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All You Need to Know About Global Trade Item Number (GTIN)

Introduction

Our blog covers the most relevant topics for retailers, such as EDI and how it is used in retail and the supply chain. We shared useful information about integration with e-commerce platforms such as Amazon, Shopify, BigCommerce and many others.

In this article, we are going to discuss Global Trade Item Number – GTIN, which is an important topic for all retailers. We will look at what a GTIN is, what it is for, how to get it, why a GTIN is needed in e-commerce and many other important aspects related to global retail and commerce.

What is GS1 US

GS1 US is part of GS1 which is one of the largest non-profit international organizations responsible for identification standardization and bar coding of goods.

GS1 is an international standards organization that develops and maintains global standards for business communication and identification systems. The organization’s main focus is on the development and implementation of barcoding and electronic product code (EPC) standards.

The most widely known of these standards – Barcodes are symbols printed on products that can be scanned electronically.

The GS1 US maintains and develop best practices of the use of a number of other standards that support the supply chain, but the most significant is the GTIN – Global Trade Item Number. GTIN allows products to be uniquely identified around the world and represent the basis of the GS1 system.

GS1 US provides services, education, and support to companies in the United States to help them implement and utilize these standards effectively. The organization facilitates the adoption of GS1 standards, such as the Global Trade Item Number (GTIN), which is a unique identifier for products, and the Global Location Number (GLN), which is used to identify physical locations in the supply chain.

What is Global Trade Item Number GTIN?

Global Trade Item Number is also known as GTIN. The GTIN is a number encoded into a barcode that allows you to identify any trade item. The GTIN barcode uses only numbers. Letters or other symbols are not allowed.

The term trade item refers to an item that is subject to trade. It is a term used mainly in supply chain management. The trade item has one or more distinctive characteristics such as size, composition, appearance, etc. in relation to other goods. Trade items include not only single products, but also whole boxes, pallets, and other shipping containers.

There is a GTIN on every package. It looks like a set of numbers. They are also presented as a barcode so that the scanner can quickly read them. GTIN-marked goods are included in the unified international GS1 database.

It is possible for a batch or multiple batches of the same product to have the same GTIN. However, a new GTIN is registered for each distinct product item.

Any change in a product such as composition, package, net weight, etc. requires a new GTIN.

Since GTIN is an international identifier, the same GTIN number cannot be assigned to another product anywhere in the world.

Why Do Companies Need a GTIN?

A GTIN is an essential part of product labeling. Typically, the manufacturers or importers of the product are responsible for obtaining the GTIN. You cannot generate GTINs yourself, as only GS1 assigns Trade Item Numbers.

Where is the GTIN Used?

GTIN in a global supply chain

The GTIN is required for labeling and logistics in the global supply chain. GTIN allows you to uniquely identify products and find them in databases. It is used at all stages of the supply chain from manufacturers to distributors, namely:
  • in distribution centers
  • in retail and wholesale trade
  • in warehouses
  • in 3PL logistics
  • in EDI (for example, in documents such as purchase orders and invoices)
  • in accounting and so on.

GTIN in advertising

It is also necessary to have a GTIN in order to promote goods online.

For example, to place an official commercial or announcement in the Google advertising service, you need to fill in the “GTIN” column. So the search engine understands what product is being advertised. It checks if they sell a product prohibited by law and looks for alternatives with a different price.

How to Get a GTIN?

It is possible to receive an authentic GTIN in two different ways:
GTIN for small busimess

For small businesses, the most cost-effective option is to license individual GS1 US GTINs for $30 each. The identification number is generated automatically in this case.

A second way is to license a GS1 Company Prefix if your business is planning to launch 10 or more products.

This license lets brands create authentic GTINs in bundles of 10, 100, and more. For businesses that license a GS1 Company Prefix, a GTIN is generated from their Prefix.

Companies are linked to products through the Prefix, which represents the first few numbers of the GTIN.

GTINs issued by GS1 US are automatically added to the GS1 Global Registry, a database used by retailers and online marketplaces to verify product identification. 

A certificate of ownership will also be provided for either option, ensuring authenticity for retail partners. 

The Importance of GTIN for E-commerce

Major retailers, online stores, and marketplaces such as Amazon, require companies to provide a GTIN for all products they deal with.

GTINs are often required by online marketplaces in order to verify that sellers are selling legitimate products and to support inventory management.

Marketplaces may hide your product listings if they are not identified with an authentic GTIN.

The Importance of GTIN for Resellers

Global Trade Item Numbers (GTINs) play a crucial role in the world of reselling products, and their significance cannot be overstated. These unique identifiers are essential for product identification and are integral to efficient supply chain management. Here’s why GTINs are indispensable for resellers like you:

Product Identification: GTINs are like fingerprints for products. Each GTIN corresponds to a specific item, allowing for accurate and standardized identification across various platforms and marketplaces. By using GTINs, resellers ensure that the products they offer are correctly recognized, reducing the risk of confusion and errors during the listing process.

