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Overcoming Key EDI Challenges in Transportation and Logistics

Encountering challenges in transport and logistics EDI workflows is common. Learn how to overcome issues and build seamless workflows.

March 19, 2024

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Are you looking to tune your EDI system for the fast-paced world of transportation and logistics but keep hitting bumps in the road? If so, you're not alone, whether you’re a shipper, carrier, or broker.

EDI systems are designed to streamline the complex and dynamic communications involved in logistics. When optimally configured, they simplify complex processes, ensuring trading partners are always on the same page.

However, as with many sophisticated software systems, issues requiring troubleshooting are common. This article explores typical EDI challenges in transportation and logistics workflows and explains how to overcome them permanently.

Read on to discover strategies for developing an efficient EDI workflow that streamlines your transactions and bolsters your partnerships with carriers, shippers, and other stakeholders.


Challenges and Solutions in Managing EDI 210 (Motor Carrier Freight Details and Invoice):

The EDI 210 transaction set replaces traditional paper invoices. It contains critical data like invoice numbers, bill-to-information, order details (items, quantities, weights), shipping methods, and delivery information, including proof of delivery and tracking numbers.

Let’s look at some common challenges with this critical transaction set.


Ensuring Accurate Invoice Data in EDI 210

First, invoice data must be accurate and match the agreed terms, item descriptions, delivery schedules, and other information. Discrepancies and errors at this stage threaten to hold up the entire shipping process.

Issues can also arise between the freight charges detailed in EDI 210 and the terms agreed upon with the shipper or consignee, leading to disputes or delayed payments.

Solution: Implementing an EDI solution with robust validation is essential. This means EDI data, such as item descriptions, quantities, weights, and delivery details, is validated against the carrier's internal systems to minimize errors.

Ideally, utilize an EDI system like 1 EDI Source capable of automatically cross-referencing freight charges on the EDI 210 invoice with the agreed terms.

This system should flag any inconsistencies for review before invoice transmission, ensuring alignment and reducing the likelihood of disputes.


Managing Varied Payment Terms and Conditions

EDI 210 must accurately reflect diverse payment terms and conditions agreed upon by shippers or consignees. You’ll need to accommodate complex payment terms and conditions using your EDI solution. Failure to do so could lead to incorrect payments and delays.

Simple EDI, like what you might find in transport management systems (TMS), often lacks the fields and web forms required to manage this.

Solution: Employ a flexible EDI solution that handles varied payment terms and conditions. This ensures that each invoice generated adheres to the specific terms of each transaction, whether it involves standard payment practices or more complex arrangements.


Integrating Proof of Delivery and Tracking Information

Including accurate proof of delivery and tracking numbers in EDI 210 is essential for billing verification and customer satisfaction. Again, simple EDI solutions often don’t provide this functionality, leaving you stuck when you need to satisfy EDI 210 requirements.

Solution: An effective EDI system should seamlessly integrate delivery and tracking information into the invoice. This integration ensures the invoice is as a billing document and a comprehensive transaction record from shipment to delivery.


Addressing Inconsistencies with Freight Charges and Services Rendered

Inconsistencies between the services rendered and the freight charges listed in EDI 210 may lead to billing disputes.

Solution: Implement a robust review and validation process within your EDI system to compare the listed freight charges with the actual services rendered. This process should involve a thorough check of the services provided against the charges applied, ensuring transparency and accuracy in billing.

Understanding Validation in Transportation and Logistics EDI

Modern EDI systems, tailored for the transportation and logistics sector, are designed to automatically validate data when received and sent. This crucial process involves meticulously checking for errors, inconsistencies, or missing information against predefined rules and industry standards.

For instance, it ensures that all necessary fields in a transaction, such as load tender details or shipment statuses, are accurately filled out and consistent.

Integrating EDI with ERP systems in the transportation and logistics industry is particularly beneficial. It facilitates the cross-referencing of data across different stages of the logistics process.

For example, validating the details in a Motor Carrier Load Tender (EDI 204) matches the carrier's records. Or ensuring that the information in a Freight Details and Invoice (EDI 210) aligns with the actual shipment data.


Critical Timing in Load Tender Acknowledgment (EDI 204 and EDI 990)

An EDI 204 Load Tender Request is used to create a new shipment, update or replace a shipment, or cancel a shipment. It provides detailed pickup and delivery information for a load, usually for a single pickup location.

Load tender requests often come with very short response time requirements, sometimes as little as 90 minutes.

Meeting these stringent deadlines is difficult with manual processes. It requires an EDI solution that can immediately notify businesses when new Load Tender Requests are received. This allows companies to respond promptly before the short response window closes.

From there, you’ll respond to EDI 204 with EDI 990, a Load Tender Acknowledgement.

This is used by manufacturers, distribution centers, wholesalers, and other organizations that produce, handle, and/or ship goods.

Failure to issue and respond promptly to EDI 204 and 990 can result in lost opportunities as trading partners may quickly move on to other carriers.

If you’re dealing with a slow EDI system that requires lots of manual input, you might be unable to handle these quick-fire processes in time to meet expectations.

Solution: Use an EDI solution that ensures the swift processing of EDI 204 documents so you can quickly assess and respond to load tender requests. Set up custom alerts for EDI 204 to shorten the response window.

