Author: Helen Thomas

The EDI 810 Invoice transaction set is the electronic version of the paper-based invoice document. It is typically sent in response to an EDI 850 Purchase Order as a request for payment once goods have shipped out or services have been provided. A vendor can create an EDI invoice transaction set (EDI 810) that usually would contain the following:

• Invoice Details – Invoice Number And Date
• Item Information – Prices And Quantities
• Shipping Details – Name, Address, Zip Code
• Payment Terms – Agreements On Payment
• Discounts – Promo Codes Or Promotions

Once an EDI 810 transaction is transmitted, additional EDI documents could follow, which may or may not include:

• EDI 997 Functional Acknowledgement – Used To Confirm Receipt of the EDI 810
• EDI 864 Text Message – Used To Report Business Violations Found in the Invoice
• EDI 820 Remittance Advice – Details Payment of the Invoice

EDI 810 Format

ISA*01*0000000000*01*0000000000*ZZ*ABCDEFGHIJKLMNO*ZZ*123456789012345*101127*1719*U*00400*000003438*0*P*>
GS*IN*4405197800*999999999*20101205*1710*1320*X*004010VICS
ST*810*1004
BIG*20101204*217224*20101204*P792940
REF*DP*099
REF*IA*99999
N1*ST**92*123
ITD*01*3***0**60
IT1*1*4*EA*8.60**UP*999999330023
IT1*2*2*EA*15.00**UP*999999330115
IT1*3*2*EA*7.30**UP*999999330146
IT1*4*4*EA*17.20**UP*999999330184
IT1*5*8*EA*4.30**UP*999999330320
IT1*6*4*EA*4.30**UP*999999330337
IT1*7*6*EA*1.50**UP*999999330634
IT1*8*6*EA*1.50**UP*999999330641
TDS*21740
CAD*****GTCT**BM*99999
CTT*8
SE*18*1004
GE*1*1320
IEA*1*000001320

EDI Specifications

The X12 855 transaction set is called a Purchase Order Acknowledgement. The 855 EDI transaction code is used by sellers to confirm the receipt of a purchase order (EDI 850) from the buyer, which completely eliminates one’s need to call or fax a confirmation document. The 855 also communicates whether the purchase order was accepted, rejected or if any changes may have been made to the accepted orders by the seller. Just like with most acknowledgement transactions, EDI 855 can indicate that the order was accepted, rejected or accepted with changes, which looks like this:

• Accepted – The purchase order has been accepted.
• Rejected – The purchase order has been rejected.
• Accepted With Changes – Changes were accepted to the purchase order. (3 outcomes)
  • All line items are accepted, freight changes or cash terms. (Header Level Changes Only)
  • Change or reject one or more line items, no header-level changes would be made.
  • Header-level changes and one or more line items have been changed or rejected.

Each one of these acknowledgements could be provided with or without an indication of product availability. The 855 transaction could also be used to communicate pre-arranged merchandise shipments directly from the vendor. The seller will usually transmit an 810 Invoice once the product ships. In some cases, an 856 Advance Shipping Notice (ASN) must be provided prior to the shipment.

EDI 855 Format

ISA*01*0000000000*01*0000000000*ZZ*ABCDEFGHIJKLMNO*ZZ*123456789012345*101127*1719*U*00400*000003438*0*P*>
GS*PR*4405197800*999999999*20110527*1719*1421*X*004010VICS
ST*855*1001
BAK*00*AC*ABC123*20000430*****20000430
DTM*067*20000507
N1*ST**21*HO1000A00
PO1*1*10*CA*72.95*CT*UK*50387698433528
ACK*IA*10*CA*067*20000507**UK*50387698433528
PO1*2*25*BX*15.75*CT*UK*30387698775411
ACK*IA*25*BX*067*20000507**UK*30387698775411
CTT*2
SE*10*1001
GE*1*1421
IEA*1*000004438

EDI 855 Specifications

What is EDI?

EDI stands for Electronic Data Interchange. EDI combines a system and processes to give businesses the ability to exchange documents and transactions between trading partners in a standard electronic format. We can use a quick example of this, any retailer can send a purchase order (PO) to a vendor digitally using EDI versus having to send over a paper document or fax. They would use the code EDI 850, which is the EDI code for purchase order. In total, there’s a lot of EDI transaction codes that you’ll need to get familiar with. EDI has reduced our need for paper and has allowed transactions to become very fast.

