A Sample EDI Document Flow

This process occurs with every vendor; the goal then is process automation and error resolution at the lowest, reliable cost. You need to be aware of short-ships, late-ships, and price increases immediately so that you can turn to another vendor. If not, you face great disruption on the factory floor and a sharp profit hit.
Standard EDI is effective with most vendors whose total annual sales are over $100,000,000; Web forms are suited for small vendors and non-production vendors.
Fine-tuning existing procedures and systems yields ROI’s over 50%.

(Read a description of the typical Order-to-Payment cycle for Customers).

You Send a Purchase Order

You Receive a PO Acknowledgment

[Time passes - The order is shipped]

You Receive a Shipment Notice (ASN)

You Receive an Invoice

Shows your final version of the transaction. They must spot any errors now and reply.

They make a promise by confirming:
* Price
* Quantities
* Dates
* More

The PO Ack provides you the greatest business benefit-you know now. The PO Ack change alert occurs on your ERP purchasing screen with which purchasing agents and material planners are most familiar.

You confirm they kept their promise in the PO Ack (scorecard). The Shipment Notice is sent the day the shipment occurs to tell you the exact quantities shipped. Your plans are not disrupted. It can help automate your check-in process at the dock and on the factory floor.

Accounts Receivable data entry is eliminated. Both your buyer and your Accounts Receivable staff can easily scrutinize it for errors. If in doubt, deduct.

The improvements can best be gathered using a steering committee as several departments are involved. And, their “ownership” will be enhanced.
Note that business processes are unique to each company. The above is an example of a standard process.

Small Vendors and Non-Production Vendors

The same process occurs, but with a twist. These vendors receive a Web form containing the PO. To send a PO Ack they click on a button to convert the PO to a PO Ack. Then they either click on “Acknowledged as received” or enter the changes. This confirms their acceptance. At the time of shipment, they convert it to a Shipment Notice or an Invoice. If you use a third party to host the Web form, then they pay a fee for the convenience. (The fee also provides them an incentive to move to standard EDI.)