January 20th, 2021
Let’s face it, consumers nowadays are more demanding than ever. The rapid growth of e-commerce and the introduction of Amazon Prime’s two-day free shipping model have completely revolutionized the online shopping experience—not to mention the added luxury of same-day delivery on many items. This has led to significant changes in consumer expectations as fast, free delivery has now become the norm.
That being said, it’s no surprise that we want things delivered directly to our doorstep in no time, and at the lowest cost. In addition to timely delivery, the modern consumer expects real-time visibility throughout the entire process. We want to know what items are available, when they will be delivered, and what the status of our order is at every step of the way. And if there is an error or delay, a complaint will certainly follow.
The COVID-19 pandemic has drastically accelerated the shift to e-commerce, setting the bar even higher for retailers, manufacturers, and distributors that are now facing an increase in demand and have no choice but to find a way to meet it while staying in line with consumer expectations, else risk going under.
Scaling E-Commerce Fulfillment with 3PL EDI Integration
To remain competitive, many businesses are rethinking their supply chain processing. A common practice is to outsource shipping and fulfillment operations to third-party logistics (3PL) providers.
A 3PL company is typically a public warehouse or logistics service provider that can help with warehouse management, packing and shipping, returns handling, and more. In most cases the end consumer doesn’t even know that there is a third party involved in logistics—all packaging and consumer-facing communication consistently reflect the seller’s brand throughout the entire shopping experience. As a result, suppliers and retailers save on warehouse and fulfillment costs while significantly accelerating their operations.
However, as more players become involved in the logistics chain, the ability to exchange real-time, up-to-date information becomes key to increasing collaboration and avoiding delays. That’s why Electronic Data Interchange (EDI) becomes crucial for businesses looking to quickly scale e-commerce fulfillment.
What is EDI in Logistics?
Third-party logistics providers exchange thousands of documents with business partners every day—purchase orders, invoices, shipping notifications, dispatch information, and more.
In today’s e-commerce landscape, order volume is growing bigger by the second. EDI helps to automate the exchanges mentioned above, all of which would otherwise have to be processed manually. By integrating with all the actors involved in the supply chain, logistics companies can effectively streamline operations, save time, and cut down on costs.
How Does EDI Work in Logistics?
In short, when the end consumer places an order on an e-commerce platform, a purchase order (EDI 850) is automatically sent to the outsourced 3PL partner to initiate the fulfillment cycle. Once the order is ready to ship, the logistics provider sends an advance shipping notice (ASN, or EDI 856) to the retailer.
An ASN provides crucial data that helps retailers and suppliers manage inventory levels and deliveries, including when the package will be shipped, where it will be delivered, what’s in it, and other critical information about the shipment, such as The Standard Carrier Alpha Code (SCAC) or the carrier used to ship the order—a UPS SCAC code, for example.
Without this EDI shipping notification, end consumers wouldn’t be able to know where their package is nor when it should arrive.
Aside from those already mentioned, here are some additional commonly used 3PL EDI documents:
EDI 940 Warehouse Shipping Order: Used to advise a warehouse to make a shipment, confirm a shipment, or modify or cancel a previously transmitted shipping order.
EDI 943 Warehouse Shipping Order: Used to advise the recipient that a transfer shipment has been made. A warehouse shipping order provides a receiving location with detailed information concerning product(s) being shipped to that location.
EDI 944 Warehouse Stock Transfer Receipt Advice: Used to advise that a transfer shipment has been received.
EDI 945 Warehouse Shipping Advice: Used by the warehouse to advise the depositor that the shipment was made. It is used to reconcile order quantities with shipment quantities.
EDI 946 Delivery Information Message: Used by a receiving location to advise that a transfer shipment has been received.
EDI 947 Warehouse Inventory Adjustment Advice: Used to inform a warehouse of a quantity or status change to inventory records.