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The Bullwhip Effect in Supply Chains: What It Is and How to Keep It Under Control

What is the Bullwhip Effect in Supply Chains? Understanding Causes and Impacts on Inventory and Efficiency

If you’re in logistics and supply chain management, you’ve probably heard of the bullwhip effect, also known as the Forrester effect. It’s a common challenge that can create huge, costly headaches for businesses. Basically, it’s when small changes in customer demand end up creating much bigger waves in the supply chain—sometimes all the way up to raw material suppliers. So, something as small as a sudden spike in demand for a product can snowball into major inefficiencies, inaccurate inventories, and even excess stock no one ends up needing.

What Exactly Causes the Bullwhip Effect?

There are a few big drivers behind the bullwhip effect:

  1. Inaccurate Forecasting: Every player in the supply chain—from retailers to manufacturers—tries to predict demand. But forecasts are rarely perfect, so each party may over- or under-order to cover themselves.
  2. Order Batching: Many businesses order in bulk to cut costs. But this batch ordering can cause uneven spikes in demand, which don’t actually reflect what customers want right now.
  3. Price Changes and Promotions: Discounts or temporary deals can drive sudden surges in orders. Great for sales, but not so much for the supply chain—it often means that everyone upstream scrambles to keep up, which can lead to an oversupply later.
  4. Limited Visibility Across the Supply Chain: Without transparent, real-time data, every participant in the chain relies on their own (sometimes outdated) info. This leads to decisions that don’t always sync up with actual customer demand.

What Exactly Causes the Bullwhip Effect?

How Does the Bullwhip Effect Impact Your Business?

The bullwhip effect in the supply chain isn’t just a theoretical problem—it can have a real impact on profitability, efficiency, and customer satisfaction. When supply chains are reacting to outdated or inaccurate data, they’re prone to overstocking, understocking, and inaccurate inventories. This translates to wasted resources, higher carrying costs, and lost sales if products aren’t available when customers need them. And these inefficiencies affect nearly every part of the business, from supply chain management to the customer experience.

How to Prevent the Bullwhip Effect: Practical Solutions

Now, let’s talk solutions. With all the buzz around supply chain analytics and retail analytics platforms powered by AI, there’s good news: you don’t have to just put up with the bullwhip effect. Solution like Electronic Data Interchange (EDI) can help to smooth out these swings in demand and keep your supply chain running more predictably.

Expanding on Real-Time Data Accuracy with EDI Integration, let’s dive deeper into the EDI process and how specific EDI documents can help avoid or minimize the bullwhip effect in the supply chain.

Real-Time Data Accuracy with EDI Integration

EDI allows companies to seamlessly exchange business documents with their supply chain partners, so everyone is finally on the same page — whether retailers, suppliers, or manufacturers.

With EDI, real-time data flows throughout the supply chain, so everyone is working with the same numbers and the same information. This visibility is powerful because it helps everyone avoid the wild swings in ordering that often lead to the bullwhip effect.

Key EDI Documents That Help Keep the Bullwhip Effect in Check

To really understand how EDI can make a difference, let’s look at a few basic EDI documents that are crucial for keeping supply chain data accurate:

  1. EDI 850 (Purchase Order): This is where everything starts. When retailers place an order, they use the EDI 850 to tell suppliers exactly what they need and when they need it. This helps suppliers plan inventory and production right away, so there’s less scrambling to meet demand at the last minute.
  2. EDI 855 (Purchase Order Acknowledgment): After receiving the purchase order, suppliers respond with the EDI 855. This document confirms the order and lets the buyer know if there are any changes or adjustments. It’s a simple way to make sure both sides are on the same page from the start.
  3. EDI 856 (Advanced Shipping Notice): When an order is shipped, the supplier sends the EDI 856 to let the retailer know what’s on its way. This heads-up means the retailer can plan for incoming stock and avoid placing extra orders just because they’re unsure of inventory status.
  4. EDI 846 (Inventory Inquiry/Advice): This document is basically a real-time inventory update. By sharing up-to-date stock levels, both suppliers and retailers can adjust orders based on what’s actually available, helping everyone avoid over-ordering or under-ordering.
  5. EDI 860 (Purchase Order Change Request – Buyer Initiated): Sometimes retailers need to adjust an order after it’s been placed—maybe demand has changed, or forecasts were off. With the EDI 860, they can make those changes quickly without starting the order process over. This keeps things moving smoothly and helps both sides respond flexibly.

Integration price

How EDI Helps the Supply Chain Flow Smoother

So, here’s how it all plays out in a typical situation:

  • A retailer sends an EDI 850 Purchase Order to their supplier.
  • The supplier replies with an EDI 855 to confirm the details.
  • If stock levels change, the supplier shares an EDI 846 Inventory Update to keep everyone informed.
  • When the order is on its way, the EDI 856 Advanced Shipping Notice gives the retailer a clear picture of when to expect the inventory.
  • And if something shifts with demand, the retailer sends an EDI 860 Change Request, making it easy to adjust the original order.

