How Companies Use EDI

How Companies Use EDI to Connect with Opportunities

Without EDI capabilities, a business has a greater risk of losing revenue and missing opportunities for growth.

How BizStuff* and Other Companies Use EDI

*BizStuff is not a real company. Any resemblance to a real entity is coincidental.

BizStuff is a distributor of office supplies. Its main source of revenue is selling to retailers.

BizStuff receives regular daily updates from all of its retailers, transmitted directly from the Point of Sale (POS) registers. An up-to-the-minute inventory balance for BizStuff’s retail stores and distribution warehouses is maintained. On a nightly basis, inventory consumption of each supplier’s products are transmitted directly to BizStuff’s suppliers and manufacturers.

The manufacturer reviews the inventory consumption and identifies an increase in demand in the West Coast region. Armed with this information, the manufacturer adjusts its production schedules at a local plant to meet that demand. At the same time, the manufacturer electronically schedules transportation to pick up the shipments and notifies BizStuff of the expected shipping dates, quantities and carriers.

For larger shipments, the manufacturer has agreed to ship directly to the retail outlet rather than to BizStuff. As each shipment is loaded onto the carrier, the containers are scanned or otherwise automatically identified to verify the accuracy of the order. Advance-ship notices (ASN 856 document) are then transmitted to BizStuff for each shipment and an electronic invoice (810) is sent.

As BizStuff receives the advance-ship notice, warehouse routing tickets for the materials that are to be shipped to BizStuff’s warehouse are prepared in advance. Some material will be identified as needed for immediate shipment. To expedite movement of this material, shipping labels will already be prepared, and outbound shipments will be scheduled.

When BizStuff receives the physical shipment, it is scanned and routed automatically. Material scheduled for shipment is cross-docked, and the rest is delivered to pre-assigned inventory locations. Inventory is automatically updated and the receipt triggers a payment authorization, which is sent to Accounts Payable. When the authorization is matched with the electronic invoice, an automated funds transfer is authorized to the manufacturer.

In this example, BizStuff is both a customer and a supplier. So, on the outbound side of the process, moving material from the distribution center to the retail outlets, BizStuff can apply the same steps.

As BizStuff receives POS information, it automatically schedules replenishment of the inventory consumed. Rather than shipping in “replenishment units” based on each store’s basic shelf stock quantity, BizStuff will replace exact quantities, adjusting them based on known inventory trends.

Advance-ship notices will be sent to the retailers, and in the same manner that the vendors drop-shipped to the retailers, the distribution center can place orders for large customers that can be shipped directly to the customer (the retailer).

TrueCommerce can help you achieve these same levels of business connectivity and performance using EDI as an enabling technology.

Basic vendor/distributor/customer relationships

An example from the food brokerage industry serves to highlight the changes this enabling technology has made possible and the extent to which document trading partnerships have become true business partnerships:

  • A manufacturer receives a large order along with a master production schedule to accommodate the order. The production schedule updates (862 documents) for key components are sent to the suppliers. The suppliers adjust their own production schedules and confirm shipping dates and quantities to support the manufacturer’s new production schedule. During the manufacturing process, product defect data is collected and transmitted to the supplier on a daily basis, allowing the supplier to keep its process within the required standards for free-to-stock certification of the material.
  • A customer in a retail outlet asks about an out-of-stock item. From the cash register, the clerk finds it in a store on the other side of town. Rather than ask the customer to travel to the other store, the clerk reserves the item and schedules a delivery the same afternoon. Within minutes the clerk advises the customer that the item can be available at a specific time.
  • A customer calls a frozen food delivery service and orders eight items to be delivered that afternoon. A delivery truck, already on its route can fill the order with items already on the truck. With a small hand-held unit, the driver calls up the order and a printed invoice is generated. When the driver returns to the truck, the transaction is communicated to his office where a credit card transaction is sent.

These are just a few examples of how companies can improve the speed and efficiency of their operations through the power of seamlessly connecting with their customers and suppliers. From the factory to the warehouse, from distributor to retailer, we can help you achieve new levels of business connectivity and performance with the world’s most complete EDI platform from TrueCommerce. Contact an EDI specialist today to learn more.

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