Five top EDI documents to integrate and automate

by | Dec 7, 2022 | Retailers, Suppliers

Electronic data interchange (EDI) isn’t exactly a riveting or “sexy” topic, but what it can do for businesses in the retail and retail supply chain ecosystem is actually pretty exciting. This standardized digital language for business documents empowers companies to exchange transaction information electronically, which enables more streamlined processes, improved accuracy, fewer inventory issues and more. But just because you have an EDI solution in place doesn’t necessarily mean you’re using it to its highest potential.

While EDI portals already significantly reduce the amount of time spent manually processing documents, without EDI automation, there can still be a fair amount of keystrokes moving information from one system to another. Some of the systems that can be integrated with EDI include WMS, CMS, ERP, accounting software, carrier programs and more. When your EDI solution is integrated with your other systems to automate your most-used EDI documents, it can significantly cut down keystrokes and speed up processes even more.

But where do you start? With the documents that will do the most to keep your business running smoothly. Here are some of the top five EDI documents to automate with the help of EDI integration.

1. Purchase Order – EDI Document 850

The purchase order (PO) is likely the top EDI document you should integrate. Known as EDI document 850, or just an “850”, POs communicate what items the buyer is requesting from the seller, quantity, pricing, shipping instructions and more. POs are used for securing products for shipping to a distribution center, warehouse store or directly to an end consumer.

When your systems are integrated with EDI, the PO flows directly into the order management system and is routed for picking. Without EDI integration, someone would have to periodically check the EDI system for new orders and then re-key the order into the ERP or whatever other system is required to pull the information through the fulfillment process.

2. Invoice – EDI Document 810

Similar to the PO, invoices are a vital part of the regular back-and-forth among retailers, suppliers, 3PLs and other links in the supply chain. Referred to as EDI document 810, invoices illustrate the transaction between a buyer and a seller, with details including item information, shipping requirements, payment terms and more.

When the 810 is integrated via EDI, invoices are easily sent from a seller to request payment from a buyer after products have been delivered. The speed of digital invoices can enable receiving or sending payments on time, and even help you take advantage of all available discounts.

Additionally, integrating both invoices and POs can help with automating the purchase order-to-invoice reconciliation process. EDI automation allows the two documents to be compared automatically without the need for manual evaluation, except in cases of mismatches which are flagged for human review. The resources saved from processing all the accurate invoices and POs can be redirected to projects that help grow the business.

3. Purchase Order Acknowledgment – EDI Document 855

After the 850 is sent from the buyer to the seller, it would be nice to know they received it. That’s where the Purchase Order Acknowledgement (POA), or EDI document 855, comes in. The 855 is sent to acknowledge that a purchase order was received.

With the 855 integrated, the supplier’s system automatically generates the POA via a workflow, without a person having to review the PO and send the response. It can even be automated to compare inventory and tell a buyer that there isn’t enough stock on hand to fulfill the order. The buyer can then decide how they want to proceed with the purchase order based on that information.

4. Purchase Order Change Request – EDI 860

There may be changes once the buyer has decided how they want to proceed with the order. The purchase order change request, or EDI document 860, is used to communicate changes to a previously submitted purchase order. This could reflect a change in quantity, ship date, address corrections or other changes needed to the original PO.

Pretend for a moment that a purchase order was sent for 10,000 units of a product, but the seller only had 7,500. A POA (EDI 855) was then sent to the buyer to relay this inventory information. Based on that, the buyer chose to change the quantity requested to 7,500, so they could get the available inventory and divert the budget for the final 2,500 to source from somewhere else. Sending the 860 change request put the change in writing, and was crucial both for the seller to get that final order right and for appropriate invoicing when payment is due.

5. Advance Shipping Notice – EDI 856

The advance shipping notice (ASN) is sent from the seller after an order has been shipped. EDI document 856 can contain a lot of information, such as quantity, UPC codes, how many pallets, how many units on a pallet, ship to and ship from addresses, and more. It also can contain details that assist with supply chain traceability, including lot numbers, manufacturing locations, expiration dates, etc.

The ASN is especially important for businesses that participate in drop shipping programs, where orders are shipped from suppliers, vendors or distributors on behalf of a retailer. The ASN can be used to relay information for individual drop shipped packages sent directly to consumers from the vendor’s warehouse. This helps the retailer to transmit the delivery information to their customer, and prevents the end consumer from ever knowing that the order was fulfilled by a third party seller.

Bonus EDI automation to integrate

The EDI 846 inventory inquiry/inventory advice document tells the purchaser the quantity of goods the seller has on hand, as well as what they have on order for future dates. Knowing what inventory is available and in the pipeline enables both parties to better forecast and manage buying and selling needs.

The EDI 846 inventory inquiry document is a vital tool for a range of processes that can help businesses keep up with today’s retail and supply chain needs, including just-in-time inventory management, order-to-shelf inventory management, drop ship order management, ship-to-store and ship-from-store models and more. Additionally, some of the biggest players in the marketplace and retail spaces like Amazon and Walmart, require that sellers regularly send them inventory information.

Move faster with EDI automation

Having an EDI portal is just the first step towards connecting, communicating and complying with your trading partners. Integrating EDI with other systems and automating your document management is ideal for more efficient processes, faster fulfillment, delivering on your promises and improved customer satisfaction.

The EDI documents listed here are the most basic and essential for business in the retail and retail supply chain ecosystem. Integrating these documents and automating them via EDI frees up time, money and other resources that could be directed towards helping your business grow.

Learn more about EDI with EDI 101. You can also check out SPS Commerce’s longer, more inclusive list of EDI documents and transactions.

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Christina Borglund