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SERES Blog English

The principles of EDI

The use of electronic data interchange is common in many industries, but it has penetrated the following sectors more thoroughly: Retail (supermarkets, department stores, distributors, etc.), Automotive (car or car part manufacturers, dealerships, etc.), Healthcare (hospitals, health centres, clinics, chemists, etc.), and Transport.

If your business has trading relations with companies in any of these sectors, you are likely to be already working on and finding ways to improve communication.

How is it used in messages between the supplier and the customer: orders, shipping notes, confirmation of the reception of goods or invoices?

EDI 2Although all sectors use the same documents, there may be some sectors where the existence of orders is mandatory, and others where the receiving advice message is optional. Similarly, some documents contain different information depending on the sector or type of interchange (restocking of fresh products, fish, etc.).

In any case, when a department store asks its supplier to, for example, restock milk; when a hospital asks its surgical material supplier to send new materials; or when a vehicle manufacturer asks for new tyres from its supplier, all of them need to send an invoice.

The reasoning is based on the fact that the customer, if we use the example of the vehicle manufacturer, places an order for goods (ORDERS in EDIFACT terminology), where they specify the number of tyres they wish to purchase. This order will indicate the amount requested, models, characteristics, etc. The tyre supplier will send the goods and will answer with despatch advice messages (DESADV) describing the products sent. This despatch advice message may contain information on two levels, basic and logistic, which indicates the detailed organisation of the material, pallets, boxes, etc. The factory, after receiving the tyres, sends a receiving advice message (RECADV) which is essential as it includes any necessary discrepancies (for example, if it receives 80 tyres instead of 100, or if the model of 4 of them is not the one requested). After the verification, the supplier issues the invoice message (INVOIC) with the corresponding corrections. These electronic invoices are created to have legal validity and/or to manage the information so that it can be processed.

The third player: Carrier / Logistics operator

This technology is not limited to the management of the relationship between the supplier and the customer. A transport or logistics company usually takes part in this relationship, sending the physical goods to the customer’s logistics centre.

As well as the aforementioned documents, in the area of logistics it is common to use other messages such as the despatch advice message (DESADV), instruction to despatch message (INSDES), order status report message (OSTRPT), international multimodal status report message (IFTSTA), forecasts of needs or consumption, delivery schedule, delivery schedule message (DELFOR), etc.

This real time exchange of information makes it possible to improve calculations and therefore optimise deadlines, space and human and financial resources. Most logistics operators work with this system depending on their customers and the amount of goods they transport.