Supply Chain Management: In the vast landscape of global trade, a seamless supply chain is crucial for success. GTINs facilitate efficient supply chain management by enhancing product visibility and traceability. These unique identifiers allow for better inventory management, easier tracking of stock movement, and streamlined order fulfillment processes.

Compatibility with Various Platforms: GTINs adhere to universal standards, making them compatible with multiple e-commerce platforms and marketplaces. As a reseller looking to expand your reach and list products on different online channels, having GTINs associated with your inventory is essential. Many popular e-commerce platforms, including Walmart Marketplace, rely on GTINs for proper product categorization and identification.

By using GTINs, you increase the chances of your products being displayed accurately on these platforms, maximizing visibility and potential sales.

Expert Advice for Resellers on Walmart Marketplace

As a re-seller on Walmart Marketplace, you may have questions about how to handle Global Trade Item Numbers (GTINs) for the products you list. We reached out to a GTIN specialist from GS1 US for expert advice to address your concerns.

According to the specialist, if your company is a re-seller of a product and you are not making any changes to the packaging, adding your brand name, or altering the product in any way, you have to use the original GTIN/UPC provided by the manufacturers. In this scenario, there is no need to create your own Company Prefix (GTIN) via GS1.org. Walmart can identify your brand, as the seller using the existing GTINs associated with the products.

This means that if you have permission from the suppliers and manufacturers to resell products without any modifications, you should utilize the original GTIN/UPC for each product. Doing so will streamline the identification process for Walmart, and you can confidently list your products on their platform.

U.P.C. vs GTIN

A Universal Product Code (U.P.C.) is the most commonly used type of barcode symbol printed on retail product packaging which contains GTIN information. 

In retail systems, U.P.C. used to capture GTIN numbers through scanning.

Thus, the U.P.C. represents a barcode symbol with black lines, while the GTIN describes the numbers that identifies a product.

Many online sellers mistakenly believe that a U.P.C. and GTIN are interchangeable and mean the same thing.

As e-commerce has evolved, more and more GTINs are being used on their own in product listings on the Internet. It serves as a link between the physical presence of a product and its digital identity, and it also allows you to verify the legitimacy of the product. As a result of the use of U.P.C. barcodes and GTINs, businesses have the ability to track their products more easily. 

A number of online retailers and marketplaces check all GTINs provided to them against the GS1 database. If vendors’ GTINs are found to be invalid, they may be delisted.

Which Products Do Not Require a GTIN?

There is a small category of products that do not need GTIN:
  • exclusive – a unique product in a single copy;
  • antiques – antiquities are not assigned GTIN;
  • handmade – handmade crafts differ from each other, so they cannot have a classifier
  • collectible models – which are not mass-produced;
  • used products – everything that has already been used by someone cannot have a repeated GTIN.

Benefits of Using a GTIN

GTIN significantly improves the processes associated with the receipt, movement or sale of goods. By using a code reader in warehouse inventory, employee errors are reduced to almost zero because basic tasks are performed automatically.

GTIN also makes it easy to transport goods through customs. Customs checks GTIN numbers on packages and accompanying documents.

Conclusion: All You Need to Know About Global Trade Item Number (GTIN)

GTIN is helpful for working with documentation, organizing, and searching for goods in warehouses and stores (acceptance, accounting, and shipment), in accounting systems, when automating inventory management, in payment documents and when placing orders, in delivery documents, etc. In electronic data interchange (EDI), GTINs serve as links to refer to the master data, which drastically reduces the amount of information transmitted by a trading partner.

Thus, the standards developed by GS1 US and GS1 globally enable businesses to improve supply chain efficiency, enhance product traceability, enable accurate and efficient inventory management, and facilitate electronic data exchange between trading partners. These standards are widely used in industries such as retail, healthcare, foodservice, logistics, and more.

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How Integration Can Improve Your Supply Chain Management

The efficient management of logistics processes involving multiple business partners is one of the main challenges faced by companies in the supply chain vertical.

There are many systems involved in the supply chain such as warehouse management systems (WMS), transportation management systems (TMS), enterprise resource planning (ERP), and much more.

However, the use of multiples of business systems and applications does not yet guarantee success.

The most important thing in the supply chain is the flow of information between the different systems, in a timely and efficient manner; this is called “data integration” which is necessary so different heterogenous systems can “communicate” with each other in a close to “real-time” fashion.

What is Supply Chain Management (SCM)?

Wikipedia gives the most accurate definition: “In commerce, supply chain management (SCM), the management of the flow of goods and services, money and information, involves the movement and storage of raw materials, of work-in-process inventory, and of finished goods as well as end to end order fulfilment from point of origin to point of consumption”.

