The process of continuous replenishment is facilitated by electronic data interchange.
Electronic data interchange (EDI) allows suppliers access to a buyer’s online database.
By knowing the buyer’s production schedule (in the case of a manufacturer), the
supplier can deliver the needed parts where they are needed just in time for their use.
EDI involves no paper—no purchase orders or invoices. The supplier uses the production
schedule, which is in the database, to determine its own production and delivery
schedules. When the parts are shipped, an electronic message is sent from the supplier
to the buyer that a shipment is en route. When the parts arrive, a bar code is scanned
with an electronic wand, and this initiates payment for the goods. Clearly, EDI requires
a close working arrangement between the supplier and the buyer—they almost operate
as one company rather than two separate companies