If you work in the manufacturing division of the automotive industry, you’re aware that it has a large range of standards and ever evolving requirements that can be tricky to keep up with on a day-to-day basis. The success of car production lines depends on the smooth exchange of documents between manufacturers and the supply chain. 

And that’s where EDI comes in. Electronic Data Interchange (EDI) is a computer to computer exchange of documents, in a standard format, between two partners. With this process, no paper or people are involved, which means lower overhead costs, increased processing speed of documents, decreased errors, and more positive relationships with business partners.

A Complex Supply Chain

With suppliers located around the globe, car manufacturers need to be able to quickly add new suppliers regardless of the region. In addition, there are a range of supplier levels that must be connected to the manufacturer’s supply chain.

For instance, Tier 1 suppliers may supply large components. Next, Tier 2 suppliers typically provide components such as motors or bearing assemblies up the chain to the Tier 1 suppliers. Finally, Tier 3 suppliers contribute brackets, seals or other components to the Tier 2 suppliers.

Also, each supplier tier may be located either very near or very far from the manufacturer. Often Tier 1 suppliers near the manufacturer provide just-in-time (JIT) inventory for the production process. Conversely, Tier 2 or Tier 3 suppliers may be anywhere in the world. Plus, there may be raw material providers such as steel manufacturers that add another level to the supply chain.

Benefits of EDI Automotive Technology

EDI meets the challenges of the complex automotive supply chain. First, it establishes a standard communication protocol across the supplier tiers. This allows computers to understand the information sent between trading partners. Some document standards include ANSI X12, EDIFACT or OFTP which is used in the European automotive industry.

Next, EDI improves communication speed and accuracy. This results in faster business cycles, reduced transaction errors and better partner relationships. Plus EDI adds real-time visibility to transaction status. All this data at the ready means businesses can make faster, more informed decisions.

Finally, EDI lowers costs for suppliers by decreasing money spent on manual processes. Also, by shortening order processing and delivery times, companies can reduce their investment in inventory stock.

The benefits of EDI for the auto industry have been proven for over 40 years. Integrated EDI solutions streamline the communication process, saving time, improving accuracy and reducing costs throughout the supply chain.