Tag Archives: electronic data interchange

What is Vendor Managed Inventory?

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Vendor managed inventory isn’t a recent idea, though it has not been implemented by very many merchants. Whenever it is applied in the correct manner, it can bring massive benefits to any business.

A vendor managed inventory is where the supplier takes responsibility for inventory management instead of your company taking care of it in house. When implemented and managed correctly it can be a very effective strategy, one it’s main beneficiaries is Walmart, who could put a large part of their success down to successful implementation.

The traditional method of in-house inventory management leaves businesses open to stocking excess inventory, or understocking, neither of which are desirable as one will be costly and the other will prevent your business from being able to meet demand. The problem is finding the right balance between holding enough stock to meet peak demand and not overstocking so you have excess inventory when it’s not needed.

Allowing vendors to take over some of the inventory management reduces the impact of this problem, as it is shared between sellers and buyers. The goal is to ensure that the buyers, who are retailers, only purchase what they can sell. Contact is maintained with sellers, who are usually manufacturers, so that stock is only purchased in small quantities more often.

The key to the system is that inventory management is taken care of by the seller, who distributes it to the buyer according to real time demand projections.
This is opposed to depending on quarterly sales forecasts dictating how much retailers will buy from their suppliers. It depends on retailers constantly updating their suppliers about inventory counts, and the suppliers can then anticipate and manage demand and send frequent shipments when required.

This is made possible by the communication technology which is available today, especially Electronic Data Interchange (EDI), which is a messaging protocol which lets different companies systems communicate directly with each other.

This is of great benefit to the customer, as the products they want are always there at a price which is not inflated to cover the retailers losses.

It also brings the manufacturers closer to the customer, by providing information about the manufacturing process to them due to the closer relationship they have with the retailer, and this is important in todays marketplace.

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Improving Fleet Management

As the economy slowly improves, the number of goods to deliver will increase, meaning transportation companies will need to meet the rising demand. In order to do so, transportation companies need to ensure they are running at maximum efficiency. Below are some tools and tips on how to keep your fleet going strong.

Activity-Based Costing Software (ABC)
ABC software allows companies to determine service costs, starting from initial acceptance to final delivery. To receive the maximum benefit from ABC software, its crucial to capture accurate data every step of the way—loading, departure, arrival, unloading and return. From there, time and costs associated with each action can be analyzed to point out inefficiencies.

Electronic Onboard Recorder (EOBR)
EOBR’s allow transportation companies to better manage their fleet by improving logging, eliminating paper, ensuring compliance, monitoring fuel and providing real-time vehicle locations.

EOBRs also allow companies to look at how much individual vehicles, routes and loads are costing by looking at vehicle and driver performance.

There are many RFID fuel purchasing solutions that ensure only authorized vehicles use the gas pump, in addition to providing a real-time view of fuel consumption and cost.

Electronic Data Interchange (EDI)
Companies can use automation through EDI to help eliminate the need for human data translation, which wastes valuable time. For example, it can be used to perform regular checks on drivers’ insurance records.

Optimizing Route Plans
Using fleet management software can help create route plans that optimize and balance delivery profitability and customer service.

If you have other tips on fleet management and transportation, share them by commenting below, or on our Facebook or twitter pages.

EDI: Electronic Data Interchange

Electronic Data Interchange, or EDI, refers to the structured transmission of data from organization to organization through electronic means. This could be to transfer electronic documents from one computer system to another and refers to a family of standards. EDI is primarily based upon ASCII (American Standard Code for Information Interchange), and focuses on formatted single messages rather than the whole sequence of conditions and exchanges that make up inter-organizational processes. Because of this EDI also implies a sequence of messages between two parties, having formatted data that represents the document. With EDI, these messages are communicated by computer to computer, rather than having human intervention.

Since EDI is considered to be a technical representation of a business conversation between two computers, it often describes the rigorously standardized format of these electronic documents. Because of this, it is important to have strict standards. EDI standards were designed to be independent of software and communication technologies. In 2002, the IETF published RFC 3335, which offered a standardized, secure method of transferring EDI data via e-mail.
The four major sets of EDI standards are as follows:

  • The UN recommended UN/EDIFACT is the only international standard and is predominant outside of North America.
  • The US standard ANSI ASC X12 is primarily used in North America
  • TRADACOMS standards are used in the UK retail industry
  • ODETTE standards are used in the European automotive industry.

Typically, EDI documents contain the same information that would be found in a paper document of the same function. For example, an EDI 940 ship-from-warehouse order is used by a manufacturer to tell a warehouse to ship the product to a retailer. This contains a shipping address, billing addres, a list of product numbers in the form of a UPC barcode, and quantities. However, EDI is used across all industries, not just in warehousing applications.