EDI automation is a term you’re starting to hear more about, it can greatly improve your data accuracy while also ensuring transactions never get lost through the process. EDI has allowed countless companies to eliminate manual data entry and processing needs, which has allowed companies to eliminate human errors due to manual data entry.

EDI has many layers, it can also help with your security, giving you an additional line of defense against improper documentation and fraud.

A wide variety of business and transactional documents can be standardized and exchanged via EDI, these include but are not limited to:

• Invoices

• Purchase Orders (POs)

• Purchase Order Changes

• Purchase Order Acknowledgements (POAs)

• Credit Adjustments

• Advanced Ship Notices (ASNs)

EDI enables all of the retail supply chain agility needed to better deliver on consumer expectations in today’s shifting landscape. On the consumer side, EDI supports the process management that pulls ecommerce orders through the fulfillment and shipping queues to keep delivery promises. EDI can also help you decrease stock outs, backorders and late deliveries. When a customer gets their order late, they have the right to be upset, wouldn’t you? Sure, some cases are unique, but you always have to think about customer service and maintaining the highest level of satisfaction possible.

When we look to the business side, EDI has a lot more benefits. For starters, it can shorten lead times and enables retailers, suppliers, distributors, brands, manufacturers and other stakeholders to improve inventory management while engaging in accurate and speedy communications. With EDI, businesses can gain efficiency, save money, scale easily and address the needs of working with larger trading partners.

Benefits of an EDI integration

Not all EDI solutions are created equal. They have different strengths and weaknesses. They range from the most basic, which is simply a web portal through which business documents are sent, all the way to fully integrable EDI systems that can connect with other systems in the business.

When an EDI system is integrated with other systems, the possibilities for gains in efficiency and reductions in errors can multiply exponentially. EDI systems can break down the silos that exist within companies that use multiple systems for different departments and duties.

Fully integrated EDI solutions can connect to:

• ERP

• WMS

• CRM

• Accounting Software

• CMS

• Shipping Programs

When all of these systems can “talk” to each other, organizations gain the cross-channel and cross-departmental visibility and communication necessary to meet the demands of today’s retail and supply chain landscape.

Learn how you can reclaim time and resources using EDI automation.

In-House EDI vs. Outsourced EDI

Besides integrated EDI and non-integrated EDI, you also have in-house EDI and outsourced EDI. Every business, with varied capabilities, resources and needs, which means you’ll need to choose the EDI solution that best fits your business.

In-House EDI

Traditional EDI solutions are “do-it-yourself”, in-house and onsite at the business. If you’re building an EDI solution from the ground up, you will have more cost upfront to invest in, this can include but is not limited to: software, hardware, staffing and other resources. The costs may be less once the system is in place, but may increase as the company grows and more addons are needed.

Online EDI Solutions

With an online EDI solution, you should be able to access a portal via the internet, either through the web or an EDI app. Online EDI solutions do have some perks over  traditional EDI departments, one often being lower costs. Despite that, they may not have the ability to do full integrations to other systems. If that’s the case, you may end up with manual data entry tasks. More so, some online EDI solutions may require an investment of onsite resources to ensure existing networks do have the bandwidth to accommodate the flow of data.

Cloud-Based EDI Providers

Cloud-based EDI solutions usually offer a little bit of everything. You’re likely looking at an upfront setup cost and monthly subscription fee. Even so, this solution is far less than traditional in-house EDI and would be scalable to the needs of your business. In fact, some cloud EDI experts have claimed a savings up to 60 percent or more. Since cloud EDI providers maintains their own hardware, software, network, upgrades, compliance requirements and more, cloud EDI reduces infrastructure expenditures and staffing needs compared to traditional EDI.

(5) Reasons You Need EDI

Many businesses seek out an EDI solution because they’ve been asked to by an existing or potential trading partner. However, even without a trading partner asking for it, there are many reasons why retailers, vendors and others in the supply chain could benefit from implementing an integrated EDI solution.

