Are you trying to get your EDI system running as smoothly as possible but feel like you’re hitting a brick wall?
EDI is designed to make retail transactions more straightforward, and once it’s set up properly, that’s precisely what it’ll do. But, as ever with advanced software, there might be a few bumps in the road.
This article overviews common EDI challenges facing retailers. The goal is to help you create an automated, hassle-free EDI workflow that benefits both you and your trading partners.
Let’s dive in.
Businesses use the EDI 850 Purchase Order (PO) transaction set to place orders for goods or services. The PO is fundamental, as subsequent EDI documents in the transaction refer back to it. Getting the PO right is key to the entire end-to-end EDI process.
Here are three common issues associated with handling EDI 850s and how to solve them:
When customers include new item numbers in EDI interchanges–ones that aren’t set up in enterprise resource planning (ERP)–how do you identify them? Should you reject the order? Or continue to set up the new item?
Solution: Automatic validation checks in your EDI processing workflow identify “new item situations” without manual intervention and escalate them early. You can ensure you fulfill client needs by shipping the correct product at the right time, avoiding delays and dissatisfaction.
Modern EDI systems, like 1 EDI Source, include software that automatically validates data as it’s received or sent. It checks for errors, inconsistencies, or missing information against predefined rules and standards. For example, it can verify that all required fields are filled, the formats are correct, and the data matches expected values or ranges.
Integrating EDI with ERP systems allows for the cross-referencing of data. For example, the system can check if the product codes or shipment addresses in a PO match the company's records. This enhances accuracy in order fulfillment and inventory management.
Pricing discrepancies between the customer's order and your system can lead to complications.
Do you process the order with the listed price and address the discrepancy later? Or request the customer resubmit the PO with the correct price, potentially delaying the delivery of the product?
Solution: Establishing formal procedures to handle discrepancies is crucial. This might involve accepting the order and resolving the pricing issue at the invoicing stage. Or preemptively requesting a PO resubmission with corrected pricing to ensure alignment from the outset. The right EDI software makes automating this process in line with your company’s requirements easy.
POs including new 'ship to' addresses not in your system can complicate logistics. Can you ship to these new locations? Do you have the right freight carriers for these destinations? What about cost differences?
Solution: Again, implementing data validation checks driven by robust business rules in your EDI solution is essential.
Instead of automatically accepting orders with unverified addresses, the EDI system will now prompt you to verify any new or unrecognized customer addresses before finalizing the order. This adds a quick safety check to prevent orders from being shipped to incorrect destinations, which can be incredibly expensive to rectify and damage customer relationships.
Sellers use EDI 855s to acknowledge the receipt of a buyer's PO. This eliminates the need for call or fax confirmations.
Creating EDI 855s can be daunting, especially for small and medium-sized organizations new to EDI management. Delays in submitting EDI 855s can have disastrous downstream effects. Customers can be left waiting and wondering when their order will arrive. In the meantime, they may seek out a more responsive supplier.
Solution: With so much riding on fast, accurate EDI 855 generation, it's crucial to have robust processes in place. Leveraging web forms (online forms that can be filled out manually on a web page) can help bridge the gap. They enable you to create or edit EDI documents when your ERP system can’t populate the right data automatically.
The EDI 860 Purchase Order Change Request transaction set is used by buyers (buyer-initiated) to modify a previously submitted PO (originally sent as an EDI 850).
EDI 860s are vital for ensuring that the final order accurately reflects mutually agreed-upon terms. Upon receiving an EDI 860, sellers should respond with an EDI 865 Purchase Order Acknowledgement with Change, guaranteeing both parties are aligned.
Receiving a PO change request can disrupt confirmed production schedules and shipment plans. It necessitates swift and accurate communication with all stakeholders. Delays in acknowledging PO changes lead to misunderstandings and potential business losses.
However, creating EDI 865s can be challenging, especially for companies new to EDI management or using more basic EDI solutions.
Solution: Web form functionality integrated into your EDI platform enables manual creation or editing of EDI documents in cases where automated systems fail.
This capacity ensures EDI 865s can consistently be sent within 24 hours after receiving the original PO or change request per recommended best practices. Maintaining prompt turnaround times for these documents bolsters customer confidence and business continuity.
The EDI 856 Advance Ship Notice (ASN) is used to electronically communicate the contents of a shipment to another trading partner. There are three challenges to managing EDI 856:
When goods are shipped, an ASN in the form of EDI 856 is sent electronically to the receiver. This document contains information about the shipment, such as the types of items, quantities, and packaging.
Each package in the shipment has a barcode label that corresponds to the information on the ASN. These barcodes are a physical representation of the data in the ASN.
Upon arrival, the receiver scans the barcodes on the packages. This scanning process is where validation comes into play.
The scanned barcode data is automatically compared against the ASN and the original PO in the receiver’s system. This step confirms what was ordered (as per the PO) and what was declared to be sent (as per the ASN) matches what has physically arrived.
An EDI solution with automated validation checks significantly reduces the likelihood of human error. It ensures that the physical goods match the order and shipping documents, increasing efficiency, accuracy, and transparency in the supply chain.
Trading partners often have varying ASN requirements, placing suppliers responsible for adapting to different data formats. A common issue is that each carton in a shipment may require a unique barcode identifier, which needs to be accurately reported back to the trading partner.
Business rules coded into a robust EDI solution validate the completeness and accuracy of ASN data and avoid potential penalties or fines. The right EDI solution makes creating business rules and constraints quick and easy so you can address the cause of data mismatches.
Trading partners generally expect the ASN to be sent before the shipment arrives. Therefore, it’s essential to understand when ASNs are required and to use alerting mechanisms within your ERP or EDI solutions.
EDI 810 is the electronic equivalent of a traditional paper-based invoice and is typically sent in response to an EDI 850 PO. EDI 810s must align with all previously transmitted data from the EDI 850 PO and EDI 856 ASN.
There are two key challenges associated with the EDI 810 transaction set:
Handling discounts within the EDI 810 data structure is error-prone. Inaccurate discounts are often traced back to how discounts are reflected in the EDI data structure.
Solution: Regular validation of the EDI data sent to trading partners is essential to verify the accuracy of your discount methods. This helps eliminate scenarios where customers might be over-discounted due to data mapping issues.
Aligning item pricing on the invoice with the pricing indicated in the EDI 850 PO requires attention. If the EDI 850 contains incorrect pricing and your ERP system doesn’t agree, the invoice may not match customer expectations, leading to short or no payment.
Solution: To solve this, use an EDI solution like 1 EDI Source that can validate item pricing on the EDI Invoice automatically against the EDI PO sent by the customer. This ensures synchronization.
Mastering EDI in retail involves understanding and overcoming the challenges of exchanging and managing transactions.
From handling purchase orders (EDI 850) to managing advanced shipping notices (EDI 856), each transaction type requires specific attention, including accurate document creation, pricing alignment, timely responses, and data accuracy.
Choosing a high-performance, modern EDI solution is vital here. 1 EDI Source offers easy-to-implement but highly configurable business rules, helping you build smooth order processing and fulfillment workflows.
1 EDI Source's robust ERP integration links order processing with your business rules, avoiding data mismatches and validation issues.
We’ve taken our popular “EDI 101 Guide” and customized it specifically for the Retail, CPG and Grocery industries. This new guide provides crucial EDI and transaction set information and will help you get started with EDI.