Paper documents are decreasing in running a business these days, as essential papers can be lost or worn down before they reach their destined location. In industries like the automotive industry, multiple tasks are regulated between numerous car manufacturers and chain suppliers.
The process of exchanging business documents between the suppliers should be smooth to ensure continuous car production lines. For this purpose, EDI (Electronic Data Interchange) software is used, allowing the exchange of documents from one company to another.
This software can be accessed on a variety of platforms and programs. You can easily send your business-related information like invoices, purchase orders, shipping notices in an electronic form rather than using papers.
To Enhance Business Processes:
In Japan, Toyota Company introduced some practices that are used in business processes to ensure the smooth production of cars. It included manufacturing processes such as Just-In-Time (JIT) and Lean manufacturing. It is essential to provide information about inventory levels, and shipments so that the purpose of JIT and Lean manufacturing can be fulfilled. EDI has made it easy for these manufacturing processes to work, leading to a successful automotive business.
When manufacturing cars, it is crucial to exchange documents with the suppliers quickly and efficiently. With EDI, it has become possible to do so even when you have suppliers in different parts of the world.
EDI Adds Value to Global Business:
Just like other businesses, the automotive industry is also expanding globally. The industry associations worldwide aim to work together to increase their production and look for new trading partners.
These associations follow standards on how to pass business documents, leading to a successful supply chain. Automotive industry associations are located in countries like North America, Europe, and Japan. They invite more automotive companies to work with them to make the industry prosper.
Communication Used In EDI:
There are communication protocols used in the automotive industry like FTP and the most commonly used these days is OFTP (Odette File Transfer Protocol). This protocol is used in communicating with business partners to make sure the production of cars runs without any errors.
The new version of OFTP, known as OFTP2, uses the internet and allows the safe exchange of documents. It encrypts the data on electronic records so it cannot be leaked anywhere. OFTP2 enables large files to be sent without any problem.
How it is Helpful for Automotive Suppliers and Manufacturers:
Automotive EDI can be used to send documents among business partners on a global platform respecting each region’s characteristics. The messages are sent and stored automatically. When a supplier dispatches an order or an invoice, it is processed without any human involvement. This feature helps in reducing any errors that can be caused.
The information is shared in real-time using EDI, making processes easy such as changes to stock inventory according to the needs. It can be easily checked if the order sent from the supplier matches the company’s demand. If the wrong order has been dispatched, EDI can be used to send back a warning letter.