All of this real-time data sharing cuts down on misunderstandings and delays. Everyone in the supply chain has what they need to act quickly and accurately, so there’s less overstocking, fewer surprises, and a much lower chance of reacting in ways that cause the bullwhip effect.

At EDI2XML, we make these EDI processes simple, fast, and effective, so you can keep your supply chain on track and avoid the typical headaches that come with demand fluctuations.

Benefits of Implementing EDI for Supply Chain Management

EDI Enhances Visibility and Transparency: When your supply chain has access to the same data on inventory, orders, and customer demand, there’s less room for costly surprises. Real-time transparency helps each player in the supply chain make better decisions based on accurate, up-to-date data.

Faster Reaction to Demand Changes: With EDI integration, demand changes get communicated instantly. So, if you’re running low on a popular item, suppliers get notified in real-time, allowing them to respond more efficiently. This kind of responsiveness is crucial to cutting down the exaggerated reactions that fuel the bullwhip effect.

Streamlined Communication Across the Supply Chain: Relying on manual processes—like emails or spreadsheets—to update inventory or demand data can be slow and prone to error. EDI ensures that critical data updates flow automatically between systems, improving response times and helping your business stay agile.

Seamless EDI Integration with ERP and CRM Systems

When it comes to effective supply chain management, ERP – Enterprise Resource Planning (like SAP or Microsoft Dynamics) and CRM – Customer Relationship Management (like Salesforce), play a huge role.

Integrating EDI with ERP and CRM systems is essential for a smooth supply chain. EDI links your systems to those of your partners to share real-time data across the entire chain.

At EDI2XML, we specialize in connecting EDI with ERP and CRM systems, so data moves instantly from one system to another.

Imagine you’re a retailer using Salesforce for customer orders and SAP for business operations, and EDI for communicating with suppliers. When a customer order comes in through Salesforce, it’s instantly visible in SAP, so inventory gets updated right away. Then, the EDI system can automatically send a purchase order to the supplier, ensuring there’s no delay. This real-time communication prevents issues like overstocking, missed orders, or lag in responding to demand changes.

How EDI2XML Can Help

At EDI2XML, we specialize in EDI and business system integration, with a focus on creating seamless data exchanges that improve supply chain management. Our EDI solutions like Fully Managed EDI or EDI Web Service are designed to make data sharing smooth and accurate, so your business can prevent the bullwhip effect and work with reliable data, every time.

Imagine not having to worry about inaccurate inventories or overcompensating for demand—just a more efficient, data-driven supply chain. Contact us today for a free consultation with our experts.

Contact EDI2XML today for a free consultation

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How EDI Streamlines Supply Chain Management

Companies are constantly looking for ways to optimize their supply chain, ensuring they can quickly adapt to market changes and meet customer demands on time.

In this blog post, let’s explore how EDI streamlines supply chain management and why it’s essential for businesses today, and the benefits it brings to modern businesses.

Introduction: Electronic Data Interchange (EDI) and Supply Chain Management

The evolution of technology, standards and protocols, revolutionized this field. Electronic Data Interchange (EDI) stands is one of the main facilitators at the level of supply chain innovation.

EDI (or Electronic Data Interchange) is a standard that allows the exchange of business documents between business partners. It is based on structured format and follows some EDI standards (i.e. X12, EDIFACT…). By automating EDI exchange, business partners will be able to transform most of the manual processes into efficient, real-time tasks, increasing efficiency and eliminating human errors.

What is EDI?

Electronic Data Interchange (EDI) is a technology that allows companies to exchange standard business documents—such as purchase orders, invoices, shipping notifications, and inventory updates—in a standardized electronic format.

I’m not going to go further on this topic, since we already published extensive articles about EDI and its use, which I recommend reading for more information about EDI.

For a more detailed guide on how EDI works and its common use cases, check out our articles:

What is Supply Chain Management?

Supply Chain Management (SCM) refers to complete coordination of the different elements and partners involved in the production flow of any good or service. This flow starts from its initial stages of purchasing and buying raw materials to its final delivery of the finished good to the end-consumer.

It SCM includes the phases of planning, executing, monitoring, and optimizing of all processes involved in transforming a product from being a raw material until it becomes a finished good, and delivered to the end-user.

The goal of SCM is to enhance the efficiency, reduce costs, improve quality, and deliver products faster.

SCM requires a major collaboration between suppliers, manufacturers, warehouses, transportation services, and retailers, ensuring that each step in the chain is executed on-time in a very optimal manner.

Useful: Download the Guide – EDI for Transportation and Logistics

Key Components of Supply Chain Management

For a successful supply chain management cycle, there are important key components that should be considered, planned and implemented.