(1) Costs Of Inaccurate Data

Companies and businesses that don’t have EDI systems usually rely on manual data entry at multiple points throughout the order process, throughout many points across the organization. Every manual data entry point is a chance for errors, errors can compound other errors and you’re left with a ton of mistakes that can hurt your business. The costs of late shipments, delivery of incorrect orders and paying inaccurate invoices adds up. You need your retail data to be accurate. If inaccurate data is coming in,  your retail forecasts will be wrong. EDI helps by eliminating human errors from your informational processes.

(2) Everything Is Moving Faster

Customers are always driving change in the way purchases are made, due to this, the whole supply chain is moving at a much faster pace than in the past. If one of your trade partners need a guaranteed delivery date of 2 days, but your existing processes require you to deliver in 3-4 days, that’s a big problem. EDI automation of documents enables accurate, efficient and streamlined processes to meet the high-speed demands of today’s retail, supply chain and consumer expectations. The supply chain is moving fast and it won’t slow down, you have to be ready, EDI automation is a smart idea.

(3) Trading Partners Are Vital

While retail supply chains operate quicker, suppliers, retailers, distributors, vendors, 3PLs and other organizations must be on the same page as your company. If your supply chain is relying on old legacy systems or outdated processes, you can guarantee it’s slowing your whole network down. In fact, there’s a lot of retailers and brands out there that won’t work with a partner that doesn’t have EDI implemented. Some of the biggest brands in the world require you to have EDI.

• Belk
• Home Depot
• Lowes
• Target
• Walmart

Supply chain efficiency matters, accuracy and automation that EDI offers a company can help retain trading partners and open the door to new opportunities.

(4)  Inventory Surpluses And Stockouts

When points of sale, ecommerce order submission, fulfillment processes, tracking shipments and other systems that don’t communicate with one another are going to cause you problems. If you have to manually enter data, it can make forecasting a major headache and you’ll be open to errors. With an integrated EDI solution, ecommerce platforms, accounting, ERP and other business solutions can communicate with each other, you can ensure you’re getting the most accurate transmission, collection and analysis of data possible.

(5) Limitations On Resources

As your business grows, resources such as inventory, staffing, space allocation and other will have to grow also. The last thing you want is bottlenecks that stunt your growth and progress. EDI can add agility, elasticity and scalability to your existing assets. With information and forecasting accuracy, EDI is going to enable you to have more precise inventory management, staffing, warehouse operations and other assets. When manual data entry requirements are reduced or eliminated, you can always move these employees to new departments. You can offer retraining to employees that want to stay with the company.

It’s never easy to say goodbye to an employee as data entry jobs are a dying breed today. However, the benefits of EDI are greater versus relying on manual data.

EDI 852 Reporting

Here at Accelerated Analytics, we provide EDI 852 reporting for our clients. If you’re a retailer, you likely already know how important EDI 852 data is. A product activity report (EDI 852) is a document that focuses on 2 main factors:

• Data On Current Products And Inventory
• Shows How Products Are Selling – POS Data

Working efficiently with EDI 852 data requires a good analysis tool like Accelerated Analytics^®. Otherwise, the merchandise planner is left to sort through line after line of data to find problems and opportunities. By using Accelerated Analytics^®, the routine tasks of formatting and consolidating data are eliminated, and exception logic can be used to save time.

If you’d like to learn more about our EDI 852 and POS Reporting, be sure to reach out. You can reach us by using this contact form or by scheduling a demo to see our software in action.

EDI 997 – Functional Acknowledgement

The EDI 997 transaction set is known as a Functional Acknowledgment or FA, which is often sent as a response to other EDI transactions received.

An EDI 997 is the same thing as a receipt, it acknowledges a specific EDI transaction or a group of EDI transactions which was received.

It is important to note that when you receive an EDI 997 in response to a transaction you sent yourself, you only know that your document arrived and was processed by the recipient’s EDI translator. It doesn’t provide any indication that your trading partner agrees with the contents of the prior transaction or that the transaction met all their business requirements.