In other words, the supply chain is the delivery of a product to a consumer. Which includes all stages from the transformation of raw materials into a finished product to delivery to the final consumer.

The main goal of the supply chain management is to coordinate all stages of the process to minimize overall costs and obtain the greatest efficiency.

What is “Integration” in the Supply Chain?

In information technology, integration is the connection of data, systems, applications, or devices to improve efficiency, productivity, and flexibility.

The purpose of integration in supply chain management is to combine different business systems responsible for different functions (warehouse, resource planning, accounting, electronic data interchange, etc.) that belong to different business partners to create a single efficient logistics system.

Internal and External Supply Chain Integration

There are two concepts in supply chain integration. Internal and external integration.

Internal integration is the interconnection of various business systems within one company.

External integration is the interaction between business partners through the interconnection of their numerous business systems responsible for various functions in logistics.

Typical examples of companies involved in the supply chain that require integration:
  • suppliers of raw materials and supplies
  • manufacturers of finished products
  • warehouses, 3 pl warehouses
  • transport companies and carriers
  • buyers (retailers, various companies, and organizations)
  • various intermediaries

Platform for full data integration across the entire supply chain

To improve efficiency, all companies involved in the supply chain need to simultaneously exchange data from different business systems. In other words, as previously mentioned, they need external integration.

Why is external integration so important? Integration in the supply chain is important because usually, any transaction goes through multiple systems such as ERP, CRM, financial, or warehouse systems. Normally, data for the same transaction must be transferred to the business partner (customer, supplier, 3pl warehouse, etc.). After receiving the data, the business partner must enter it into their business systems.

If companies have no integrated systems, data is transferred and processed manually or by downloading spreadsheets or files. Those processes are not efficient, they require a lot of resources and time, and there is a high risk of errors and data loss.

With the integration platform, companies can quickly and easily automate the exchange of information.

Useful reading: How to Choose the Right Integration Platform?

Integration platform for automating data entry

The goal of systems integration is to reduce costs and efforts for all participants in the supply chain process.

Manually entering duplicate information into several business systems takes a lot of time. Sometimes it requires hiring additional employees just to perform some of these mechanical functions. Furthermore, multiple manual entries into various systems are prone to human errors and less quality of information.

With the help of an integration platform like Magic xpi, you can quickly automate the data entry process, by reducing the time for entering data and ensuring their accuracy.

Besides, the use of modern gadgets, such as tablets and smartphones, allows data entry directly in the field (for example, when receiving goods at a warehouse), which speeds up information flows and improves customer service.

Magic xpi integration platform for efficient supply chain demand forecasting

Demand forecasting is the process of estimating future consumer demand over a given period using historical sales data and other information.

It is no secret that demand forecasting is very important for effective Supply Chain Management. Demand forecasting affects important business operations such as financial planning, raw material planning, production planning, marketing, and sales plans, as well as risk assessment.

Download Magic xpi product overview

Magic xpi can help you achieve more accurate forecasts by ensuring perfect coordination between your enterprise resource planning (ERP) and Customer relationship management (CRM) systems.

This will lead to increased profits and higher competitive advantage.

Magic xpi integration platform to improve transportation process

ERP integration with EDI, warehouse management system, and yard management software will help to improve transportation processes.

Magic xpi B2B Integration

The integration of these business systems provides instant information exchange and can significantly reduce downtime.

Thus, you or your transport companies will have more time to deliver the goods.

The best integration solution for Supply chain management

Supply chain management is a broad topic in which the integration of business systems plays a key role. Data integration can help manage all the necessary processes to ensure a smooth flow at all stages of the supply chain. It can significantly improve all the processes in the supply chain, ensure fast order fulfillment, reduce cost, and improve customer service.

Being a business partner with Magic Software Enterprises for over 20 years now, we provide powerful integration solutions. We have been helping our clients make their business profitable by integrating systems.

Contact us for a free consultation.

You may also be interested in reading about:

Electronic Data Interchange (EDI) in the Supply Chain

This post was updated to reflect current trends and information.


What is EDI?

EDI or Electronic data interchange is a technology for exchanging information in real-time between business partners, based on standard and structured electronic messages.

EDI has particularly gained popularity in logistics and retail. This is a recognized standard in business because this protocol helps accelerate the entire supply chain – from procurement to payment.

With a large volume of transactions, large stocks, and numerous suppliers, retailers have a high return on investment when adopting EDI for business documents exchange.

Complete List of EDI Codes

Why use EDI in the supply chain?

