The world of EDI is a complex and wonderful place. This standardized language of electronic business documents allows companies to do more business, and reach customers
universally across all channels. But, just because you’re using EDI doesn’t necessarily mean you’re doing it right.
While EDI cuts down on some significant time-wasting of the paper purchase order days, you could still be doing unnecessary busywork by not integrating your systems to automate your most-used EDI documents.
“Integrating” EDI means that documents flow seamlessly and automatically in and out of your ERP system without a manual transcription of some kind.
For example, let’s say you’re a supplier using some kind of web interface to view all incoming orders from retailers and send the correct responses. However, the interface isn’t connected to your ERP system, so you need to look at the order in the web interface, then pull up your ERP system and manually re-enter the order into your ERP system. Yikes — so much clicking, typing and potential for costly mistakes!
Additionally, for any subsequent transactions on that order (e.g. shipping notifications), you would need to take the data from your ERP and manually re-enter it into the web interface.
While you know this process allows you to be compliant with your retail partner's requirements, it puts a heavy burden on your team and is likely to be ridden with human error.
Cut yourself (and your team) a break, and get these five crucial EDI documents integrated.
1. EDI 850 - Purchase Order (PO)
The EDI 850, otherwise known as a purchase order, is probably the top EDI document to have integrated. POs communicate what items are being requested, specific pricing and even shipping instructions. POs are used for getting products to a distribution center, store or the end consumer.
In an integrated scenario, the PO would flow directly into the order management system and get routed for picking. However, in a non-integrated scenario, someone would need to check the EDI system for new orders periodically and then re-key the order into the ERP or other system required to get the information through the fulfillment process.
Thus, having this EDI document integrated into your order management system is really the ideal situation if you want to free up your resources, more efficiently process POs and speed up fulfillment.
2. EDI 810 - Invoice
Much like the PO, the invoice (EDI 810) is part of the regular back-and-forth of vendors and retailers. Like the paper invoice, this document lists the transaction between a buyer and a seller, with details such payment terms, item information, shipping specifications and more.
With the 810 integrated, invoices could be easily sent to request payment from a retailer after products are shipped. Invoices sent via EDI are instantly transmitted, which can help with taking advantage of all available discounts and receiving or sending payments on time.
Additionally, when both invoices and POs are integrated, the ERP or other systems can be built to compare the two documents without the need for manual evaluation. Only the mismatches are flagged for human review and reconciliation. As long as the POs and the invoices align, they’ll be processed — and could even be set up for automatic payment.
3. EDI 855 - Purchase Order Acknowledgment (POA)
Once the 850 has been received, a supplier will need to send back a purchase order acknowledgment (POA) to the buyer, letting them know the PO was received by the seller. The POA is also referred to as the EDI 855, or in EDIFACT (Electronic Data Interchange for Administration, Commerce and Transport), the Purchase Order Response (ORDRSP).
With the 855 integrated, your system could automatically generate the acknowledgment from a workflow, without a person having to review the PO and send the response.
The POA can also be used to tell a buyer that there isn’t enough inventory to fulfill the order. When the document is integrated with the ERP and other systems, it can check inventory levels automatically and let the buyer know what is available, and potentially when the backorder could be accommodated. The buyer can then make a decision on how they want to proceed based on that information.
This kind of transparency can build trust between trading partners.
4. EDI 860 - Purchase Order Change Request
The purchase order change request, or EDI 860, is used to communicate purchase order changes from the buyer to the seller regarding orders that have been previously submitted. This could be an increase or decrease in quantity, change in ship date, address corrections or other changes needed for the original purchase order.
Say, for example, that the original purchase order was for 1,000 units. The seller only had 750, so they sent a POA to the buyer that relayed this information. The buyer then decided to change the quantity on their original order to 750 so they could divert their budget to sourcing the final 250 from somewhere else. The 860 would reflect this change from the buyer, and is crucial for the seller to get that final order right.
5. 856 - Advance Shipping Notice (ASN)
After an order has been shipped, the seller sends an advanced ship notice (ASN), or EDI 856, to the buyer confirming order shipment.
The ASN contains a ton of information, including ship to and ship from addresses, how many pallets, how many units on a pallet, quantity, UPC codes and more. It also can carry additional details that can help with supply chain traceability, such as lot numbers, expiration dates, manufacturing locations, etc.
The ASN is important for retailers and vendors that participate in drop shipping programs or marketplaces like Amazon. An ASN can accommodate shipping information for individual drop shipped packages to be sent directly to consumers from the vendor warehouse. This allows the retailer to relay the delivery information to their customer, without them ever knowing that the order was fulfilled and shipped from a third party.
In the ideal situation, the shipping notice would be automatically generated from the system as part of the shipping process through a workflow. With the ASN integrated into the system, the buyer could receive the notification as soon as the package left for delivery.
One more EDI document
For companies that deal with inventory, having the EDI 846 Inventory inquiry/inventory advice document integrated is also a big plus.
This document tells the purchaser the quantity of goods the seller has on hand and on order for future dates. This enables both parties to better manage buying and selling needs. It’s primarily used in a drop ship order management model to support ecommerce management.
Marketplaces like Amazon and some retailers, including Kohl’s or Walmart, require that sellers send them an inventory list with available quantities. The EDI 846 communicates this information to and from vendors, manufacturers and brands to the retailers and marketplaces.
Move faster by integrating
These transaction documents are the most basic and vital for conducting business in the modern world of commerce. Integrating these documents into your systems so that they can be processed automatically frees up time, money and other resources.
Additionally, as businesses speed up their processes and companies move faster to satisfy their customers, integration of these documents can help you more quickly and accurately deliver on the promises you make to your trading partners.