For example, a 997 sent in response to an EDI 810 (Invoice) transaction does not indicate that the pricing or terms in the invoice were accepted, only that that invoice transaction was received and identified. At the most basic level, the acknowledgement will only contain an acceptance or rejection notification. However, the remote EDI translator will perform some validation of the EDI standards before responding. Therefore, at more advanced levels, some trading partners will send more detailed EDI 997s that describe individual elements that contain syntax errors when rejections occur.

EDI 997 Specification

EDI 997 Format

ISA*01*0000000000*01*0000000000*ZZ*ABCDEFGHIJKLMNO*ZZ*123456789012345*101127*1719*U*00400*000003438*0*P*>

GS*FA*999999999*4405197800*20111206*1100*1*X*004010VICS

ST*997*0001

AK1*PO*1421

AK9*A*1*1*1

SE*4*0001

GE*1*1

IEA*1*000000001

Source: Accredited Standards Committee X12. ASC X12 Standard Table Data

EDI 850 – Purchase Order

The EDI 850 is also refereed to by EDIFACT ORDERS and x12 850 Purchase Order. The EDI 850 represents an electronic purchase order that’s sent from a buyer to a seller, which request their want to buy goods or services. The electronic purchase order is one of the most common documents that should be included in all automated EDI systems.

The EDI 850 is a Purchase Order transaction set, used to place orders for goods or services. The EDI 850 usually provides the same information you would find on a Purchase Order (PO) document, which would include:

• Items And Prices
• Quantities Ordered
• Shipping Details
• Payment Terms
• Discounts Applied

Companies that are making purchases usually use EDI purchase orders to order products to be shipped to a distribution center, to store locations or to end consumers. This document could have a single ship-to location or it can have multiple ship-to locations, such as for cross-dock orders.

EDI 850 Specification

This X12 Transaction Set contains the format and establishes the data contents of the Purchase Order Transaction Set (850) for use within the context of an Electronic Data Interchange (EDI) environment. This EDI transaction code can be used to provide for customary and established business and industry practice relative to the placement of purchase orders for goods and services. This transaction set should not be used to convey purchase order changes or purchase order acknowledgment information as other EDI codes would be used for those.

EDI 850 Format

ISA*01*0000000000*01*0000000000*ZZ*ABCDEFGHIJKLMNO*ZZ*123456789012345*101127*1719*U*00400*000003438*0*P*>
GS*PO*4405197800*999999999*20101127*1719*1421*X*004010VICS
ST*850*000000010
BEG*00*SA*08292233294**20101127*610385385
REF*DP*038
REF*PS*R
ITD*14*3*2**45**46
DTM*002*20101214
PKG*F*68***PALLETIZE SHIPMENT
PKG*F*66***REGULAR
TD5*A*92*P3**SEE XYZ RETAIL ROUTING GUIDE
N1*ST*XYZ RETAIL*9*0003947268292
N3*31875 SOLON RD
N4*SOLON*OH*44139
PO1*1*120*EA*9.25*TE*CB*065322-117*PR*RO*VN*AB3542
PID*F****SMALL WIDGET
PO4*4*4*EA*PLT94**3*LR*15*CT

Source: Accredited Standards Committee X12. ASC X12 Standard Table Data

Every stage, process and function across your global supply chain is vital. Just one failure in your supply chain can be enough disrupt the flow. This is exactly why inventory management is among the most consequential elements of your supply chain. It serves as the pillar for the whole end-to-end process, balancing the inbound flow of materials and products with outbound shipments to distributors, retailers or out to your consumers.

In the best case scenario, the entire supply chain process is regulated by both existing and expected customer demand. Due to this, inventory management needs to be both reactive and proactive. It has to respond quickly to shifts in demand but also use every tool at its disposal to anticipate how demand may change, which allows you to make adjustments in your supply chain production rates and shipments as needed.

This is where technology can give your company an advantage, giving you access to the technologies and services you need to meet current customer demand. AI, data analytics, and the cloud can help you do just that. These 3 technologies give companies visibility in 2 key areas:

• Suppliers, Logistics And Transportation Partners
• Customer Marketplace

The Age Of Modern Inventory Management

(1) Using AI And ML – No one can dispute the fact that artificial intelligence (AI) and machine learning (ML) technologies are the future. When combined with AI and ML, your data analytics is enhanced. For example, these technologies are helping drive a shift from traditional demand planning methods to automating demand. Yes, demand automation, the right technology can make a huge difference in your inventory management.