  1. Planning: This is the strategic phase where companies do their research on how to meet the demand for their products or services.
  2. Sourcing: Sourcing involves selecting one or multiple suppliers who will provide the raw materials, components, or services necessary for production, for a certain product or service.
  3. Manufacturing: In this phase, raw materials are transformed into finished products.
  4. Logistics and Distribution: Once products are manufactured, they must be stored and distributed to consumers. This involves all logistical processes such as warehousing, inventory management, and transportation.
  5. Returns Management: Also known as reverse logistics, this component deals with the return of defective or excess products from consumers. Managing returns efficiently is important to minimize losses and maintaining customer satisfaction.
  6. Information Flow: Throughout the supply chain, there must be a seamless flow of information to ensure that all parties are aware of demand, inventory levels, production schedules, and shipping timelines. This helps to coordinate efforts across the supply chain, reducing delays and errors.

EDI and Logistics

Importance of Supply Chain Management

Supply chain management (SCM) is very important in today’s business landscape, to be able to deliver on-time, low-cost products and services and at a reduced risk. Here are some of the important elements:

  • Reduce Cost: SCM helps reduce costs by improving efficiencies in procurement, minimizing waste, and optimizing transportation.
  • Increase of Customer Satisfaction: Supply chain can enhance customer experience and promote loyalty. Being able to deliver to customers on time and in good condition, will improve customer loyalty.
  • Increase Company’s Agility: SCM helps companies respond to changes in demand or disruptions in the market quickly.
  • Improve of Collaboration: Better communication means better collaboration across suppliers, manufacturers, and distributors all working towards the same objective.
  • Disruption: Disruption of a Supply chain is a risk that is substantial. Such disruption can be due to different reasons (i.e. natural disasters, political instability, or other factors). Such disruptions can significantly impact a business. SCM helps mitigate risks by allowing companies to create and execute contingency plans based on maintaining relationships with multiple suppliers and monitoring global trends.

How EDI Works in the Supply Chain

As described in the above paragraph, Supply chain management (SCM), relies on several parameters to be as efficient as expected, and deliver as per business expectations. EDI has a role to play in every key component of a successful SCM.

a) Planning: during the planning phase, companies part of the SCM exchange their forecast and based on customer demands and historical sales data via EDI; as an example a distribution company will share via an EDI transaction 830 (Productions forecast and scheduling) its production planning.

b) Sourcing and manufacturing: during the sourcing and manufacturing phase within a SCM, companies will exchange via EDI all kinds of transactions to complete these cycles:

    1. Inventory feeds (EDI 846): Ral-time inventory feeds and updates, are sent periodically by suppliers and manufacturers, to their own customers, via EDI 846 transaction. This allows to update them with accurate inventory levels track stock movements.
    2. Orders (EDI 850): When a customer places an order it goes via EDI 850 transaction to the supplier, this process, would eliminate the need for manual order entry and speeds up the order processing time.
    3. Shipping and Receiving: this process in SCM uses a substantial number of EDI transactions, from EDI transactions that concerns the logistics and transportation companies (i.e. EDI 204, EDI 210, EDI 214…) to the actual shipping and receiving transaction (i.e. ASN 856).
    4. Invoicing: After the goods are delivered, the supplier sends an electronic invoice EDI 810 to the customer. The customer can then process the invoice and make the payment electronically, streamlining the entire billing and payment process.

c) Logistics, distribution and returns: again, EDI is present in all of these components in the supply chain:

  1. Logistics and distribution: lots of EDI transactions come to play, when it comes to logistics, and return, EDI 204, 210, 214…
  2. Returns: EDI 180, EDI 894 and EDI 895 are typical EDI transaction for merchandise return.

 

How EDI Works in the Supply Chain

Useful Reading: EDI for Third-Party Logistics providers (3PL)

How EDI Streamlines Supply Chain Management

Following are some EDI attributes, that have an impact on the Supply Chain management SCM:

Faster Communication

When exchanging EDI documents, companies part of the same SCM, are opting for a full automation which means, a real-time exchange of business documents, along with automated flows to process those documents.

Eliminating bottlenecks and human errors. Orders, confirmations, and invoices flow automatically between systems, reducing lead times and allowing businesses to respond faster to changes in demand, inventory levels, or production schedules.

Reduce human errors

Manual data entry is equivalent to human errors. Errors in purchase orders, inventory levels, or shipment details can lead to costly mistakes such as overstocking, missed shipments, or payment delays. Using EDI minimizes these risks by automating data transfers.

Improve data quality and integrity

Standardized formats of data, ensure that information is accurately communicated, which will certainly improve data integrity and quality. No more human errors.

Improve Efficiency

Automating supply chain transactions with EDI leads to significant cost savings, where the most important expense is labor. Typically, the labor cost of manually entering data and correcting errors is substantial.

Exchanging EDI reduces these costs by allowing businesses to process large volumes of transactions automatically.

Improve Inventory Management

Companies exchanging EDI transactions will have a much better inventory visibility to their supplier’s inventory. It will eventually enable JIT (Just-in-time) inventory strategies and control of costs.

Improve Data Security

By exchanging EDI transactions, based on standardized protocols and encrypting the data using EDI communication protocols such as AS2, sFTP, AS3 and other protocols, business partners enhance their compliance and security footprints, ensuring secured data exchange.

