Suppliers under control: How EDI contributes to effective supplier management

A signed contract does not yet mean that the goods will arrive on time. In the supply chain today, it is no longer enough to rely on agreements and spreadsheets. Companies need hard data in order to monitor the performance of their partners, plan production more quickly, and work better with cash flow. This is exactly where EDI comes into play – a tool that has long ceased to be only about document exchange, but about gaining control over everything that is really happening in your supply chain.

The most common problems of supply chains

The current reality of supply chains in more and more companies looks like this:

• uncertain deliveries,
• overloaded logistics,
• frequent outages,
• high error rates
• and pressure to reduce costs.

Production and inventory planning due to these complications often resembles driving blind, and every mistake in the chain multiplies – from overstocking in warehouses to unnecessarily blocked capital.

At the same time, dependence on key suppliers is increasing. Production is often linked to several essential partners, without whom the whole process stops. It is enough if one of them is delayed, has a problem with materials or processes the order incorrectly, and the outage is immediately transferred to you. Not having an alternative or at least a reliable overview of supplier performance means accepting risk that can endanger the entire business – from missed deadlines to the loss of key customers.

An important step to solving these problems is quality data. Without it, many decisions in the supply chain are made only intuitively or retrospectively. Supplier performance is not evaluated systematically, OTIF (on time in full) analyses are missing or outdated, and errors are solved only after the problem occurs. Without data, it is not possible to manage, improve, or predict.

From Spreadsheets to Real-Time Overview: How EDI Changes Supplier Management

Electronic Data Interchange (EDI) is still perceived by many companies purely as a service for transmitting orders, invoices, and other documents in a structured format. But if it is properly set up, it becomes a fully-fledged tool for managing the supplier–customer chain.

Communication with suppliers via EDI takes place as follows:

• you send the order as an EDI message directly to the supplier’s information system,
• their system automatically generates an order confirmation, dispatch advice, or invoice – all of these documents are immediately entered into your system,
• the data obtained from this communication can be used immediately.

EDI enables you to work with data in real time and turn it into specific decisions. You no longer just monitor delivered/undelivered, but also why, when, and for how much. Thanks to EDI data, you can measure the performance of your suppliers:

• you track how often they deliver on time and in full (OTIF),
• how quickly they respond
• and how many errors appear in the orders.

Thanks to this, you can implement steps to improve processes, such as:

• rewards for suppliers for reliability,
• penalties for supplier errors,
• replacement of unreliable or slow suppliers,
• and more accurate forecasts of production and purchasing.

Thanks to EDI, suppliers know exactly what and when they are to deliver, and you have the certainty that your order hasn’t been overlooked. Instead of forwarding emails and making phone calls, you rely on a unified, transparent data flow. Plus, you gain a data foundation for reporting, forecasting, and decision-making. EDI thus becomes the brain of the entire supply chain.

EDI as a barrier against chaos: 3 key streams that keep the chain in motion

We’ve already mentioned that EDI automates document exchange and helps manage suppliers. At the same time, it ensures the smooth operation of the entire supply chain.

It only works if three key “streams” are aligned. Once one gets stuck, the whole chain can break. With EDI, you prevent these blockages before they happen:

1. Goods – To avoid overloaded warehouses or delivery outages, the flow of goods and materials must be well planned and continuously managed. EDI automates the transfer of orders, delivery notes, and receipts, so you always have an up-to-date overview of what is where and when the next shipment will arrive.
2. Information – It’s not just about internal visibility. You also need to know what is happening at your suppliers and their subcontractors. EDI connects all parts of the chain and enables data sharing in real time. Instead of manually retyping or waiting for emails, you get instant access to accurate, standardized information.
3. Money – Fast and accurate processing of invoices and other documents is key for cash flow. EDI eliminates errors from manual input and ensures that documents arrive on time and in the required format. This speeds up approvals, gives you better insight into liabilities and receivables, and provides financial control. Ideally, EDI is combined with supply chain financing.

And what’s more: with this level of overview and control, managerial decision-making also becomes calmer and more strategic. Ultimately, it’s about making sure your company is not only fast, but also predictable, stable, and resilient.

Gain a clear overview of your suppliers’ performance. Contact us and we’ll find out how EDI can work for you too.