How EDI is used in the Retail Industry

How EDI is Used in the Retail Industry

Introduction to EDI in the retail industry

For over 40+ years the retail industry has been using EDI to replace its paper-based system and started exchanging documents like purchase orders, invoices, and ship notices with their suppliers/business partners using EDI. Retail businesses usually exchange high volumes of order data and EDI solutions can help in exchanging this large volume of data in a standardized format to improve operational efficiency and reduce the turnaround time to process orders. It also helps them to keep track of inventory management and provide more visibility into the supply chain and provide better customer support.

The retail industry uses EDI in 3 stages,

  1. Procurement
  2. Shipping
  3. Invoicing
Procurement

1. Procurement

Procurement is the method of purchasing goods or services, typically for business purposes. During the procurement process, the retail industry uses EDI to exchange purchase orders (EDI 850) and purchase order acknowledgments (EDI 855). The buyer/retailer sends a purchase order to the supplier and the supplier then sends the purchase order acknowledgment back to the buyer/retailer.

Shipping

2. Shipping

Logistics/shipping plays a big part in the retail supply chain. In this stage, the supplier sends the advance ship notice (EDI 856) to the buyer/retailer. The advance ship notice (ASN) provides the buyer with information like what is being sent in each package when it’ll be sent, by whom, and more. ASN plays a very important role can help retailers relieve stock congestion and reduce check-in times.

“According to the research from the Grocery Manufacturers of America, ASNs slash receiving times by up to 60% if just one part of deliveries uses automated ASNs, a 250-store company can save 65,000 receiving hours each year.”

The ASN can ensure that every step of the supply chain is fully informed of the status of the goods.

Invoice

3. Invoicing

In the final stage, the supplier issues an EDI invoice (EDI 810) to request payments for products delivered. EDI 810 document consists of invoice details like invoice number, date, shipping details, payment terms, and item information like information including prices and quantities, discounts, and more. To this, the retailer will respond back with EDI remittance advice (EDI 820) and sends it to the supplier to confirm payment

Benefits of EDI in the Retail Industry

 

  1. Reduce transaction times

In contrast to the manual paper-based system, EDI messages can be exchanged in seconds, which leads to faster invoice processing and improved cash flows. By using EDI solutions buyers/retailers can receive EDI invoices directly into their accounting software so they can process them quickly and efficiently.  

  1. Reduce costly errors, avoid delays, and saves costs

Manual processing is prone to Invoicing errors and can be costly leading to charge backs from retailers. Also, errors in documents can cause delays in shipments and goods receivable disrupting the supply chain. However, by using an effective EDI solution you can reduce all these costly errors, improve operational efficiency, and save thousands of dollars.

  1. Expand your fulfillment Models

Support eCommerce growth and create a seamless consumer experience across channels using standardized EDI transactions.

  1. Simply order management and improve warehouse efficiency

Get EDI order information from suppliers and gain visibility into whether suppliers can fulfill orders in full and on time. By receiving automated ASNs from suppliers you can move your inventory efficiently through your supply chain and plan better warehouse management, which in turn improves warehouse operational efficiency.

  1. Automation

With EDI you can automate your entire supply chain cycle. From procurement, shipping, and order management. On boarding your suppliers to EDI will enable a consistent order fulfillment process.

  1. Improve supplier efficiency

EDI can help retailers gain visibility into order management which means which suppliers are delivering orders on time, correctly, and quickly and which are not. With this type of data, retailers can make changes if certain suppliers just aren’t cutting it. This type of insight would take months to discover without an EDI system.

  1. Effective product management and bust trends

Gain visibility into product performance. EDI can help retailers help identify trending products i.e., which products are selling like hotcakes, and which are not. This will help retailers adjust inventory supplies accordingly.

  1. Increase sales with drop shipping

Drop shipping is a process of providing goods directly from manufacturers to retailers or customers. If a retailer provides an option to its customers to order products online via its eCommerce store, instead of storing the inventory in the retailer warehouse, with the help of EDI it can send the same order information to its supplier and ask the supplier to fulfill the order directly to its customer from their warehouse. In this way, retailers can save time and save storage space by not storing the inventory and processing orders faster for its customers. All this can happen with an effective EDI system.

