How EDI Can Strengthen Your 3PL Partnerships

Third-party logistics providers (3PL) are essential in today’s modern supply chains. They offer additional support for specific stages of delivery operations and help accelerate supply chain processes. But communicating with them can be a headache, especially if you’re managing documents and updates manually. In this article we’ll explore how electronic data interchange (EDI) can streamline 3PL partnerships and improve trading partner transactions.   

What is a 3PL?

3PLs are B2B partners that assist businesses with managing their supply chains and are vitally important to supply chains around the globe.

For many organisations, growth can create complexities in fulfilment and product transportation. Often, businesses can invest all their time into what they know best – their business – but when it comes to storing, distributing and shipping stock they can run into a multitude of challenges. That is where specialised 3PLs can add value.

3PLs are an increasingly popular source of outsourced supply chain management and 90% of Fortune 500 companies use a 3PL.

What is EDI for 3PL?

A lack of reliable information across the fulfilment process can lead businesses to experience a shortage of in-store products, lost revenue, and even temporary losses due to erroneous deliveries, long approvals and frequent account adjustments. Since 3PLs are responsible for shipping a multitude of orders on behalf of many clients, data accuracy is even more important.

EDI helps manufacturers and retailers trade with their 3PL partners and ensure that accurate messages containing critical information can be exchanged quickly and seamlessly. Just like trading with a retailer or supplier, trading via EDI with your 3PL partner will streamline efficiencies and automate the flow of electronic messages between two entities within a network.

The need for standardised communication is increasingly important as the global third-party logistics (3PL) market was valued at $1,027.71 billion in 2019, and is projected to reach $1,789.94 billion by 2027, highlighting the expected growth in the market. EDI provides that standardisation, further enhancing the efficiency of your 3PL partnerships.

How EDI Can Strengthen Your 3PL Partnerships

For many organisations, the need for 3PL involvement increases in line with success. As businesses expand, they need to find ways to streamline their supply chains and bring barriers to growth down.

One of those barriers is the speed at which manufacturing fulfilment needs to move. When contracts are on the line and deadlines are tight, minutes count. Retailers can often penalise manufacturers for late deliveries. As a result, the near real-time transmission capabilities of EDI transactions lead many to adopt EDI within their supply chain.

Whereas doing business with a single customer might seem simple at first, it becomes increasingly more complex with the size, success and complexity of your operation. EDI enables fast, accurate and efficient trading partner communication. It helps you cut through the clutter and makes life easier.

Companies that connect to their 3PLs via EDI benefit from streamlined order processing workflows, improved business performance and increased supply chain predictability and accuracy, which is why many distributors, retailers and suppliers ask their 3PLs to become EDI capable. By connecting to your 3PL via EDI, you’ll also be able to achieve:

• Greater visibility into product movements to and from remote warehouses
• Enhanced order delivery accuracy with data validation and error alerts
• Faster fulfilment via automated message exchange
• Higher on-time, in-full rates with valued customers

TrueCommerce 3PL EDI integration

3PLs will generally require different types of documents than are required by traditional trading partners. Often, including a 3PL within your supply chain will necessitate the use of warehouse-specific messages to keep track of inventory both at the warehouse and on the move.

Recognising the importance of rapid communication throughout the supply chain TrueCommerce provides EDI solutions perfectly tailored towards 3PL activity. Our solutions automate the exchange of mission critical documents including but not limited to:

• Warehouse Shipping Order (EDI 940)
• Warehouse Stock Transfer Shipment Advice (EDI 944)
• Warehouse Shipping Advice (EDI 945)

Leveraging seamless message transaction combined with extensive ERP integration capabilities delivered through our industry-leading fully managed service, businesses can rest assured that their 3PL communications will be easy, fast, and accurate.

Fortnum & Mason, the London based luxury grocer and store, moved to TrueCommerce to enjoy a reliable and secure integrated EDI solution for trading with its third-party logistics provider. Tony Longhurst, Director of IT at Fortnum & Mason, said “Our decision to move from Microsoft AX2009 to Dynamics 365 demanded a change of architecture, creating an opportunity to improve the performance, reliability and traceability of the integration into our third-party logistics provider.”

Fortnum & Mason did not have a previous EDI solution and as a result, the business was looking for a cloud-based EDI provider capable of translating and exchanging messages including orders, stock movements, pick/pack data and ASNs from its Dynamics 365 environment to its third-party logistics provider without the need for any onsite EDI expertise. By improving the reliability and traceability of these messages with its 3PL provider, Fortnum & Mason has the infrastructure in place to accurately move and track stock from its supplier warehouse to its stores.

If your business is outsourcing logistics to a 3PL and would like to know how you can use EDI to expedite the process, then get in touch to find out how TrueCommerce can help.