Payment

The final step in the process is receiving payment from the manufacturer. When sequencing parts, the timing of payment may vary from that which the supplier has traditionally become accustomed. With traditional EDI, Advanced Shipment Notice usually triggers the necessary processes in the suppliers’ and manufacturers’ systems that handle the invoicing and generation of payment.

There are also a couple of alternative methods for recognizing when the payment is due to the suppliers. They are usually referred to as Pay on Consumption, or Pay on Production. Essentially, the manufacturer commits to the payment for the part once it is actually installed on the production line, or once it leaves their plant, and not when it is shipped by the supplier, or when it is received by the manufacturer. This may cause some issues with the supplier’s ERP and Accounting systems, as most of them are not necessarily equipped to handle such requirements.