Disadvantages of paper workflow faxing or email:
  • Considerable labor cos for working with orders and shipments.
  • The slowness of the processes.
  • Frequently occurring human errors.
  • Difficulties in relations with large buyers-clients.
  • Delays and disruptions of supplies.
  • Discrepancies between order and delivery.
  • Repeated manual entry of all data into various systems (accounting, CRM, ERP, etc.)

EDI avoids problems by providing complete control over supplies and accelerating the flow of funds.

Thanks to EDI, trading partners can send and receive messages instantly. Each party (retailer, supplier, logistics company) onboarded on EDI once, will immediately get the opportunity to exchange information with their business partners without thinking about the features and capabilities of partner accounting systems, their workflow, or the required document format.

How does EDI work?
EDI for logistics

EDI exchange protocol is based on standards (i.e. X12, EDIFACT…) that govern the formats of messages transmitted between business partners electronically.
The necessary data from one company is extracted, formatted, checked, and sent to the necessary business partners, either directly or via EDI service providers…

During the transfer, the EDI service provider translates and maps the information into the required EDI standard, preserving its content.

The receiving party immediately receives the message in a convenient and understandable format. It can be X12, EDIFACT, Json, XML, etc.

Without an EDI service provider, electronic data exchange is very difficult to manage internally with the company’s workforce. It will take many IT professionals who have experience in EDI, the company will need to deploy a large-scale infrastructure to ensure the smooth operation of the EDI service. In addition, many business partners can have a huge variety of IT systems and formats, so you must be able to adapt to each of partner requirements individually. Such financial, labor, and time costs are irrational. That is why, more companies are outsourcing their Integration especially EDI mapping and integration, to outside service providers, to reduce the burden from their internal staff.

Do you need the right advice on how to choose the right EDI service provider or you are thinking about changing the current EDI provider?

Read this article: How to change your EDI Service Provider

Typical EDI workflow process

Purchase Order – ORDERS (EDI 850 Document)

The buyer company sends the supplier a message with the list of goods that she plans to purchase. PO contains date and time of delivery, address, reference to the contract, prices, quantity of goods, and other necessary information.

Useful reading: All you need to know about EDI ANSI X12 Transaction Set 850 Purchase Order

Purchase Order Response – ORDRSP (EDI 855 Purchase Order Acknowledgement)

The supplier sends the buyer a response to his order, noting his consent to the transaction and indicating how accurately the order can be executed. It may also indicate the change in prices for the product selected by the buyer. The buyer receives advance confirmation of prices and quantity of goods from the supplier, can plan the state of their inventory. The supplier at this time reserves goods in his warehouse for delivery.

Despatch advice – DESADV (EDI 856 Advanced Ship Notice in the X12 standard).

At the same time as shipment, the supplier sends a notice to the buyer. It helps simplify and speed up the process of goods acceptance, as EDI 856 (DESADV) contains detailed information about the cargo. For example, container numbers, the hierarchy of packages indicating their types, barcodes, and contents, as well as the physical characteristics of the goods, etc. The purchasing company can use RFID scanners and the Serial Shipping Container Code (SSCC) when receiving. This helps speed up the receipt and get rid of mistakes.

Receiving advice RECADV (EDI 861 – Receiving Advice/Acceptance Certificate)

When the buyer accepts the goods from the supplier, he sends him a RECADV message on the actually received and delivered goods. Thus, the Receiving advice is a report from the buyer to the shipper to indicate that the order arrived intact at its final destination. Moreover, rapid notification of the supplier allows him to generate invoices quickly.

Additional and specific types of EDI messages

UN/EDIFACT Price/sales catalog message (PRICAT)

PRICAT is also known as EDI 832 Price/Sales Catalog in ANSI X12 standard. Companies use the Price/sales catalog message to transmit commercial information to business partners about products, especially about current prices.

EDIFACT RETANN – Announcement for returns message | EDI 180 – Return Merchandise Authorization and Notification

RETANN or EDI 180 in X12 standard sent by the buyer when returning the goods to the supplier for any reason. The message contains the characteristics of the goods planned for return, as well as the terms and reasons – defective, non-standard, expiration, re-grading, etc.

EDIFACT COACSU Commercial Account Summary

Exchange EDI messages between the accounting departments of the supplier and the buyer, which contain the calculations of companies for a certain period.

EDIFACT INVRPT Inventory Report Message | EDI 846 Inventory Inquiry/Advice

INVRPT or EDI 846 transaction set reports the quantity of goods available. Often used to report on the availability and movement of goods.

Useful reading:
What is UN/EDIFACT INVRPT Inventory report message?

What is EDI 846 document?

How EDI can speed the receiving of goods in a warehouse

Benefits of EDI for Supply Chain Management

EDI has the following advantages:

– Reducing Cost: Automation of processes that were previously performed by employees manually using paper documents and / or email, will certainly reduce costs.

– Improving efficiency and productivity: Processing more business documents in less time.

