Ron’s Thoughts: The Importance of Supply Chain Visibility
July 27, 2020
In today’s world, understanding where product is, where it’s coming from, and when it’s going to get where it needs to go is absolutely essential. Right now, we’ve got retailers and manufacturers and everyone else doing more with fewer employees, which makes that even harder. But the good thing is that there’s technology available that helps you get that visibility and execute those processes without having to add resources.
EDI plays a huge role in visibility. If you’re in the supply chain today and you’re not doing EDI, it’s time. It’s time to do it. If you’re in the supply chain and you are doing EDI, it’s time to look at what you’re doing and where you can expand from there, be it increasing your level of deployment, or adding additional applications that can increase your ability to execute.
How does EDI help? Most businesses start off with EDI 850 purchase orders, EDI 855 acknowledgements, 856 advanced shipping notices, and 810 invoices. It’s a great place to start, because you get a lot of return on investment with those.
The main piece that’s very important is understanding where products are, and when they’re coming in. When a retailer sends a purchase order through EDI, they get an electronic acknowledgement back from the manufacturer. In that acknowledgement, there’s information to confirm cost, quantity and when the product is going to ship, be it next week or three weeks from now.
To get to the next level, you can implement a PO change (EDI 860) with exception management, using software like TrueCommerce ecUtopia. Now you’re only manually looking at orders outside of your tolerance, whether it’s a price issue, shipping exception or anything else you want flagged, instead of having multiple employees going through every order or missing issues because they are flowing through the system unchecked. You get visibility across a huge range of orders, without an added burden for your team.
Another big advantage with EDI is the ability to get the same data in multiple places. If you have an order come in that gets flagged, you kick off an EDI 860 PO change, which goes to the manufacturer, who acknowledges it and can engage with you about the change. But both parties are starting with the same information, and you have a virtual paper trail in case there are disagreements down the road.
Traditionally, there’s someone at the retailer who is calling on “open” PO’s every week, to check that the shipment is still coming on the same date. But with EDI, you can automate that with a document called a status inquiry and get back an order status electronically. In turn, that means you can reduce your back-office work, so your team members can focus on other priorities.
The other part of that equation is the ASN, EDI 856. Thanks to that document, the ship date is confirmed, and we know what’s coming in every trailer, every container, every day, because the ASN has that information straight from the manufacturer. Dock managers can take that information and use technology like our Dock Scheduling software to understand their dock and yard availability and put the right staff, and the right amount of staff, in the warehouse at the right time.
They can also look at the different trailers coming in to prioritize shipments and get orders in faster so they can close out purchase orders. Plus, by creating a more efficient dock and yard, they can save on late fees known as a detention charge or per diem charge.
If you get all that data manually, it takes you too long to sift through it, and too long to get the answers you need. That’s where EDI can help, by automating the sifting and sending you exceptions based on your business’s needs.
With EDI, when you order 100 items, you can see, will 100 items ship? Will it be 50 and 50 or are half of them on backorder so the second shipment will have to wait? Even before you send the purchase order, the vendors can send you an EDI 846 to let you know about inventory availability — which is incredibly important right now because manufacturers are still working to restart their own supply chains, ocean freights and shipments.
Then you can look at: when is the ship date, and importantly, when is the arrival date, based on the location of the shipper and the destination. Getting all that information at the individual purchase order level, and then using documents like the status inquiry to force vendors to update their dates and data, and bringing that data to your dock and yard—it comes together to create a much more efficient, controlled supply chain.
With TrueCommerce-ecUtopia, EDI, in and of itself, is no longer just a technology, it provides the foundation for business-to-business commerce management. As a retailer and a manufacturer, you are now provided business solutions to manage the life of your interactions with better visibility, actionable exceptions, and collaboration tools that make everyone involved smarter and more profitable.
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About the Author: Ron Sellers, co-founder and chief revenue officer of TrueCommerce ecUtopia, is a technology advocate and leader for the home furnishings industry. With more than 25 years of industry-related experience, he offers significant expertise as a committee member of the Home Furnishings Association (HFA) and sits on the Executive Advisory Council for WithIt, a women’s leadership development network for the home and furnishings industries. When Ron is outside of the office, he can be found on his Harley Davidson cruising the streets.
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