September 1st, 2020
There are certain industries in which electronic data interchange, or EDI, reigns supreme. The manufacturing industry is certainly one of them. That’s because, historically speaking, most manufacturing companies have struggled with managing inventory levels in their supply chain at some point in time. Without an EDI solution, supply chain management can only get you so far when it comes to keeping your trading partners happy.
EDI software has, in a sense, come to the rescue by providing a quick alternative to traditional document exchange methods between trading partners. In the manufacturing industry, EDI documents have enabled efficient communication between manufacturers and their customers. Additionally, an EDI solution helps manufacturing companies by enabling accurate demand forecasting, reducing costs, and most importantly, enhancing customer relationships.
Knowing the benefits of EDI in manufacturing is great and all, but if you’re regularly engaging in supply chain exchanges, it’s even more important to familiarize yourself with the most-used EDI transactions in manufacturing. That being said, you’ll likely run into the ANSI X12 standard, which consists of hundreds of EDI transaction sets. For your convenience, we’ve compiled a list of must-know EDI transactions for the manufacturing industry.
A List of EDI Transactions Commonly Used in Manufacturing
EDI 810 – Invoice
Invoice is a much more familiar term than EDI 810 for most. You know the deal—you receive a purchase order, fulfill the request, and send an invoice in response. An EDI 810 is simply the electronic version of this invoice.
EDI 830 – Planning Schedule with Release
This one is extremely important when it comes to EDI transactions in manufacturing. An EDI 830 is the EDI document that your customer sends to you, the manufacturer, in order to inform you of anticipated demand in the coming months (usually 3-6). An EDI 830 provides you with invaluable inventory information and therefore enables proper demand forecasting. This lessens the chance that your inventory levels will be too low to fill incoming purchase orders.
EDI 846 – Inventory Inquiry / Inventory Advice
Are you going to stop producing a certain product? Will a best-seller be out of stock (OOO) for the next three months? Does your customer need to place an abnormally large order? An EDI 846 inventory inquiry advice works both ways.
For one, you can send an EDI 846 inventory advice to your customer to inform them on inventory levels that may be relevant according to their buying patterns. On the other hand, your customer can send an EDI 846 inventory inquiry as a self-led check-up on your inventory levels. As far as EDI transactions in manufacturing go, this is a good one to facilitate realistic planning on both ends. An EDI 846 document sets expectations and provides a reference point for stock-level inquiries.
EDI 850 – Purchase Order
Purchase orders, invoices—these documents go hand in hand. An EDI 850 is yet another commonly known document that has been assigned a numeric code! An EDI 850 is a good old-fashioned purchase order (PO) in an electronic format. This EDI transaction document provides the stock keeping unit (SKU), order quantity, price, ship-to location, and more.
As opposed to traditional purchase orders, there’s less room for manual-entry errors in an EDI 850, which is high-priority in manufacturing to keep product shortages at a minimum. If your customers use EDI to send their orders to you, it’s a win-win situation.
EDI 855 – Purchase Order Acknowledgment
The name says it all. An EDI 855 is a purchase order acknowledgment. It’s the electronic message that you send to your customer to let them know that you’ve received their order. You can also include other useful information in an EDI 855, like if you’ve accepted the purchase order as is or with changes, or if you have completely rejected it.
EDI 856 – Advance Shipment Notification ASN
In other words, your order has shipped! An EDI 856 is the EDI transaction set that you send to your customers to let them know their order is on its way. The advance shipment notification (ASN), or advanced shipping notice, typically includes a tracking number, details on package contents, expected date of arrival, etc.
EDI 860 – Purchase Order Change
An EDI 860 is an EDI transaction in manufacturing that can be used in two ways: First, it can be used by your customer to make changes to a previously submitted EDI 850.
Pop quiz! What’s an EDI 850? Correct, it’s a purchase order!
Second, an EDI 860 can be used by your customer to accept your changes to their original purchase order. If you’re using the EDI 846 inventory inquiry advice, then you hopefully won’t run into this too often as a result of low inventory levels.
EDI 862 – Shipping Schedule
Mainly used to support just-in-time (JIT) manufacturing, an EDI 862 is used in real time to provide updates on shipment details. As most manufacturers know, supply and demand isn’t always 1:1, nor can it always be predicted. In that sense, an EDI 862 acts as a constant refresher to the EDI 830 (Planning Schedule with Release) to notify the customer of any changes as an order approaches fulfillment.
EDI 940 – Warehouse Shipping Order
An EDI 940 is used when a third-party is involved in the shipment, which is often the case when it comes to the manufacturing industry. As a manufacturer, you send an EDI 940 in order to authorize a warehouse, or some other third-party logistics (3PL) provider, to send a shipment to its intended location.
It’s also important to note that an EDI 940 is often used in drop-ship scenarios, as many manufacturing companies choose to outsource drop shipping to a 3PL. This can be a huge cost saving opportunity for manufacturers, so it’s good to know the ins-and-outs of drop shipping to make the best decision.
EDI 945 – Warehouse Ship Advice
Similar to an advance shipment notice (ASN), an EDI 945 is the warehouse’s way of letting you know that their warehouse shipping order (EDI 940) has been fulfilled. Put simply, an EDI 945 lets manufacturers know that their order has shipped from the warehouse and is off to its intended destination, regardless of whether the order is going to a customer or direct to consumer.