(2) Data Analytics – One can argue that data analytics is one of the most important inventory management aids, especially when it pertains to market demand. With all of your data in hand, you will be able to better forecast demand, shifting from reactive to more proactive in the process. The data feeding and analytics engines can include everything from actual sales numbers and trends to social media posts, weather forecasts, and information on labor strikes. POS Data shows sales and inventory data down to a SKU/store level of detail, which is extremely important for all retailers. Data and analytics is your key to going next level with your inventory management.

(3) Leverage The Cloud – The Cloud gives you scalability, allowing you to quickly respond to production and delivery. If you need to increase production, the cloud makes it quick and easy to do just that.

(4) Reimagine Your Inventory Management – The inventory management function requires start to finish visibility across your entire supply chain, the best way to get this comprehensive visibility is with the cloud. This will allow you to see everything, from raw materials to your customer’s sale. Still, there’s a few things you need to focus on;

• Having the ability to collect data on your cloud-enabled technology, API integrations can give you that ability, which ensures you’re getting up-to-date data from your supply chain.
• Gaining visibility on your inventory throughout your supply chain can help you avoid stockouts, excess or shortages.
• Being able to see your inventory in real-time is a huge advantage, it allows you to react immediately. By doing so, you can take the right steps to ensure customer service is never overbearing.
• With your ability to control demand across multiple tiers, you can automate inventory replenishment to improve supply chain efficiency.
• Just like with your supply chain pillars, inventory management needs to evolve to keep up with changing customer demands. The gained visibility to customers, the market, suppliers, logistics and transportation partners is possible through AI, data analytics and the cloud. These are key to modern inventory management.

In this guide, you’ll learn how EDI works for retailers, grocers and e-commerce retailers. Explore why companies in the retail industry use it to help automate, improve and speed up order management and other processes. Discover the benefits of EDI for your retail or grocery business, and how it can help you work better with your trading partners.

How Does EDI Work In Retail? Why Is It Important For Today’s Retailers?

There’s a reason why more and more retailers are turning to EDI, it allows them to manage their business relationships with suppliers, vendors and distributors, and for good reason.

EDI alone eliminates the need for manual data entry, faxing, phoning and emailing about orders and transactions. Due to this, transactions are a lot faster and more accurate than any period prior. In a retail world that’s moving faster and faster, EDI is becoming vital for all retailers, e-commerce and grocers. EDI has become a pillar for effective supply chain management.

EDI is a language that’s known in many business systems and it ensures all of your trading partners and suppliers are on the same page.

Examples Of How EDI Works For Retailers, E-Commerce And Grocers

When ever you need to place an order with a supplier, you’d create an electronic purchase order the system you use. Your EDI solution then creates an EDI version of that purchase order (EDI 850) and it’s sent to the supplier.

Even though your supplier may use different technology than you, their order system is able to correctly translate and receive the information automatically, so as long as they’re EDI compliant. Nearly all of the major retailers will be EDI compliant, which ensures all transferred data is accurate.

Once your supplier receives the purchase order, they will send you an EDI code (EDI 997), which means your order was received.

When your order is ready to be shipped out, the supplier will send you an advance shipping notice (EDI 856). Next, you’re going to receive an invoice from your supplier (EDI 810) and you can check to make sure that order is accurate and you received the correct quantities (EDI 861).

Using EDI codes is much easier than having to manually enter all this data, hence the reason EDI has become so popular over the years.

Imagine if instead of spending hours matching up paperwork, you reconciling your orders with a few keystrokes. By automating an invoice (EDI 810) match to the purchase order (EDI 850) and quantity received (EDI 861), everything is already available in your system to allow you to issue an accurate payment (EDI 820).

When it comes to receiving your products and selling them, (EDI 852) can provide data on the inventory and current products you have. It can also show how those products are selling from your POS Data.

EDI Benefits For Retailers, E-Retailers And Grocers

There’s a wide range of benefits for using EDI. EDI is the foundational pillar for automated order processing and inventory management. EDI is proven to streamline and improve workflow while enhancing supply chain predictability.