Can we help in your EDI integration and automation projects?

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The Importance of EDI 862 Shipping Schedule in Streamlining Supply Chain Management

Introduction: What is EDI X12 862 Shipping Schedule?

In today’s digital world, efficient communication and streamlined processes are paramount for successful supply chain management. One of the key tools that facilitate this seamless exchange of information is Electronic Data Interchange (EDI).

Among the various EDI transaction sets, the EDI 862 transaction, also known as the Shipping Schedule, plays a crucial role in coordinating shipments and ensuring timely delivery.

The Shipping Schedule (EDI 862) provides essential data related to the delivery of goods, allowing suppliers and customers to efficiently plan and manage their inventory and logistics operations.

Let’s explore the definition, structure, standards, processing, and benefits of the EDI 862 Shipping Schedule.

EDI 862 Shipping Schedule – Definition

The EDI 862 Shipping Schedule is a standardized electronic document sent from a supplier to a buyer; it contains specific details regarding the shipping requirements for a particular order or set of orders. It typically includes information such as:
  • shipment dates,
  • quantities,
  • packaging instructions,
  • carrier details, and other relevant logistics data.

EDI X12 862 (EDIFACT DELJIT) – Structure & Standards

The structure of an EDI 862 document follows the ANSI ASC X12 standard. In the UN/EDIFACT standards, the DELJIT (Delivery Just-In-Time) message performs a similar function. It consists of data segments, elements, and sub-elements arranged in a hierarchical format.

The structure defines the order and format in which the information is transmitted, ensuring compatibility and interoperability between different systems.

ANSI ASC X12 standard is prevalent in North America, while UN/EDIFACT is widely adopted globally.

These standards provide a common language for data exchange, ensuring consistency and compatibility between trading partners.

EDI 862 Shipping Schedule – Processing

The processing of the EDI 862 Shipping Schedule involves the exchange of structured electronic data between the sender and the receiver. Here’s a general overview of the processing steps:

Data Preparation: The shipping schedule data is collected and formatted according to the specific EDI standard, such as ANSI ASC X12 or UN/EDIFACT.

Translation: Data is translated into the appropriate EDI format, usually companies use the services of an EDI Provider. This can be either a Fully Managed EDI Service or an EDI Web Service.

This step ensures that the information is correctly encoded and compliant with the selected standard.

Learn more about how to choose the right EDI solution for you in this article: Business Automation: How to Choose the Right EDI Solution

Transmission: The translated EDI document is transmitted securely by the EDI Provider to the trading partner using a communication protocol such as AS2, FTP, or VAN (Value Added Network).

Receipt and Validation: The recipient’s system receives the EDI 862 document and performs validation checks to ensure the data integrity and compliance with the standard.

Processing and Integration: The received shipping schedule information is processed and integrated into the recipient’s internal systems, such as enterprise resource planning (ERP) or warehouse management systems (WMS).

Acknowledgment: A functional acknowledgment (e.g., EDI 997) is generated and sent back to the sender to confirm the successful receipt and processing of the EDI 862 document.

Sample EDI 862 Data for the Shipping Schedule Transaction Set

The EDI 862 document represents a Shipping Schedule, which provides information about scheduled shipments.

ISA*00*          *00*          *12*Sender         *ZZ*Receiver       *210429*0402*U*00401*000000003*0*P*>

GS*SS*Sender*Receiver*20210429*04024783*1*X*004010

ST*862*0001

BSS*00*2019-12-17 13:15:19*20191217*DL*20210429*20210429****P302289

N1*BT*JOHN BLUEINDUSTRIES INC.*92*59940

N3*ATTN: ACCOUNTS PAYABLE DEPARTMENT*PO BOX 47200

N4*HAMEL*MN*55340*US

N1*ST*JOHN BLUEINDUSTRIES INC.*92*WXY5L559

N3*ATTN: RECEIVING*989 Q AVE.

N4*MILFORD*IA*12345*US

N1*SU**92*744551A

LIN*1*BP*MISC

UIT*EA

REF*RE*0**YN>5>ZY>PSS001

PER*EX*Company’s Help Team*EM*email@lcopany.com*TE*1-800-123-123

FST*2*C*D*20210429****RE*0

DTM*017*20200108*0500*CS

DTM*150**1600*CS

DTM*151**1700*CS

DTM*118*20210429

DTM*011*20200107

SHP*38*2*112*20210429

TD3***SHIP DIRECT******1783662

TD5**US*734870*P*17836671780792**59*766736

SE*23*0001

GE*1*1

IEA*1*000000003

Let’s break down the segments and elements within the provided EDI 862 file:

ISA: Interchange Control Header segment. It contains information about the sender and receiver of the interchange, along with control information such as the date and version of the EDI standards used.

GS: Functional Group Header segment. It provides information about the sender and receiver. The segment also includes a group control number and the version of the EDI standards used.

