Trying to optimize your EDI system, but niggling issues keep holding you back? You’re not alone.
EDI promises to streamline complex manufacturing transactions and accelerate business cycles–when correctly set up. However, problems that require troubleshooting are a frequent frustration.
This article explores the most common EDI challenges manufacturers face.
Read on to learn strategies for creating an efficient EDI workflow that smooths transactions, saves money, and strengthens trading partner relationships.
The EDI 850 Purchase Order (PO) transaction set instigates the ordering of raw materials, components, and other industrial goods.
Ensuring POs are correctly formatted is fundamental to initiating smooth, seamless transactions that minimize delays throughout the entire transaction cycle.
Here are common issues faced in handling EDI 850s and their solutions:
Manufacturers often encounter new item numbers in POs that aren't pre-configured in their ERP systems. This can hold up the production planning process.
Suppose you accept the order, and it passes all the way to fulfillment. Fulfillment then realizes the products have not been entered into your system yet, and the order fails to process. This delay causes extra work––you could also miss shipping windows and lose the order.
Even after your team adds the new item to the system, they either must take the time to contact EDI support to reprocess the order or, worse, bother the customer to send it again!
Solution: Enable your business users to access EDI and reprocess inbound orders on their own, leveraging dynamic visibility tools that allow them to resend and, if necessary, make basic edits.
Pricing discrepancies between the customer's order and the manufacturer's system can slow quoting and billing processes.
Solution: It’s crucial to ensure your EDI solution flags pricing discrepancies early. Alongside this, you can establish formal procedures to handle pricing issues. Options include:
Receiving POs with new 'ship to' addresses that aren’t logged in the system can confuse logistics and distribution processes.
Can you ship to these new addresses? Do you have the right pricing and freight options set up? Confusion and delay in answering these questions risks impacting the transaction and customer relationship.
Solution: Once again, data validation checks driven by robust business rules in the EDI system clamp down on this issue. Instead of automatically accepting these orders, the system should prompt for verification of any new or unrecognized addresses before finalization.
This prevents orders with unknown addresses from progressing further down the pipeline.
Remember, the further a transaction progresses, the harder it is to backtrack and undo errors. Validation stops many errors right from the start, tightening up the entire transaction cycle.
Correctly using EDI 855s to acknowledge the receipt of a buyer's PO is vital. Buyers need to understand when their PO is accepted so they can prepare for delivery, payment, etc.
This eliminates the need for traditional call or fax confirmation and keeps communication centralized within your EDI platform. If you fail to acknowledge a PO with an EDI 855, the buyer might consider you slow and unreactive and simply take their business elsewhere.
A key challenge here is that EDI 855s are often not automatically generated by an ERP system, meaning you’ll have to create and issue them manually. That can be a problem if your EDI doesn’t offer a means of manually creating custom EDI 855s.
Solution: Web form functionality enables manual creation or editing of EDI documents when automatic data generation from ERP systems is unavailable, which is common with EDI 855s.
The EDI 860 transaction set, initiated by the buyer, allows modifications to an existing PO sent as an EDI 850.
When a seller receives an EDI 860, they should respond with an EDI 865 Purchase Order Acknowledgement with Change to ensure alignment between both parties. This is used to confirm that the final order reflects the agreed-upon terms.
Receiving a PO change request can disrupt production schedules and shipping plans.
You’ll first need to communicate the change request to the relevant departments and decision-makers.
Delays in responding to PO change requests can lead to friction and transaction errors. You might even manufacture and ship the wrong product—a very costly mistake!
Solution: Integrating web forms into the EDI process allows for the manual creation or editing of EDI documents, including EDI 865s (Purchase Order Acknowledgement with Change).
Ensuring that EDI 865s are sent out within 24 hours after receiving the original PO or change request is best practice, reinforcing customer trust. You can set up alerts to ensure an EDI 860 never passes you by.
The EDI 856 Advance Ship Notice (ASN) communicates shipment details to trading partners, providing them with the information they need to plan the receipt of goods.
When manufacturers ship goods, they send an ASN as an EDI 856 to the receiver. This document details the shipment, including item types, quantities, and packaging specifics.
Each package in the shipment carries a barcode label corresponding to the ASN data.
Discrepancies between the bar codes and the ASNs often result in the manual sorting of packages, leading to increased labor costs for the receiver and chargebacks or penalties for the supplier.
Solution: Using an EDI solution with automated validation checks is paramount here.
It minimizes human error and ensures that the physical goods match the order and shipping documents.
Upon arrival, the receiver scans these barcodes, which triggers automatic validation.
The validation compares the scanned barcode data against the ASN and the original PO in the receiver's system. This ensures that the delivered items match what was ordered and what was declared in the ASN.
Manufacturers often face varying ASN requirements from different trading partners, such as unique barcode identifiers for each carton in a shipment.
Solution: Implementing business rules within the EDI system is essential for validating the completeness and accuracy of ASN data. You’ll then be alerted if you’ve not supplied all the expected ASNs for the cartons in the shipment.
Perhaps needless to say, trading partners expect the ASN to be sent before the physical shipment arrives. Automatic alert mechanisms and notifications within your ERP or EDI systems will ensure this always happens.
EDI 810 serves as the electronic equivalent of a traditional paper-based invoice. It's typically issued in response to an EDI 850 PO and must align with all previously transmitted data from the EDI 850 PO and EDI 856 ASN.
Ensuring that the item pricing on the invoice matches the pricing indicated in the EDI 850 PO is essential.
Discrepancies can occur if the EDI 850 contains incorrect pricing or doesn't align with the manufacturer's ERP system, leading to billing issues and potentially impacting customer payments.
This also applies to discounts within the EDI 810 transaction set. Incorrect discount applications can result from configuring these discounts within the EDI data structure.
Solution: Regular validation of EDI data sent to trading partners is crucial for ensuring the accuracy of discount methods.
Use an EDI solution like 1 EDI Source, which can automatically validate item pricing on the EDI Invoice against the EDI PO sent by the customer. This ensures synchronization and accuracy in invoicing, crucial for maintaining healthy customer relationships and cash flow.
Mastering EDI in manufacturing takes time and practice. Each transaction set has its nuances, but there’s no point in suffering with confusion.
By choosing a high-performance, modern EDI solution like 1 EDI Source, you’ll be well on your way to handling transactions with the professionalism your customers demand.
1 EDI Source offers configurable business rules that are easy to implement, enabling you to create smooth order processing and fulfillment workflows. Automatic validation and alerts put an end to unnecessary errors and inconsistencies. And if you ever have to make a manual change, web forms make it quick and painless, keeping all your data centralized.
Reach out for a free demo of 1 EDI Source today to see how our solution can optimize your business.