• EDI Is Cheaper – Paper based orders can cost you upward of $50 per order or more. With EDI, you could pay as low as $1 for transactions.
• Reducing Data Errors – Anytime you have manual data entry, errors are a concern. EDI reduces your need for manual entry and you can fully automate it.
• Better Inventory Predicatability – EDI allows you to accurately analyze your inventory, helping you reduce stockouts, surplus, markdown, etc.
• More Attention On Growth – With the right EDI solution, you’re going to be able to automate a lot of processes, allowing you to focus more on your growth.
• Better Accurate Forecasting – When your data is accurate, the data used for forecasting is going to be more accurate, EDI systems are extremely accurate.
• Responding Quicker – EDI gives you full control over on-hand inventory. If there’s ever an disruption, you can act fast with the data in hand.

EDI compliance refers to the ability to exchange business documents in the way your trading partner requires.

Each document must adhere to a specific EDI format to ensure the successful exchange of EDI documents.

Do You Need EDI Compliance?

Nearly all major trading partners require you to be EDI compliant, this includes;

• Belks
• Bed Bath & Beyond
• Dillards
• Home Depot
• Lowes
• Target
• Walmart

To answer that question, it’s a BIG YES! You need it, you can’t do without it.

How Do You Become EDI Compliant?

There are a few key steps in the process to becoming EDI compliant.

• What Does Your Trading Partner Require – The first step of EDI compliance is understanding the requirements your specific trading partner has. Fortunately, most trading partners will have resources on their website that detail the full set of requirements and expectations with respect to EDI.
• Choosing Your EDI Solution – When it comes to choosing your EDI solution, you have a few different options. You can outsource your EDI requirements to a third-party provider, you could also build an in-house EDI solution. For most companies out there, building an in-house EDI solution can be a huge challenge. This process involves developing the software needed to securely exchange EDI documents. However, as long as you’re working with the right provider, an in-house solution can be built.
• Testing Your EDI – Once you have your EDI solution set up, you’re ready to move to the next stage: testing your EDI. You’re going to need to test your EDI solution to ensure that all your documents can successfully be exchanged in the proper format with your trading partner(s). After testing is done with the trading partner, you’re ready for business!
• EDI Reporting – If you’re using EDI 852, you need an EDI reporting solution. Accelerated Analytics provides EDI reporting, we also provide POS reporting. EDI data is not just about invoices and purchase orders. EDI 852 is also referred to as a product activity report. It provides data on your current products and inventory. If you’re a retailer, EDI 852 is vital to growing your company. To learn more about our EDI 852 reports, take a minute to reach out here.

Supply chain management (SCM) is the broad range of activities required to plan, control and execute a product’s flow from materials to production to distribution in the most economical way possible.

SCM focuses on integrated planning and execution of processes needed to optimize the flow of materials, information and capital in functions that broadly include demand sourcing, planning, production, inventory management and logistics (storage and transportation). Companies use both business strategy and specialized software in supply chain management to create a competitive edge against the competition.

Supply chain management is expansive and complex.  Each role relies on your partners, suppliers, manufacturers and others to operate efficiently. Due to this, supply chain efficiency also requires change management, collaboration and risk management to create alignment and communication between all the participants.

In addition, supply chain sustainability — which covers environmental, social and legal issues, in addition to sustainable procurement — and the closely related concept of corporate social responsibility — which evaluates a company’s effect on the environment and social well-being — are areas of major concern for today’s companies.

Supply Chain Benefits

There’s a number of positive benefits that supply chain management produces, such as;

• Lower Costs
• Higher Profits
• Better Efficiency
• Ability To Manage Demand
• Accurate Inventory
• Increased Collaboration
• Higher Production

SCM enables companies to keep costs low, help manage demand efficiently, carry the right amount of inventory, deal with disruptions and meet customer demand in the most effective way possible. These supply chain management benefits are possible through effective strategies and appropriate software to help you manage the growing complexity of today’s supply chains.

Why Supply Chain Management Is Important

SCM has many significant impacts on both sides, the enterprise and the consumer.

