SAP EDI: stay truly connected with the food supply chain

Nov 26, 2021
  • IT
  • food
  • SAP

Smooth information exchange between ERP systems is essential, especially in the digital age. How can it help give your organization more control of the food industry supply chain? In other words: how does SAP EDI ease professionals' lives?

By: Paul van Os and Corné Spreij
 

In many production chains, ERP (often SAP) is the standard way of keeping track of your business processes. From stock, administration, logistics and everything in between: with SAP, crucial information is always up-to-date to help you make strategic decisions. SAP helps you set the right KPIs and generate reports showing exactly how your parameters are performing.

But while ERP is well established in the food industry, this is not always the case for exchanging information between companies within the rest of the production chain. It is, however, essential that you can rely on information throughout the entire chain. This is where EDI comes into play. EDI is a standard that ensures automatic information exchange between different parties. SAP EDI makes the old way of working – with paper or electronic forms – redundant. 

SAP EDI in practice

What does SAP EDI look like in practice? Let’s explain its workings with the help of two examples.

Example 1. Let’s picture a fictional situation where an order is placed with a supplier which is about to be delivered. The SAP system at the supplier sends a series of EDI messages: whether the order has been processed, and when it will be delivered. There is also detailed information on how the order is packed: the exact number of boxes on a pallet, the size of packages, and the number of pallets. When the message stream enters the receiving company's SAP system, fully automatically, administrative processes start running, with SAP sending a confirmation of receipt and ensuring that the products are cleared in the warehouse and included in the stock information.

Example 2. And what about fresh, chilled products? When they are sent to their final destination, the store should be informed, as the cold chain should never be interrupted. Thanks to EDI, no time is lost in scanning and clearing the products.

Benefits of SAP EDI

 The benefits are clear:

  • No more paperwork or electronic documents. Time savings are enormous, because there is no manual work, plus nobody will have to check and track down errors from manual work. Automation, in this case, means immediate cost savings in work hours.
  • It saves a lot of time, especially when you compare it to fax or email.
  • Within EDI protocol, it is possible to use ‘delivery notification’. You can always prove that you informed a party and therefore prevent penalty clauses from being triggered.

 For the food chain there are additional benefits: 

  • There are many regulations in the food industry that your organization should comply with. Thanks to EDI and SAP, that is easier. For example, the origin of food and raw materials can be easily traced. You can also integrate blockchain. This allows you to see exactly where a product came from, all the way down to the farmer’s field. Consumer organizations (and consumers) want more and more certainty and transparency about sustainable, organic and fair-trade products.
  • Some larger corporations, like supermarkets, demand the use of ERP and EDI for information exchange.

 Please understand that we are talking about large numbers of EDI-messages, exchanged in very short periods of time. Doing this manually is impossible. We simply can’t live without EDI in today’s world, or many shelves would remain empty.

It is therefore a good idea to have your SAP or other ERP system audited to see where improvements (and profits) can be made. We are happy to help you!