– Reducing errors: The standardization of EDI ensures that the transmitted data is formed into a standard document before it is transmitted.

– Optimization of tracking and reporting: EDI can be integrated with a variety of business systems (ERP, CRM, Warehouse Management, accounting, etc.) This allows enterprises to improve business processes and provide data collection and analysis.

– Building loyalty with business partners: EDI provides the instant transfer of necessary documents, which makes the delivery of goods faster and more reliable.

Effective EDI Solution for Supply Chain

For over 21 years, EDI2XML has been helping companies solve complex integration issues and providing complete EDI communication between business partners.

Improve your business process and maximize your supply chain performance with our EDI solutions. Contact us for a free consultation.

You may also be interested in reading about:

EDI Integration for Warehouse

Most distribution companies are faced with delays in delivering and receiving merchandise and the acceptance of shipments. There are many reasons for these delays:
– employee’s efficiency
– an ineffective system of storage of goods within the warehouse
– lack of technology tools.

In this article, we will tell you how to optimize and speed up the warehouse using EDI ( Electronic Data Interchange)

Warehouse Management Issues

How quickly the warehouse starts picking an order received from an ERP– depends on the internal business process in an organization.

There are situations where orders received before 12:00 noon are shipped on the same day, and all other orders – only the next morning.

There are companies whose warehouse business processes are built in such a way that it takes 2-3 days to process and ship one order.

If the company operates in the FMCG market, then the logistics should be very fast. For example, when delivering perishable goods such as fish and seafood, dairy products, fruit, and vegetables.

The time to receive and accept the goods also depends on the form in which the documents and related paperwork are presented.

Acceptance of goods from a large truck can take from one to three hours.

EDI can significantly reduce the processing time for goods acceptance documentation. Companies that have implemented and integrated EDI in their warehouse business processes realized a reduction in processing time of up to 90%.

Moreover, with large volumes of deliveries, there are other advantages of electronic data Interchange.

eBook:  EDI – Key Information You Need to Know  

EDI Transaction Sets for the Supply Chain

In supply chains, the EDI 856 Advanced Ship Notice and EDI 861 Receiving Advice/Acceptance Certificate transaction sets are very commonly used. DESADV – Despatch advice message and RECADV – Receiving Advice Messages perform the same function in the EDIFACT standard.

An EDI 856 document contains information about the shipment and other detailed information:
  • shipment id
  • physical characteristics of the goods
  • recipient and sender identifiers
  • barcodes
  • transportation information.

When receiving an 856 EDI document, the recipient does not need to enter data manually. Product information may automatically flow into the accounting business system. Advanced Ship Notice helps to prepare for acceptance. Even before the arrival of the supplier’s truck, the buyer already has a list of goods shipped, integrated into his own system.
EDI for Warehouse

The response to the EDI 856 document, to confirms the acceptance of the goods, is EDI 861. The Receiving Advice is transmitted from the buyer to the supplier. EDI 861 indicates the list of goods received or not received, accepted or not accepted, as well as other accompanying information.

EDI improves the accuracy of work with deliveries and reduces the number of human errors when processing documents in the warehouse. Since the data comes even before goods delivery, it is possible to arrange a schedule so that unloading begins immediately after the arrival of the goods.

Using SSCC codes, is a companion to the EDI 856 transaction, which makes it possible to mobile scanners to automatically read information on the contents of pallets, regardless of the number of assortments.

EDI Integration for Warehouse and Supply Chain

For suppliers working with retailers and other distributors, it is possible to use both of EDI2XML offerings: EDI web service that allows to send and receive EDI 856 /861, as well as the fully managed EDI solution…

Integration of EDI with accounting /warehouse business system is importantly relevant, when a huge number of transactions is being processed daily; it will help accelerate the work at the warehouse.
free edi consultation

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Best Practices for Improving E-Commerce Supply Chain Management

This post was updated to reflect current trends and information.


Currently, many businesses are operating their own eCommerce stores on Shopify or Amazon to sell their products and services over the Internet to clients and consumers, all over the world. This is a great way to increase sales and brand awareness.

United States: top 10 online stores

The e-commerce market in the United States is constantly evolving. According to Statista’s forecasts, in the coming years, retail sales of B2C e-commerce in the US will grow rapidly: from 315.6 billion US dollars in 2018 to more than 565.7 billion US dollars in 2023. The most popular online store in the United States is, of course, Amazon.com, the second most popular is Walmart.com
United States: top 10 online stores

As you can see in the graph above, at the top of the e-commerce rating are the 2 largest retailers:

Amazon.com, Inc. is a global e-commerce corporation that provides online retail, consumer electronics, digital content and other services such as daily deals and local groceries. The greatest part of the company’s revenue is generated from third-party seller revenues, subscription services, and AWS activities. Due to quality standards and global reach, Amazon is considered one of the most valuable brands in the world.