• Customer Service – Supply chain management can help you improve customer service, something every company wants to improve on. When done right, they have the ability to ensure customer satisfaction by making certain the necessary products are available at the correct location at the right time. By increasing customer satisfaction levels, enterprises are able to build and improve customer loyalty.
• Lower Operating Costs – SCM also provides a major advantage for companies by decreasing operating costs. When done right, efficient supply chain management can help you reduce the cost of purchasing, production and the total supply chain. Lowering costs is going to help your company be in a better financial position, allowing you to increase profit and cash flow. Following supply chain management best practices, you’ll have the opportunity to minimize over using your large fixed assets, such as warehouse.  Supply chain experts can help you redesign parts of your supply chain or your entire supply chain. For example, you may find you only need 3 warehouses versus 4 warehouses, saving you the added costs of a full warehouse.
• Quality Of Life – You won’t hear this a lot, but SCM plays a vital role in our society. We owe our survival to supply chains. People rely on supply chains to deliver necessities like food and water as well as medicines and healthcare. The supply chain is also vital to the delivery of electricity to homes and businesses, providing the energy needed for light, heat, air conditioning and refrigeration.
• Job Creation – SCM can also improve quality of life by fostering job creation, providing a foundation for economic growth and improving standards of living. It provides a multitude of job opportunities, since supply chain professionals design and control all of the supply chains in a society as well as manage inventory control, warehousing, packaging and logistics. Furthermore, a common feature of most poor nations is their lack of developed supply chains. Societies with strong, developed supply chain infrastructures — such as large railroad networks, interstate highway systems and an array of airports and seaports — can efficiently exchange goods at lower costs, allowing consumers to buy more products, thus providing economic growth and increasing the standard of living.

Supply Chain Processes

Each major phase of a product’s movement through the supply chain, from materials to production and distribution, has its own distinct business processes and disciplines. Most of them began decades ago as paper-based methods but now are usually handled in specialized software.

The SCM process starts with figuring out what products customers want — the early stages of supply chain planning, traditionally considered one of the two overarching categories of SCM, along with supply chain execution.

Supply chain planning starts with demand planning, this is a process for gathering historical data, such as past sales, and applying analytics and statistical modeling to create a forecast or demand plan that the sales department and operational departments, which is what you see a lot in manufacturing and marketing. The forecast determines the types and quantities of products you’ll have manufactured.

Now, some companies perform demand planning as part of a formalized process, this is called sales and operations planning (S&OP). This focuses on an iterative process for gathering data, discussion, reconciling of demand plans with production plans and management approval. Some companies include S&OP in a broader process called integrated business planning (IBP) that incorporates other departments’ to plan a single global company plan.

The next step would lead us to production planning, this is when a company drills down the specifics of where and how the products based on the demand plan are going to be manufactured.  You can also take it a step further, which often involves specialized software (advanced planning and scheduling), allowing you to optimize your resources for production and make them more adaptive to changes you see in demand. Production planning is also used in other industries, such as agriculture and oil and gas.

Material requirements planning (MRP) is a process that’s been used for the past 80 where manufacturers ensure sufficient materials and components (like subassemblies) are available for use in the manufacturing process by taking inventory of what’s on hand. This allows you to identify gaps so you can buy or produce the remaining items you need. The central document in both MRP and production planning is called a bill of materials (BOM), which is a complete list of the items you’re going to need to make any given product.

MRP is sometimes done as part of manufacturing resource planning (MRP II), which builds the MRP concept to other departments such as HR and finance. MRP and MRP II were the predecessors of enterprise resource planning (ERP) software, which is designed to integrate the major business processes of companies within any type of industry.

Two complex processes play important roles in most of the major steps of SCM:

• Inventory Management
• Logistics

Inventory management consists of various techniques and formulas for ensuring adequate supply, from raw materials in a manufacturing plant, perhaps managed in an MRP system, to packaged goods in a retail store, for the least expenditure of time and resources. Manufacturers are faced with a variety of inventory management issues, many of which involve coordinating demand planning with inventory at both ends of the production process. For example, sometimes material requirements planning leads to more inventory, especially when the system is first implemented and the manufacturer must work to synchronize MRP parameters with the inventory already on hand.