ST: Transaction Set Header segment. It indicates the start of a specific transaction set, in this case, the Shipping Schedule (862).

BSS: Beginning Segment for Shipment Schedule. It contains general information about the shipment, such as the scheduled shipment date, the delivery date, and other relevant details.

N1: Name segment. It provides information about the entities involved in the transaction.

LIN: Item Identification segment. It identifies a specific line item or product being shipped, including details like the item number and item type.

UIT: Unit Detail segment. It provides information about the unit of measure for the item being shipped.

REF: Reference Identification segment. It includes additional references related to the shipment.

PER: Administrative Communications Contact segment. It specifies the contact person or department responsible for communication-related to the transaction, including their name, email, and phone number.

FST: Forecast Schedule segment. It contains forecast information related to the shipment.

DTM: Date/Time Reference segment. It provides date and time information associated with the shipment, such as order dates, delivery dates, and ship dates.

SHP: Shipped/Received Information segment. It includes details about the shipment, such as the number of units shipped, the packaging code, and the shipment date.

TD3: Carrier Details (Equipment) segment. It provides information about the transportation equipment used for the shipment, including any special handling requirements.

TD5: Carrier Details (Routing Sequence/Transit Time) segment. It specifies details about the carrier, such as the carrier code, routing information, and transit time.

SE: Transaction Set Trailer segment. It marks the end of the transaction set (Shipping Schedule in this case) and includes a control number and the number of segments in the set.

GE: Functional Group Trailer segment. It marks the end of the functional group and includes a control number and the number of transaction sets within the group.

IEA: Interchange Control Trailer segment. It marks the end of the interchange and includes a control number and the number of functional groups within the interchange.

Each segment is composed of elements separated by asterisks (*). The elements

What is the Difference Between EDI 830 and EDI 862? (EDI 862 vs EDI 830)

The EDI 830 and EDI 862 are both important EDI documents used in supply chain management, but they serve different purposes and convey different types of information. Here’s a breakdown of the differences between the two:

EDI 830 – Planning Schedule with Release Capability

The EDI 830, also known as the Planning Schedule with Release Capability, is used by the customer (buyer) to communicate their long-term production to the supplier. It provides a forecast of the customer’s anticipated demand for goods over a specific period, typically weeks or months in advance. The EDI 830 includes information such as item quantities, delivery schedules, and any changes or updates to the forecasted demand.

The main purpose of the EDI 830 is to help suppliers plan their production schedules, capacity requirements, and raw material procurement based on the anticipated demand from the customer. It allows suppliers to align their resources and inventory levels to meet the customer’s needs efficiently.

EDI 862 – Shipping Schedule Transactions

On the other hand, the EDI 862, also known as the Shipping Schedule, is used to communicate detailed shipping information to the supplier. It provides specific instructions regarding the shipment of goods. Thus, the purpose of the EDI 862 Shipping Schedule is to convey specific shipping instructions (delivery date, carrier info, destination facility…). It’s important to note that the 862 does not replace the 830; rather, it complements it.

The primary purpose of EDI 862 is to inform the supplier about the planned shipping activities and enable the customer to efficiently plan their inventory and logistics operations. It helps the customer prepare for the receipt of goods, allocate warehouse space, and coordinate their internal processes accordingly.

In summary, the key differences between the EDI 830 and EDI 862 are:

Content: The EDI 830 focuses on providing forecasted demand and long-term production requirements, while the EDI 862 provides detailed shipping information and instructions.

It is important to note that the specific roles and responsibilities for sending and receiving EDI 862 can vary depending on the business relationship and agreement between trading partners. It is ultimately determined by the specific arrangement and practices between the buyer and supplier.

Planning vs. Execution: The EDI 830 is more related to production planning and demand forecasting, whereas the EDI 862 is more focused on the execution and coordination of shipments and deliveries.

Both documents play crucial roles in supply chain management, helping trading partners effectively plan, communicate, and coordinate their production and logistics activities.

EDI 862 Shipping Schedule Benefits

The EDI 862 Shipping Schedule offers several benefits to trading partners in the supply chain:

Improved Efficiency

By automating the exchange of shipping information, the EDI 862 reduces manual data entry and paperwork, resulting in faster and more accurate processing of shipping schedules.

Enhanced Visibility

The shipping schedule provides real-time visibility into upcoming deliveries, enabling better planning and coordination of resources.

Reduced Errors

With standardized data formats and automated validation, the EDI 862 helps eliminate errors and discrepancies that can occur during manual data entry or paper-based processes.

Streamlined Logistics

The timely and accurate transmission of shipping information allows suppliers and customers to optimize their logistics operations, reducing lead times and improving order fulfillment.

Inventory Optimization

By having access to precise shipping schedules, organizations can manage their inventory levels more effectively, minimizing stockouts and excess inventory.

Stronger Trading Partner Relationships

EDI 862 promotes collaboration and trust between trading partners by enabling seamless information exchange, leading to improved business relationships.

