Understanding the Needs of Manufacturers EDI Services in the Supply Chain

  February 27, 2012       By Ray Atia
A retailer and supplier are partners in a supply chain. As a member, a manufacturer wants to ensure that it will effectively supply products to retailers, which in turn sell them to retail customers. A manufacturer must eliminate as many unnecessary steps in the supply chain as possible. This is because the company will make more money if it can become very efficient in performing every step in the supply chain until the customer makes the sale. The manufacturer can use a third-party service to exchange accounting information with its supplier, leading to many business benefits, not the least of which is automated generation of new sales orders. The retailer/supplier system is known to the manufacturer as Manufacturer EDI. Such an electronic system will require some improvements over time to ensure that new orders are placed and satisfied on a level that optimizes sales for the retailer. For example, the manufacturing firm will want a system that ensures that its own production system does not create a lot of excess products. That's because excess products are significant of wasted labor and materials and other business ramifications such as the need to store excess products in a warehouse. The manufacturer can look at improving its own internal procedures to respond to the information shared with its retailers. For example, a manufacturing manager can look for patterns in overproduction for a specific retailer and encourage the retailer to correct its own inventory. If both the retailer and supplier are keeping accurate inventory levels, then there won't be as many instances of overproduction, which could lead to waste.