How to manage an enterprise whose production or commercial activities are highly dependent on exact timing and sufficient volumes of deliveries of goods, materials, or raw materials?
For example, when the manufacturing conveyor underload or empty shelves for a short period of time can cause enormous losses to the business.
Different companies have various approaches to solving this problem: from increasing reserve stocks to creating a strict system of fines for suppliers. However, advanced and successful enterprises use a more efficient and reliable way to solve the supply problem – implementing electronic data interchange (EDI).
Why DELFOR (Delivery schedule message) is needed
Besides the typical business processes related to orders, shipments, acceptance, and return of goods, EDI allows companies to streamline deliveries within the framework of the Just in Time concept.
The Just-in-time concept is the organization of the flow of materials, so that goods, components, or raw materials are delivered in the required quantity, to the right place, and exactly at the appointed time for the production, assembly, or sale.
At the same time, companies do not need large reserve stock that “freezes” the company’s money.
The main question is how to implement this concept, especially, if the company has a large number of suppliers, a wide range of products, or multiple warehouses? How to synchronize data with partners and how to transfer the information as quickly as possible?
In UN/EDIFACT standard there is a DELFOR Delivery Schedule message. DELFOR transmits in electronic structured form information about the delivery plan in two main sections – by product and by place of delivery.
EDI provides instant transmission and guaranteed reception of data when changing any circumstances and conditions. Moreover, it is possible to automate these processes, so the company can avoid errors and delays, associated with the human factor.
The DELFOR message is sent by the purchasing company to the supplying company to indicate the need for products. This message can be used by retailers with their trading partners or a manufacturing company receiving components or raw materials from their partners.
The delivery schedule message DELFOR is used to provide continuous material flow between the supplier and the buyer when the delivery specifications cannot be fully defined in the contract or order.
DELFOR message allows refining and detailing the requirements and providing the supplier with information that enables him to predict the future needs of the buyer.
Time management and UN/EDIFACT DELFOR message
Delivery schedules transmitted through DELFOR message can be of two types:
Perpetual is used to describe regular orders and deliveries. Urgent is applied for a limited period (for example, with an increased delivery regime) with a start-and-finish date.
A DELFOR message can be sent at any frequency (once a month, once a week, etc.) and covers any period (e.g., week, month, quarter, half-year, year). Medium- and long-term schedules transmitted every month may change to short-term ones issued every week.
All products and materials indicated in the delivery schedule message must be uniquely identified by the order, item number, article number, or part number.
The identification number can be determined either by the customer or by the supplier – the parties agree on this issue at the stage of concluding the contract.
The delivery schedule message may indicate the place of delivery of the goods it could be:
- warehouse of the enterprise;
- specific assembly line;
- distribution center;
- warehouse of the logistics company.
By receiving such a message, the supplier gets the opportunity to confirm or reject the request, or make changes. Using the DELFOR message, business partners can agree on which day the buyer can accept the order and on which day the supplier can deliver it.
DELFOR message can also be used for the forecast plan. In this case, the supplier has the opportunity to understand the long-term needs of his customer. This helps to plan the delivery of raw materials and more flexibly manage production.
Business partners usually agree in advance on the purpose of sending DELFOR messages – for a quick order or for planning deliveries for a long time.
How EDI is implemented in practice
In a world practice, DELFOR is one of the most widely used transaction in the manufacturing industry, where supply chain can be very complex and fragmented. At the same time, all the collaborators must be strictly coordinated. Errors in the exchange of information at one stage can affect subsequent elements of the chain, up to the end consumer. For this reason, EDI is one of the most used technologies in production planning, inventory allocation, logistics, and transportation.
Using the DELFOR message, a manufacturing company can send its partners an approximate supply plan on a weekly basis.
In the case of more operational tasks, companies can implement DELJIT (Delivery Just in Time) message.
In this way, suppliers are informed of the exact shipping schedule requirements in the next 24 hours. However, each enterprise can flexibly customize processes exclusively for its needs and production cycles.
The third message related to the delivery schedule in the manufacturing space, is the DESADV Despatch advice message (or EDI 856 Advanced Ship Notice in the X12 standard). The supplier should send this message immediately after shipment leaves its premises.
The message indicates the contents of the delivery and additional information about the shipment, the order, type of packaging and product description and characteristics.
A dispatch message improves supply chain management. Manufacturers and distributors can control and track shipments, orders and inventory more effectively. The whole process becomes traceable; it becomes possible to know when the goods will be sent, when it will reach its destination.
According to Industry Week’s Best Plants analysts who studied more than 100 companies with the Just in Time logistic concept implemented using EDI messages, their average results were very positive:
- The volume of stock instead of the maximum 15 days was reduced to 2 days
- Stock of finished products decreased by one third
- The duration of the production cycle decreased by 40%
- Production costs decreased by 20%