By Mark Peterman
President, Cornerstone Solutions Group
First of a two-part series
What do PDFs, papers, spreadsheets and emails all have in common? These are all materials used to communicate orders, order status and invoice information between companies doing business with each other. In addition, they all require manual effort and result in delays.
For example, if I’m a power plant, my ERP (Enterprise Resource Planning) system tells me I need to order more coal for my operation. So I create and send an order via email or phone call to the barge line to load and move the coal to my receiving dock. The barge line enters that order into their system and executes the order. To follow up, I’ll call my provider or ask for an email every day that lets me know the status of my order.
This scenario shows up in many different ways within an industry, and all these redundant manual processes waste your company’s valuable time. The inland marine industry can benefit from a higher adoption rate of Electronic Data Interchange, or EDI, to improve speed, accuracy and efficiency, and at the same time lower overall cost of exchanging orders, order status and invoice information. EDI is an electronic structured exchange of business documents between organizations in a trading community. “Electronic” refers to the use of computer and telecommunications technology to facilitate the exchange of information. “Structured” refers to the form between two parties in a commercial transaction.
There are many specific types of EDI, but we’ll focus on the business level for business-to-business operations. EDI can be the direct transmission of data from one system to another, or it can be the transmission of data through a third party often referred to as a “VAN” or Value Added Network. Think of the VAN as a system that serves as a hub for trading partners to exchange information using common language and form instead of creating direct connections with multiple systems.
The key to EDI is its convenient system-to-system operation. This nearly instantaneous system-to-system feature eliminates the lengthy manual effort of constantly verifying and exchanging papers, emails, PDFs and spreadsheets. I simply enter the information into my system, and it shows up in yours.
Let’s talk about the benefits of EDI:
- Speed—Exchange information in real time. Or, as Jim Taylor of MarineNet LLC, who runs BargeEx (a VAN), said, “When you put it in your system, you put it in your trading partner’s system.” You can exchange orders, order status, barge status, financial information, and help answer questions like “Where’s my freight?” or “How should this tow get built?” in real time, not hours or days.
- Efficiency—Focus on core business operations and cut down on low value work. If you can reduce the number of times you touch the order (or any other information), you’ll save on labor. In addition, if you’re printing and sending orders or invoices, you can cut down on paper and postage.
- Service—Analyze information and make timely and informed decisions. Taylor said, “EDI enables a service provider receiving an order to make better decisions about that order quickly. They make good decisions about how to service the customer and don’t waste time re-keying information or making phone calls.”
- Accuracy—Eliminate rekeying errors and introduce common reference points. A place may have two names like the “John Amos Power Plant” which is also known as “Scary Dock” on the Kanawha River. At Mile 158 on the Lower Mississippi River, is it Convent Fleet, Elmwood (as the old guys call it), or AEP River Operations? EDI resolves these errors with increased accuracy and standardization.
- Visibility—Easily access information within relevant systems. EDI eliminates repetitive, redundant, and inefficient recreation of data and reports. Companies no longer have to pull reports to send to customers because they can send information directly into a customer system where it’s needed.
- Cash Cycle—Shorten your time between work and cash by minimizing transaction process time. In addition, having the data easily accessible in your systems will reduce the time to resolve disputes about invoices versus the orders. Overall, EDI improves information processes by saving companies valuable time and money. By further adopting EDI, the inland marine industry can enhance its business-to-business communications with increased efficiency, accuracy and automation.