Overall, the EDI 862 Shipping Schedule plays a vital role in supply chain management by facilitating efficient communication of shipping requirements, reducing errors, and enhancing operational effectiveness for businesses involved in the movement of goods.

Automate 862 Shipping Schedule with EDI Services from EDI2XML

We have been offering EDI services for more than 22 years, making us highly experienced in implementing EDI projects. Our services cover a wide range of options, including fully managed EDI, EDI web service, and EDI on-premises solutions.

Whether you need comprehensive support or specific EDI services, we have the expertise to meet your requirements.

Contact us today for a free initial consultation to discuss how our EDI solutions can streamline your operations.

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EDI 832 Price/Sales Catalog: Understanding its Importance in Supply Chain Management

This article will cover one of the critical EDI documents in Supply Chain Management, the EDI 832 Price/Sales Catalog.

What is EDI 832 Price/Sales Catalog?

The EDI 832 formally known as EDI X12 832 Price/Sales Catalog Transaction Set is a critical document that is used to provide product information and pricing data; it is sent from suppliers to buyers. It contains detailed information about the products, including product description, pricing, and other relevant details.

The EDI 832 document is used in various industries, including retail, wholesale, and manufacturing. The document is particularly useful for suppliers who sell a large number of products and need to provide customers with up-to-date information about their products and pricing.

EDI 832 Price/Sales Catalog Business Flow

The EDI 832 Price/Sales Catalog document flow typically involves the following steps:

  • Creation. The supplier creates the EDI 832 Price/Sales Catalog document, which contains information about their products, pricing, and other relevant details.
  • Transmission. The EDI 832 Price/Sales Catalog document is transmitted electronically from the supplier to the buyer.
  • Processing. The buyer receives the EDI 832 and processes the information to update their internal business systems, such as their ERP, or inventory management system.
  • Update. The supplier updates the EDI 832 every pre-defined period with any changes to product information or pricing, and transmits the updated document to the customer.
  • Usage. The buyer uses the information in the EDI 832 Price/Sales Catalog document to make purchasing decisions and manage their supply chain operations.

This document flow ensures that both the supplier and customer have access to the most up-to-date information, which helps to improve the accuracy and efficiency of supply chain operations.

EDI 832: Related EDI Transactions Process Workflow

The EDI 832 Price/Sales Catalog process workflow typically involves several related EDI transactions, including the following:

Price/Sales Catalog (EDI 832): The document includes product description, pricing information, and other relevant details.

Purchase Order (EDI 850). The EDI 850 transaction is used to place an order with a supplier. Typical purchase orders include information about the products, quantities, and delivery dates.

Advance Ship Notice (EDI 856). The EDI 856 transaction is used to provide advance notice of a shipment, including information about the items being shipped, the shipping method, and the expected delivery date.

Invoice (EDI 810). The invoice typically includes information about the products being invoiced, the quantities being invoiced, and the total amount due.

These transactions work together to support the complete order-to-payment process, allowing companies to exchange business transactions electronically and streamline their operations.

Key Data Elements in EDI 832

The key data elements in EDI 832 Price/Sales Catalog document include:

Product Identification: This includes information such as the product code, product name, and product description.

Pricing Information: This includes information such as the unit price, discount information, and any applicable taxes or fees.

Availability Information: This includes information about the availability of the product, including the expected delivery date, lead time, and minimum order quantity.

Product Characteristics: This includes information such as the product dimensions, weight, and any relevant specifications.

Product Classification: This includes information about the product’s classification, such as its category, subcategory, and any relevant product codes.

These key data elements provide the customer with the information they need to make informed purchasing decisions and manage their supply chain operations effectively.

Moreover, since the information is transmitted in a standardized format, it can be easily processed and understood by both suppliers and customers, reducing the likelihood of misunderstandings or errors.

USEFUL READING: Business Automation: How to Choose the Right EDI Solution

EDI 832 Price/Sales Catalog –Standards

The EDI 832 price/sales catalog uses the EDI ANSI X12 standard. The ANSI X12 standard is widely used for EDI transactions in the US and North America.

The analog of the X12 EDI 832 Price/Sales Catalog transaction set in the EDIFACT PRICAT (Price Catalog) message. EDIFACT Standard is an international standard that is used for Electronic Data Interchange (EDI) transactions worldwide but is particularly popular in Europe.

Both the EDIFACT PRICAT message and the X12 EDI 832 document are used to exchange product and pricing information between suppliers and customers. Both standards ensure that the information is transmitted in a standardized format.

EDI 832 Price/Sales Catalog – Structure

The structure of the EDI 832 Price/Sales Catalog document typically includes the following elements:

Header: The header contains information about the sender and receiver of the document, as well as the date and time it was transmitted.

Product Information: This section contains detailed information about the products, including product descriptions, pricing, and other relevant details.

Footer: The footer contains a summary of the information in the EDI 832 Price/Sales Catalog document, as well as any relevant checksums or error codes.