1 EDI Source uses alerts to facilitate rapid and accurate responses via EDI 990 (Response to Load Tender), which is crucial for confirming the acceptance or rejection of the tender.


Providing Detailed Shipment Status Updates (EDI 214)

Another key challenge in transportation and logistics is creating and submitting appropriately detailed shipping updates.

Basic information about pickup and delivery is often insufficient–trading partners demand extensive status messages throughout the shipment's journey. As such, the EDI 214 transaction set is extensive, including:

  • Where shipped from - including name and address
  • Shipment location - including address or coordinates
  • Dates and times - including pickup and estimated delivery
  • Proof of delivery - including location and who signed for delivery
  • Shipment status details - including reasons for status and lading exception information
  • Shipment description - including weight, packaging, and quantity information

Handling all that data in one transaction set, along with supporting documents, isn’t something every EDI solution can handle.

Solution: A robust EDI solution, like 1 EDI Source, offers web forms to support creating or editing EDI documents when automatic data generation isn’t available.

An efficient EDI system can automate the process of sending these updates, ensuring that all stakeholders in the supply chain are promptly informed about the shipment's status. This not only helps maintain transparency but also aids in planning and managing logistics operations more effectively.


Efficient Management of Supporting Document Attachments

Delivery receipts, bills of lading, and weight certificates must be attached to transaction sets. But this can get extremely messy. So, having the ability to store files within your EDI system is critical to centralizing transaction data.

Solution: With an advanced EDI system like 1 EDI Source, you can easily and securely attach supporting documents to their respective transactions, maintaining the integrity and traceability of each shipment.

For instance, when a shipment reaches its destination, the accompanying delivery receipt can be promptly attached and transmitted, providing immediate proof of delivery.

Similarly, bills of lading and weight certificates, which verify freight terms and shipment integrity, can be managed with the same level of efficiency.


Managing Invoice Adjustments by Payment Agencies

Another common challenge we see arises when trading partners use payment agencies.

These agencies often have incentives to minimize freight bills, leading them to short-pay or even reject invoices as a strategy to control freight costs for their clients.

This situation results in either underpayments or outright rejected invoices for the carriers, creating financial discrepancies and administrative burdens.

Solution: An advanced EDI solution with automated validation capabilities offers a robust response to this challenge.

These systems can be programmed to meticulously validate invoice data against agreed-upon freight charges and terms before the invoices are sent to payment agencies. Validation includes checks for accuracy in billing amounts, adherence to contractual rates, and confirmation that all necessary information is included.

Ensuring that invoices are correct and comprehensive from the outset reduces the likelihood of them being underpaid or rejected due to errors or omissions.


The Limitations of Transportation Management Systems (TMS)

EDI solutions are vital for transportation and logistics companies looking to build smooth, effective transaction workflows.

However, we’ve noticed that many Transportation Management Systems (TMS) offer inadequate built-in EDI capabilities, which hampers a business’s performance.

Standard TMS solutions with integrated EDI capabilities often have predefined formats and limited customizability. In contrast, dedicated EDI solutions offer greater customizability, allowing businesses to tailor EDI specifications to specific needs while increasing profitability.

Extra features like web forms ensure flexibility when issuing custom messages that aren’t readily auto-generated. This is fundamentally important for anyone handling unique transaction types, complex routing scenarios, and specific compliance requirements that vary among trading partners.


Advanced Validation and Error Handling

Robust EDI solutions provide more sophisticated validation checks and error-handling mechanisms.

This ensures data accuracy and consistency, reducing the likelihood of transaction errors that could lead to operational delays or disputes with trading partners.


Integration with Diverse Systems

Unlike the EDI capabilities embedded in standard TMS, advanced EDI solutions like 1 EDI Source can integrate with a broader range of systems and software, including ERP (Enterprise Resource Planning), WMS (Warehouse Management Systems), and other logistics software.

Integration ensures seamless data flow across enterprise systems, delivering higher efficiency and productivity while future-proofing your business.


Handling Ever-Increasing Volumes of Data

The transportation sector experiences a tremendous volume of daily transactions and related data, which creates complex data flows and document handling needs. Legacy EDI systems often struggle to scale, leading to manual exceptions and accuracy issues.

Cloud-based EDI, like 1 EDI Source, delivers a near-infinitely scalable solution that can handle any volume of data across the ecosystem without infrastructure constraints.

Robust data retention capabilities provide audit trails for documents and transaction histories, while integration with ERP, CRM, and business intelligence (BI) tools unlocks new ways of learning from EDI data.


Summing Up

Winning competitive edges in the transportation and logistics sector requires a deep understanding of transaction challenges.

Selecting a high-performance, modern EDI solution is crucial to solving them.

1 EDI Source delivers cutting-edge EDI designed for modern logistics. It delivers value for all transportation and logistics stakeholders:

  • For shippers, EDI automates sending load tendering documents to carriers for bidding and dispatch.
  • For carriers, EDI seamlessly receives load tender information, accelerates bidding, and integrates dispatching data.
  • For brokers, EDI assists in managing loads, tendering, tracking, and payments across carriers.
  • For freight payment firms, EDI automatically brings in data required to audit freight invoices, process faster payments, and consolidate reporting.

To learn more about how 1 EDI Source can augment your transport and logistic transaction workflows, book a demo with us today.