would require not only generic EDI skills but also knowledge of local standards, for example, handling of taxes and regulations.

Bottom line: If you are concerned about maintaining an up-to-date B2B manufacturing environment that ultimately supports your SCM system, the key is making sure you have the resources necessary to adequately staff and administer EDI.

About the author: Alan Earls had his first exposure to computer programming on one of Digital Equipment Corp.'s PDP-8 minicomputers. He went on to serve as editor of the newspaper Mass High Tech and is the author of the book Route 128 and the Birth of the Age of High Tech, a photographic essay on a key part of Massachusetts economic history. He currently is a freelance writer, covering many aspects of IT technology and writing regularly for SearchManufacturingERP.com.

This was first published in January 2010

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