Logistics focuses on everything you do with transporting and storing goods, from the start of the supply chain with delivery and materials to manufacturers, to delivery of finished products to stores or directly to your consumers. It goes beyond to product servicing, return and recycling too, a process we refer to as reverse logistics. It’s inventory management that’s built into all of your logistical processes.

Procurement, which is called sourcing by some, is the process of finding suppliers for goods, managing those relationships, and acquiring the goods at the best economical price. Procurement has a lot of working elements too,  including communication, requests for bids and paperwork, such as purchase orders and invoices. It is a major component of supply chain management, given how much is bought and sold at all points along the chain. Most companies that operate in the supply chain, which include suppliers, manufacturers, distributors and retailers, they have dedicated procurement personnel to handle your supply chain points.

Strategic sourcing would refer to an elevated and more sophisticated type of procurement that aims to optimize a company’s sourcing process by taking advantage of its consolidated purchasing power and align it with the business goals of the company.

Supplier relationship management (SRM), in contrast, addresses sourcing issues by focusing on the suppliers the company deems most critical to success and systematically strengthening relationships with them while fostering a high level of performance.

What Is EDI?

EDI is an abbreviation for electronic data interchange.

EDI is an acronym for Electronic Data Interchange. EDI provides a standardized method of communicating data between businesses. The other businesses that you exchange data with would be considered your EDI trading partners.

Using EDI, businesses are able to send information digitally from one business system to another, using a standardized format. There’s a wide range of  business systems that utilize EDI technology, allowing them to connect with e-commerce solutions, CMS, ERP, WMS, accounting software and more.

In the past, order processes, transactions and communications were done with paper or fax, EDI changed that. Today, it has become a key element for automating business processes.

EDI allows you to do things that couldn’t be done with paper or fax, allowing you to send digital information, data and transactions to other companies, leading to higher accuracy and fast communication speeds. Purchase orders are a great example to use, with EDI, we can digitally transmit purchase orders, invoices, advanced ship notices or other documents with EDI in a second.

EDI 101: What EDI Does

There’s a number of reasons why EDI services can help your company.

• Accuracate Data
• Efficient Data
• Supply Chain Network Integration
• Fast Order & Transaction Processing
• Faster Payments
• Less Needs For Paper

While all of these are great benefits, one of the most important advantages that EDI provides is that it makes your business EDI compliant. EDI compliance is required by many big box retailers in order for your business to conduct transactions.

EDI 101: How EDI Works

EDI works through the use of EDI transaction files. EDI transaction files will contain the pertinent information in a standardized format. There are many different EDI transaction files, each serving its own unique purpose.

For instance, the EDI 856 transaction file (also known as the Advance Ship Notice or ASN), serves to identify shipping information to a trading partner. B2BGateway outlines the many utilizations of the 856 transaction file in their blog article “Explaining EDI 856 Advance Ship Notice”. Some of its many useful purposes include:

• Who: carrier information
• What: items being shipped/how many
• When: when the package has shipped or will ship
• How: mode of transportation

You can utilize EDI services through an EDI provider, commonly known as a Value Added Network (VAN). The VAN is what will make your transactions EDI compliant. If they are integrated with your inventory management software, the EDI provider will work directly with your management software to process orders between you and your trading partners. The direct integration provides maximum unification in your supply chain processes.

Accelerated Analytics provides EDI 852 reporting. There’s a number of benefits retailers can gain thanks to their EDI 852 data. Just in case you don’t know what EDI 852 is, let us explain it like this. EDI 852 files are usually referred to as “product activity data” or “product activity report.”

A product activity report (EDI 852) is a document that highlights on 2 core factors:

• Gives you data on your current products and inventory
• It shows how your products are selling – Point of Sale or POS data

Now, while there’s a lot of data and insights you can get out of your EDI 852, the core data points are focused around;

• Item and Quantity sold in dollars
• Item and Quantity sold in units
• Quantity on hand (inventory)

EDI 852 data files are typically provided on a weekly basis.  The biggest challenge is the fact that every unique retailer uses different formats, data descriptions, and codes. When you’re looking for an EDI partner, you’ll need to find EDI providers that include your specific retailer.