Common EDI X12 Transaction Codes Used in Retail Industry

 

EDI X12 Transaction Number

EDI Transaction Name / Document Type

 

EDI 180

Return Merchandise Authorization and Notification

 Read More

EDI 290

Cooperative Advertising Agreements

Read More

EDI 810

Invoice

Read More

EDI 816

Organizational Relationships

Read More

EDI 832

Price/Sales Catalog

Read More

EDI 846

Inventory Inquiry/Advice

Read More

EDI 850

Purchase Order

Read More

EDI 855

Purchase Order Acknowledgment

Read More

EDI 856

Ship Notice/Manifest

Read More

EDI 857

Shipment and Billing Notice

Read More

EDI 860

Purchase Order Change Request - Buyer Initiated

Read More

EDI 865

Purchase Order Change Acknowledgement/Request – Seller Initiated

Read More

EDI 869

Order Status Inquiry

Read More

EDI 870

Order Status Report

Read More

EDI 875

Grocery Product Purchase Order

Read More

EDI 876

Grocery Products Purchase Order Change

Read More

EDI 877

Manufacturer Coupon Family Code Structure

Read More

EDI 880

Grocery Products Invoice

Read More

EDI 881

Manufacturer Coupon Redemption Detail

Read More

EDI 885

Retail Account Characteristics

Read More

EDI 887

Coupon Notification

Read More

EDI 888

Item Maintenance

Read More

November 18, 2022

How EDI Helps Your Dropshipping Ecommerce Business What is Dropshipping? Dropshipping or DTC (Direct to consumer) is a fulfillment method where a retailer sells the product to its consumers via its online eCommerce store but does not keep the products in stock. Instead, the retailer sends the order information to its supplier and asks them … Continue reading “”

Read More

November 10, 2022

How EDI Helps 3PL Providers (Third-Party Logistics Companies) What is 3PL A 3PL provider is a third-party logistics company serving as links in outsourced distribution and fulfillment stages of the supply chain. 3PL companies provide full-scale logistics services such as transportation, warehousing, customs clearance, and other logistics-related activities. Basically, 3PL helps outsource a part of … Continue reading “”

Read More

November 3, 2022

How EDI is used in the Retail Industry Introduction to EDI in the retail industry For over 40+ years the retail industry has been using EDI to replace its paper-based system and started exchanging documents like purchase orders, invoices, and ship notices with their suppliers/business partners using EDI. Retail businesses usually exchange high volumes of … Continue reading “”

Read More

October 27, 2022

GDSN 101: Everything You Need to Know About GDSN Define GDSN Global Data Synchronization Network established in 2004, is a GDSN distributed system of independent, interoperable data pools all connected to the GS1 Global Registry ® The. GDSN enables retailers and suppliers to have accurate, real-time supply chain data. GDSN Terminology GS1 global registry Interoperability … Continue reading “”

Read More

October 13, 2022

What is UN/EDIFACT Standard and Messages? UN/EDIFACT (United Nations/Electronic Data Interchange for Administration, Commerce, and Transport is the international standard that was developed by the United Nations). Comprise a set of internationally agreed standards, directo­ries, and guidelines for the electronic interchange of structured data, between independent computerized information systems. The work of maintenance and further … Continue reading “”

Read More

October 5, 2022

What is EDI Translation? Define EDI Translation EDI translation means converting data from enterprise-specific and irregular formats into standardized and organized structures that are compliant with EDI standards. Why EDI Translation is Important? In 2022, it’s important for businesses to maintain those crucial business relationships with their trading/business partners, and adopting an integrated EDI platform … Continue reading “”

Read More

September 22, 2022

Evolution of EDI Technology One of the first use of EDI technology was in 1948. A standard manifest system was designed to transmit data by telex, radio-teletype, or telephone by the US army to track cargo during the German war. Since then, EDI technology continued to evolve and became a standardized communication channel for businesses … Continue reading “”

Read More

September 15, 2022

How Can EDI Help Automate Order Processing for Your Business? Before getting started with EDI order processing, First, let’s define What is EDI? – EDI stands for electronic data interchange which is a standardized way that businesses exchange information. EDI automates orders flowing in and out of the supply chain with ease without manual intervention. … Continue reading “”

Read More

September 9, 2022

EDI in Shipping Industry EDI has often been referred to as the lifeblood of the logistics industry. Implementing a proper EDI solution can do all kinds of incredible things for the shipping/logistics industry. It can improve operational efficiency, increase visibility into their supply chain, and most of all, strengthen customer relationships throughout their ecosystem. The EDI … Continue reading “”

Read More

August 23, 2022

EDI for Small Business Commport’s Small Business EDI Solutions Will Help You Succeed The acronym EDI stands for Electronic Data Interchange, which refers to the way that businesses exchange information electronically. These days, most companies use EDI to send invoices, purchase orders, and other documents between each other. EDI makes it easier for companies to … Continue reading “”

Read More

Ready to find out more about Commport Supply Chain Solutions for Retail Industry?

Explore all our solutions today!