Walmart, Inc. is one of the biggest retail chains offering low prices and immensely varied products, giving Walmart a competitive edge.

Challenge of efficient e-commerce transaction

Whatever you choose, open your own online store on one of the most popular e-commerce platforms such as Shopify, WooCommerce, BigCommerce, Magento or sell on Amazon, or deal with Walmart, Home Depot, Target, etc. it is very beneficial for companies of all size and various industries to expand their online business.

However, many executives still do not consider a full integration between there online store, and their business management system (ERP, CRM), as a must and important option to adopt.

Efficient supply chain management and prompt exchange of the necessary information between trading partners is the key to the success of your electronic business and the high satisfaction of your customers.

Download our whitepaper for more information about Shopify integration.

The main problems that online store owners may encounter when they omit a full integration between their store and their ERP are as follows:
  • They must hire more staff to manage their supply chain, in order to respond to growing customer demands.
  • It is difficult to balance incoming demand and production (in case the company is a manufacturer)
  • Problematic transfer of inquiries and information between several business partners involved in the supply chain channel.

The challenge with supply chain management is to synchronize the supply chain with consumer demand and measure the productivity and success rate. Therefore, below are 3 useful tips to overcome these challenges:

Integrated ERP Solutions

Having one platform to manage and run a business can make all the difference. A fully integrated software system will be able to efficiently manage an eCommerce and retail business and eliminate the need to key-in information from the online store to the management system manually.

Useful reading: Must-Have Integration between E-Commerce and Business Systems

EDI Integration

As mentioned previously, the ability to balance product demands from an eCommerce store and supply chain demands is very important. Therefore, to do this would be to empower the eCommerce platform with EDI capabilities, to exchange data in real-time with suppliers and partners.

Useful reading: The most used EDI messages in the supply chain management

Modern Business Solutions

A scalable integrated IT solution, such as the one suggested by EDI2XML, is needed to be able to electronically exchange information by parsing data of different formats, like X12/EDIFACT, XML, CSV or Json, and translate EDI from one format to another. On top of that, the solution should be able to easily integrate with different systems and communicate with different partners using modern and secured communication protocols such as AS2, sFTP or API (Web services).

Improve your eCommerce management and supply chain by implementing and integrating with the best tools and solutions.
Free EDI Consultation

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Must-Have Integration between E-Commerce and Business Systems

9 Major E-Commerce Trends That Will Help Grow Your Online Business

The main reasons why you need Microsoft Dynamics Integration with your Business Systems

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ORDERS and ORDRSP: The main EDIFACT messages in the supply chain management

This post was updated to reflect current trends and information.

Receiving and processing EDI purchase orders is the most common transaction faced by small businesses. This electronic business document is used to place a commercial order for goods or services by a buyer or business partner.
EDIFACT ORDERS

It’s still possible to use phone, email, or fax between two small businesses, but if you want to collaborate with a large retailer, distributor, or manufacturer, there is a high probability that you must be EDI compatible to receive orders from your B2B partners, in addition to other potential EDI documents or transactions.

What is EDIFACT ORDERS?

ORDERS (Purchase Order) is a type of EDIFACT message that contains requests for the supply of goods or services.

In EDI ANSI ASC X12 standard which is widely used in North America, the ORDERS is referred to as EDI 850 Purchase Order.

Large companies, working with small contractors demand mandatory use of EDI. Requirements for EDI compatibility is specified in contracts or in partners selection criteria.

High competition forces the business to comply, and start exchanging electronic data quickly and accurately, spending minimal time and resources on this business process. Thus, small enterprises must comply with the imposed conditions, in order not to lose a source of profitable purchases.

EDIFACT ORDERS message content

The most important main information contained in an EDIFACT ORDERS message:
  • Order number
  • Required date
  • Delivery date
  • Reference to supply contract number
  • Price and qualifier (including VAT and other taxes)
  • Identifiers of the consignee and sender, delivery location, customer, carrier, recipient
  • Information about the contents of the order (barcodes, quantity, item name, etc.).

EDIFACT ORDERS Processing

After signing the contract, the buyer uses ORDERS to send the seller a list and quantity of goods ordered.

Typically, a buyer creates the order in his ERP system (the most popular are SAP ERP, Microsoft Dynamics, Oracle JD Edwards EnterpriseOne). The created Purchase Order is instantly converted into an EDIFACT ORDERS message which is immediately sent to the seller. The seller must receive the EDIFACT message and quickly process it. He should transmit a Purchase Order Response (ORDRSP) in response to the Purchase Order received.