As stated above, the EDI 832 Price/Sales Catalog document adheres to EDI standards, which ensures that the information is transmitted in a standardized format that can be easily processed and understood by both suppliers and buyers. This helps to reduce the likelihood of misunderstandings or errors and ensures that the information is transmitted accurately and efficiently.

IMPORTANT NOTE: The EDI X12 standard does not have the capability to transmit images. The EDI X12 832 Price/Sales Catalog is used to exchange product catalog data, including product descriptions, pricing information, and item specifications. It is a text-based format that is used to transmit data in a standardized format, but it does not have the capability to transmit images or other binary data.

EDI 832 Example

ISA*00*          *00*          *12*4506813009     *ZZ*RECEIVER       *220417*1132*U*00401*700005483*0*P*>~

GS*SC*9372915040*RECEIVER*20220417*113200*700005483*X*004010~

ST*832*1013327~

BCT*RC*126462263313********02~

REF*IA*009824~

DTM*007*20210423~

CUR*SE*CAD~

LIN**VA*D70GBTD06 MAG0D030*EN*8051730951638*CM*410*VN*D70GBTD06 MAG0D030*SM*1~

REF*PG~

REF*DP~

PID*F*08***JACKET****EN~

PID*F*PG***F21~

PID*F*SC****ME~

PID*F*SIZ***S~

CTP**RES*1495*1*EA~

CTP**WHL*598~

LIN**VA*D70GBTD06 MAG0D030*EN*8051730951645*CM*410*VN*D70GBTD06 MAG0D030*SM*1~

REF*PG~

REF*DP~

PID*F*08***JACKET****EN~

PID*F*PG***F21~

PID*F*SC****ME~

PID*F*SIZ***M~

CTP**RES*1495*1*EA~

CTP**WHL*598~

LIN**VA*D70GBTD06 MAG0D030*EN*8051730951652*CM*410*VN*D70GBTD06 MAG0D030*SM*1~

REF*PG~

REF*DP~

PID*F*08***JACKET****EN~

PID*F*PG***F21~

PID*F*SC****ME~

PID*F*SIZ***L~

CTP**RES*1495*1*EA~

CTP**WHL*598~

LIN**VA*D70GBTD06 MAG0D030*EN*8051730951669*CM*410*VN*D70GBTD06 MAG0D030*SM*1~

REF*PG~

REF*DP~

PID*F*08***JACKET****EN~

PID*F*PG***F21~

PID*F*SC****ME~

PID*F*SIZ***XL~

CTP**RES*1495*1*EA~

CTP**WHL*598~

LIN**VA*D70GBTD06 MAG0D030*EN*8051730951676*CM*410*VN*D70GBTD06 MAG0D030*SM*1~

REF*PG~

REF*DP~

PID*F*08***JACKET****EN~

PID*F*PG***F21~

PID*F*SC****ME~

PID*F*SIZ***XXL~

CTP**RES*1495*1*EA~

CTP**WHL*598~

CTT*5~

SE*52*1013327~

GE*1*700005483~

IEA*1*700005483~

How Supply Chain Management Benefits From EDI 832 Price/Sales Catalogs

The EDI 832 document helps buyers to manage their supply chain operations more effectively by providing them with accurate and up-to-date information about the products they purchase. This information can be used to update internal ERP system, such as NetSuite, SAP, Dynamics 365, Salesforce, or other which helps to improve the efficiency of supply chain operations.

EDI 832 Price/Sales Catalogs

Furthermore, both trading partners benefit from the following:

Reduce time, effort, and errors

By using the EDI 832 Price/Sales Catalog, companies save time and effort when processing orders and making changes to product information. Using the EDI 832 eliminates the need for manual data entry, which can be time-consuming and error-prone.

Additionally, since the information is in a standardized format, (ex. X12 or EDIFACT) it can be easily integrated into internal business systems such as ERP, reducing the chance of misunderstandings or errors.

Accuracy and efficiency of supply chain

Another important benefit of EDI 832 Price/Sales Catalog is that it helps to improve the accuracy and efficiency of supply chain operations. By providing real-time information about product availability, pricing, and other relevant details, it helps to ensure that orders are processed quickly and accurately, reducing the risk of delays or mistakes. Moreover, since the information is updated regularly, it ensures that suppliers and customers always have access to the most up-to-date information, which helps to improve the overall efficiency of supply chain operations.

What is the Best Way to Exchange EDI 832?

If you’re looking to start exchanging EDI 832 Price/Sales Catalogs with your trading partners, consider working with a fully managed EDI services provider. With a managed EDI solution, you can streamline your EDI operations and minimize the time and resources required to manage your EDI transactions.

A fully managed EDI solution can handle all aspects of EDI processing, including data mapping, EDI translation, error resolution, and communication with your trading partners. You can focus on your core business while the EDI service provider takes care of the technical details of EDI.

By working with an EDI provider such as EDI2XML, you can enjoy the benefits of EDI 832 without having to invest in software or IT infrastructure. Plus, with experienced EDI professionals handling your EDI operations, you can be confident that your EDI transactions are accurate, timely, and secure.

