Estimated reading time: 2 minutes, 55 seconds

Missed Opportunities For Not Using EDI and How Easy It Is

OpportunityOpportunities abound in the retail industry; it is just a case of searching them out. Solutions and getting help are not the problem. Let's see what pops right out at us: (1) trading partner collaboration; (2) transportation management; (3) pull, don't push (4) drop-ship

With strong collaboration between trading partners, both parties can realize increased sales as well as improved inventory management. Electronic data interchange is the strong enabler of stronger relationships between retailers and their vendors. Many major retailers only allow selected vendors (larger or critical) to access retail-level information for the simple reason that it is labor-intensive if you go the old-fashioned ways (spreadsheets or email).


If you are a vendor on the outside looking in, you might see opportunities for improvements / productivity, but, so sorry, retailer is too strained to provide. But with a strong EDI strategy in place, retailers can easily share this crucial data with every trading partner. Yes, this data will need to be shared on a regular schedule in order to be extremely effective. It has got to be an on-demand dispersal of up-to-date inventory strategies.


Manual systems tend to “slow down” when staff gets overwhelmed with other projects. Guess what? Tension pops up between retailer and vendors. Finally we are seeing the benefits of collaboration and data availability that comes with EDI.

Transportation management can be difficult and require a high amount of detail. However, with a good EDI solution in place you can alleviate common dissatisfactions with real-time processing of both incoming and outgoing shipments. Load tenders help monitor what is going on and lets a company manage by exception. Time-sensitive documents can be processed immediately so no delays in the product flow.


Start receiving your payments electronically and further improve your order-to-cash cycle. Transportation Management System (TMS) and  Warehouse Management System (WMS) are tied together. Most shippers and 3PLs will easily and happily join you.

EDI enables a “pull” instead of a “push” approach to inventory replenishment. Pull systems use demand data to drive both replenishment and production. Only immediate customer requirements are drawn from the protective inventories upstream. This approach is driven by actual consumption at the store as well as with forecasts. A pull network supports multiple replenishment policies based on the individual demand profile of the product. Since goods only flow downstream to cover immediate need, inventory remains further up the supply chain, closer to the source. In contrast, many push systems put the majority of the inventory at the retail store.

EDI is the “juice” that makes drop-ship run. Drop-ship (from the factory especially) is the “darling” of the supply chain improvement folks because it cuts warehouse and multiple shipment costs to pieces. EDI enables manufacturers, suppliers and other supply chain partners to minimize cost and maximize efficiency across all their transactional communications.


Typical EDI documents: inventory inquiry document (846); the two primary transaction documents — Purchase Order (850) and Invoice (810) — another commonly used EDI document for drop shipping arrangements is the Purchase Order Acknowledgement (855).  This document is sent to advise the buyer that the vendor has or will ship the merchandise.


For orders that include custom products or longer lead times, some retailers require the Order Status Report (870), which provides an update on the progress of order fulfillment. Upon partial or complete shipment of the order, the supplier will send the Advanced Ship Notice (856), which includes the tracking numbers and other shipment information.  Retailers use this information to update the online order status and send email notification to their customers.

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