EDIFACT and ERP/CRM integration

To save time and money by processing the vast amount of information received from business partners, most companies (both retailers and suppliers) choose to integrate their EDI / EDIFACT messages into their ERP systems. Basically, with integration, they connect the received EDI messages and push it directly to their ERP software, through Integration Connectors designed specifically to synchronize and integrate into their ERP systems.

For example, using Magic xpi Integration Platform a company can connect a variety of heterogenous business systems such as ERP, CRM, finance, etc. by implementing out-of-the-box certified and optimized connectors.

You can find useful information on EDI integration with ERP Systems in the following articles:

How to make EDIFACT ordering even easier
EDIFACT ERP integration

As the number of outgoing or incoming orders increase, companies try to optimize the exchange of orders. In case the number of your orders exceeds a couple of hundreds per month, it’s worth thinking about integrating the flow of orders directly into your business software solution and save your company the time and money associated with human errors, delays to deliver, and increase efficiency.

The process of Order creation can be fully automated; it will not require human intervention. To do this first it is necessary to integrate your business system with EDI.

Related article:

Usually, after starting to use ORDERS message, the buyer will most likely request to receive replies to his orders, which means connecting another type of EDI message – ORDRSP. In addition, he can ask you for the dispatch advice (DESADV), and he can send you the delivery advice message. (RECADV).

What is ORDRSP and what are the benefits of using this EDIFACT message

ORDRSP (Order Response) is a type of EDIFACT message in which the supplier confirms or rejects the delivery of goods to the buyer. Using ORDRSP, the supplier can propose amendments, notify of a complete or partial delivery or confirm the entire delivery, before even processing the delivery.

Using UN/EDIFACT ORDRSP improves the logistics chain: the parties save on transportation, reduce returns due to incorrect deliveries of merchandise, increase the accuracy of delivery of the right products.

Through ORDRSP, the supplier can notify the buyer of the lack of certain products, thus avoiding disruption of supplies and maintaining a loyal business relationship. Customer, having this information, can order a similar product from the presented assortment or place an order from another supplier.

The buyer can always understand whether the supplier will deliver the goods on time, or not. He sees preliminary price confirmation and quantity of products, predicts the state of stock based on ORDRSP, and the supplier can automatically book goods for delivery in his warehouse when processing a Purchase Order Response.

What does ORDRSP contain?

ORDRSP has a direct relationship with ORDERS and are complimentary to each other. ORDRSP consists of:
  • Order number
  • GLN numbers of the buyer and seller
  • Order confirmation number
  • Date of planned delivery of goods
  • Scheduled time
  • Item No
  • Quantity approved (To Ship)
  • Price approved
  • Reason of rejection (when parameters are not matching between Order and supplier)

EDI/EDIFACT integration

In EDI/EDIFACT documents exchange, the EDI provider plays a key role. He is the one who ensures the conversion and integrity of message formats and tracking data transfers. For over 21 years now, our company EDI2XML has been successfully helping companies of all sizes switch to Electronic Data Interchange. We help speed up working with orders, shipments, acceptance, inventory of goods and reduce the risks of human errors. We have no hidden fees or confusing rates.

Contact us today for more information and a free EDI consultation.

4 Challenges of EDI and Drop-Ship in eCommerce


This post was updated to reflect current trends and information.

EDI integration projects


The term “drop-ship” has been used quite a lot in recent years by retailers and manufacturers alike. This supply chain management method looks to be gaining in popularity going into 2019 and will likely be in high demand for years to come as well.

Let me first explain the meaning of drop shipping and how it has become so popular…

What is Drop Shipping?

“Drop-ship” is a fulfillment method where a merchant does not carry any inventory on hand. Instead they sell products to consumers via an online store (eCommerce), send the customers’ orders to the manufacturer and have the manufacturer ship the goods directly to the customer. The customer will never know the difference since they pay the merchant and receive their goods in a box with the merchant’s labels. This method eliminates the need for the merchant to handle the goods.

The Rise of Drop-Ship Popularity

Due to the fast evolution of eCommerce, coupled with the continuous challenges that businesses face to reduce costs and increase profitability, the drop-ship method is in high in demand by major retailers. You’ll find that eCommerce giants like Amazon.com, Costco.com, Cabelas.com, Sears.com and others, are increasing the pressure on their supply chain to adopt the drop-ship concept. Of course, they also require their business partners to comply with their EDI requirements and specs for a full automation of the entire sales cycle.

The Complexity behind Drop Shipping

If we take a behind-the-scenes look at drop shipping from 2 perspectives, from the eCommerce retailer, like Amazon or Cabela’s, and from the manufacturer of goods, we’ll find the simplicities and complexities behind each process.

From the perspective of the eCommerce retailer, the drop-ship method allows them to eliminate the need to carry any inventory and to ship their goods. Their process is rather simple, profitable and quick. All they need to do is sell products online and ensure that their partnered manufacturers are EDI and drop-ship ready. Once they sell products from their eCommerce site, they will send the orders via EDI to their manufacturer and the manufacturer takes it from there.

