The Benefits of Purchase Order Acknowledgments to Supply Chain Performance

Blurred supermarketSupply Chain Insights recently conducted a study entitled, “EDI: Workhorse of the Value Chain.” In it, about 81% of the respondents recognized automated Purchase Order Acknowledgment as an essential EDI document for improving supply chain performance. This is because the file offers access to supplier and purchaser order statuses without the need to call or e-mail.

How it Works

The purchaser forwards an EDI Purchase Order to the supplier who will then send them back a Purchase Order Acknowledgment. This means that the supplier decides to accomplish the order based on the conditions of the purchase order. In case the supplier is unable to comply with the requirements, the Purchase Order Acknowledgment will have the details of the order that they can fulfill.

If the buyer wants to alter the original purchase order, they can send a Purchase Order Change file. This happens if the supplier will not be able to meet the requirements or if the buyer themselves changed their needs. The supplier will then provide them with a Purchase Order Change Acknowledgment to confirm. The use of these files makes the entire process simpler compared to when done manually.

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How it Benefits

Automating the exchange of files offers several advantages to companies:

  • Quicker and more precise order-to-receipt procedure brought by removing slow, mistake-prone manual ordering.
  • Elimination or reduction of laborious and resource-intensive order status queries by both the seller and the buyer. This is because of the usage of EDI status files that offer new access into the supply chain.
  • Improved buyer flexibility caused by the preciseness and swiftness of the EDI process.
  • Greater satisfaction levels by the seller, buyer, and their customers due to the advantages above.

Using EDI in receiving and shipping procedures allow both the receiving and supplying companies to efficiently contend in a business environment.