How EDI (Electronic Data Interchange) Can Simplify Your Supply Chain and Save You Money

In a world before internet, e-mail or text messages, EDI may have been a difficult concept to grasp, but today, it should be a no-brainer. Many major retailers require that your company is able to receive EDI Purchase Orders (EDI 850) in order to do business with them, however, for manufacturers or importers who receive these EDI 850s, that’s often the end of the EDI process. EDI, which stands for Electronic Data Interchange, is simply the most logical way to communicate your logistics requests with your logistics partners. Whether you’re sending an order, transferring inventory or tendering a shipment, EDI ensures that your data reaches the intended recipient with speed and accuracy. Here’s a basic breakdown of what EDI is and why you should seriously consider using it:

What is it?

EDI is a method of data transmission between business partners through computer-to-computer communication. As an alternative to postal mail, fax and email, EDI has been the preferred method of data communication for businesses since the 1970’s. A major advantage of EDI vs other formats (such as a .csv file) are the EDI standards that ensure every data field is consistent. For example, if an order is shipping to New Jersey, the state must always be entered as “NJ”, not “New Jersey” or “N.J.”

How does it work?

EDI messages are generated and sent to the recipient’s computer or server at regular intervals. For example, as soon as a shipment is planned from a manufacturing facility to a warehouse, the data is transferred from the manufacturing facility’s Enterprise Resource Planning software (such as SAP) to the third-party logistics provider’s Transportation Management System (TMS) and Warehouse Management System (WMS).

The EDI process flow consists of three steps:

Step 1: The documents are generated to be sent. This is the only step that may require human involvement, as the data may initially need to be entered, triggered or approved manually.

Step 2: The data is interpreted and formatted by EDI software in preparation for transmission.

Step 3: The sender’s system connects to the recipient’s system (or through a VAN (Valued-Added Network)), and the EDI documents are transmitted to the recipient.

Step 4: An acknowledgement confirms receipt of the EDI transaction by the recipient of the EDI message.

Is it worth it?

Definitely! EDI ensures accuracy and speed through every step of the process. Since data is not being re-entered at each stage, data entry keystroke errors are dramatically reduced. EDI also allows for quicker order processing and turnaround; imagine the time it would take to enter 100 orders with 20 line items versus just importing an EDI file (hours versus minutes). Lastly, EDI ensures smoother communication with retailers such as Amazon, Target and Walmart. There’s no question that EDI is worth the investment, it can help your company avoid costly logistical errors down the road. Whether you’re a current Port Jersey Logistics client interested in making the conversion to EDI or an outside visitor with questions about the process, we highly recommend that you contact us to discuss what EDI and Port Jersey Logistics can do for you.

Below is a detailed listing of the EDI messages Port Jersey Logistics and our business partners most commonly utilize:

EDI 204 – Load Tender: Advises our carriers of freight requiring shipment or pick up.

EDI 214 – Shipment Status Message: Updates shipment statuses from our freight carriers to our Transportation Management System once an order is picked up.

EDI 210 – Freight Detail and Invoice: Generates a transportation invoice for submission to our business partner.

EDI 846 – Inventory Inquiry/ Advice: Communicates inventory information to our business partner.

EDI 856 – Ship Notice/Manifest – Sends a message from our warehouse to our business partner ’s customer to notify them of shipment contents before arrival to their facility. Also known as the Advance Ship Notice.

EDI 940 – Warehouse Shipping Order: Instructs our warehouse on what to ship, how much to ship and when.

EDI 943 – Warehouse Stock Transfer Shipment Advice: Notifies a remote warehouse that a transfer shipment has been made from the manufacturer.

EDI 944 – Warehouse Stock Transfer Receipt Advice: Generates an acknowledgement for our business partner that a transfer shipment has been received.

EDI 945 – Warehouse Shipping Advice: Provides confirmation to our business partner of a shipment from our warehouse.

EDI 947 – Warehouse Inventory Adjustment Advice: Informs our business partner of quantity or status changes in inventory records. Also provides detailed information about internal adjustments that occur between our warehouse and our business partner.

EDI 997 – EDI Acknowledgment – Confirms delivery of inbound and outbound shipments.

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