From the perspective of the manufacturer, we’ll find some of the complexities. However, if they are setup correctly from the get-go, then it becomes rather simple and quick. In this case, the drop-shipper (manufacturer or distributer) is entirely in charge of the fulfillment of all incoming eCommerce orders (from the retailer). They need to process the sale all the while complying with the retailer’s business specifications such as EDI. Let’s go over the top 4 challenges a manufacturer must overcome during a drop-ship EDI implementation;

Top 4 Challenges the Drop-Shipper Might Face

If you are a manufacturer and have recently partnered with an eCommerce retailer to sell your products, then you might already know that they will require you to drop ship and automate your sales process through EDI integration. I have listed below the top 4 challenges you might face as a drop shipper;

1.    Ability to submit accurate inventory feed (846) to the eCommerce retailer

When starting a new business relationship with an eCommerce retailer based on the drop-ship method, the first step will be to feed inventory & per-item stock statuses to the retailer in a timely manner. This inventory inquiry/advice document is called EDI 846. Major retailers such as Amazon.com, Cabelas.com, Costco.com and Wal-Mart.com require their Trading Partners to send them an 846 document at least twice a day so that their online store can properly show only available products, based on inventory available to ship. Most of the time, companies either don’t have an accurate inventory system or their stock status is not properly maintained, which can be a great challenge to overcome. Even if companies have accurate inventory statuses, many of their management software systems, even reputable and expensive systems such as JDE, do not have built-in capabilities to send the 846-inventory status in X12 format, as per the requirements of the retailers.

2.    Ability to receive and process EDI orders (850)

Another challenge comes in the form of receiving EDI purchase orders (document 850). Many companies struggle with the capability to receive EDI orders, process them and integrate them quickly into their management system before it is sent to the pick/pack/ship process down the line in the supply chain. Most software systems are still missing this integration capability and require end users to manually key-in orders received in EDI x12 format, to then be able to process and ship. This is a great challenge for many manufacturing and distribution businesses. Dealing with eCommerce Stores, orders are continuously coming in, at all hours, in high volumes. The client (retailer) typically expects the manufacturers to ship within 24 to 48 hours (at the latest!). Moreover, eCommerce retailers are expecting to receive a P/O acknowledgment (document 855) via EDI. Therefore, it’s extremely critical that the drop shipper is equipped with a fully integrated software solution where EDI orders can automatically come through in real-time, so that they are quickly processed.

3.    Ability to fulfill orders within a very short period of time

As previously mentioned, eCommerce retailers expect their partners to ship goods to the end-consumer within a very short time frame (24 to 48 hours). They expect them to package the products, print customized picking/packing slips to send with the goods and complete the shipping process in a very quick manner. In case of failure to comply, there is a risk the vendor will be eliminated from the program. At the logistics level, an important challenge is to have a management system and required resources to process orders, pick, pack and ship in the required time frame. Efficiency in this case is imperative since time is money.

4.    Ability to electronically submit Ship Notices (856) & Invoices (810)

Two other EDI x12 documents are sent out to the eCommerce retailer by the drop shipper; the Advance Ship Notice or ASN (document 856) and of course an invoice (document 810). Most companies don’t currently have the capability to turn those business documents into an x12 EDI format and submit to the Trading Partner, straight from their management system.

Overcoming Drop-Ship Challenges

Our team’s experience with EDI drop-ship has allowed us to overcome the above challenges in an efficient and timely manner. Since every project varies, it’s important to do the following;

  • Surround yourself with experts in EDI who have the experience in dealing with drop-ship projects. It’s important to have enough knowledge and expertise in these methods prior to beginning any EDI drop-ship project. It’s important to get organized internally before any major project.
  • Ask an EDI Provider, who offers flexible and affordable EDI & IT services, to help you streamline your processes and advise you on best practices.
  • Opt for a full EDI integration with your current management software solution, if possible. Of course, such an option is not always possible or provided by your Software provider but if it is, it’s our recommendation to go ahead with this since it will eliminate chargebacks and increase efficiency in your EDI projects so you are best capable of complying with your Trading Partners’ demands. Don’t forget, partner demands and specs can change at any moment. It’s best to ensure you can handle changes at a moment’s notice. (Flexibility is the way to go!)

If you’re looking to complete an EDI Drop-Ship project, contact us today. We’ve got the experts and the EDI2XML service to get you drop-ship ready. Contact us today for your FREE consultation to evaluate your EDI project.

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Triple Threat: Integration of ERP, eCommerce & EDI

By now, I am sure most business professionals have heard about or have already implemented EDI, ERP Management Systems, and of course eCommerce Stores. If not, here’s a quick explanation of each Read more

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