In conclusion, starting to exchange EDI 832 with a fully managed EDI services provider is a smart way to streamline your EDI operations and ensure that your EDI transactions are handled efficiently and effectively.

Contact us today for your free EDI consultation!

 

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All You Need to Know about EDI for Suppliers

Suppliers can offer a retailer a broad selection of products that can range from 10 to 300 or more different items. Considering that a large retailer (as well as a supplier) can have dozens or even hundreds of different trading partners. Exchanging such a volume of information by fax or e-mail, and manually entering an order, invoice, and other related information into the ERP system becomes completely inefficient.

The need to transfer and enter data manually has been eliminated by EDI technology. EDI saves staff time and greatly improves supply chain management.

NOTE: EDI is the exchange of electronically structured messages in accordance with agreed standards (X12, EDIFACT) between the information systems of trading partners. The message refers to the business documentation which was traditionally exchanged in paper form. Invoice, Purchase Order, Inventory Inquiry/Advice, and so on.

What is a Supplier in Business?

A supplier is a company (manufacturer, vendor, wholesaler, distributor) that provides goods and services to another organization. The supplier is part of the supply chain. Recently, more and more common suppliers are engaged in dropshipping, that is, they deliver goods directly to the buyer’s customers.
EDI for Supplier

Benefits of EDI for Trading Partner

EDI integration has many benefits for both the supplier and the buyer and allows you to automate operations related to external data.

Through the use of EDI, companies can:

– ensure the security of commercial data transmission;

– guarantee fast and timely transfer of information;

– increase productivity through fast transmission and processing of information;

– minimize errors that occur during manual data entry, which often lead to additional costs;

– reduce operational costs;

– significantly increase the trade turnover between business partners, increase the profitability and competitiveness of the company in the market.

EDI Order Processing

EDI serves as a “link” between suppliers and buyers. In the retail industry, the retailer defines the format (X12/EDIFACT) and the list of required EDI documents and sets strict rules for exchanging EDI documents with all of its suppliers. Supplier companies that want to work with retailers are required to follow the established rules.

The scheme of EDI interaction on the example of the EDI order processing between a retailer (buyer) and a product supplier is shown in the figure below.

The buyer creates an order for the goods, which is converted into an electronic data interchange (EDI) format (i.e. X12, EDIFACT), encoded, and sent in encrypted format over an FTP, sFTP, AS2, API, or VPN to the supplier.

At the supplier side, this EDI transaction set is decoded and converted into the supplier application format (XML, CSV, TXT, JSON) and the incoming EDI message could be integrated into the ERP/CRM system of the supplier.
EDI order process

The simplest and most common business process looks like this:

– Buyer: prepare and send the order (EDI X12 850) to the supplier.

– Supplier: sends to the buyer a Purchase Order Acknowledgment (EDI X12 855) to confirm the supplier’s intention to fulfill the order.

– Supplier: Once the products are shipped, the supplier sends an Advanced Ship Notice (EDI X12 856) to the buyer.

– Supplier: send the buyer an invoice (EDI X12 810) to get paid.

The Most Used EDI Documents by Suppliers

Below is a list of the most used EDI documents between a supplier and a buyer.

Documents in X12 Standard (Common in North America)
  • EDI 810 – Invoice
  • EDI 812 – Credit/Debit Adjustment
  • EDI 832 – Price/Sales Catalog
  • EDI 846 – Inventory Inquiry/Advice
  • EDI 850 – Purchase Order
  • EDI 855 – Purchase Order Acknowledgment
  • EDI 856 – Advanced Ship Notice (ASN) /Manifest

Documents in the EDIFACT Standard Used in Europe
  • ORDERS Purchase order (order for delivery of goods or services
  • ORDRSP Purchase Order Response (order confirmation
  • DESADV Despatch advice (notice of shipment)
  • RECADV Receiving advice (delivery notice)
  • INVOIC Invoice
  • PRICAT Price/sales catalog message (product catalog
  • PROINQ Product inquiry (price list request)
  • COACSU Commercial account summary (the act of review of mutual accounts

In addition to those listed above, trading partners can exchange other types of documents that depend on the industry in which the company operates and its business processes.

You can find the full list of EDI documents with their codes at the links below:

EDI 810 Invoice Example

The following example of EDI Transaction Set details X12 810 invoice.

ISA*00*          *00*          *12*5141231234     *12*5034564567     

*181122*1220*U*00501*000000001*0*T*> GS*IN*5141231234*504564567*20181122*122047*1*X*005010

ST*810*0001

BIG*20181122*I-0042537

N1*RI**92*10055500

N1*ST**92*00262

ITD*05*1*****100

DTM*011*20190120

IT1**2*EA*5.45**UP*888077648572

SDQ*EA*92*00682*1*70674*1

IT1**2*EA*5.45**UP*888077650123

SDQ*EA*92*00111*1*11356*1

IT1**3*EA*4.85**UP*888077648954

SDQ*EA*92*00682*1*11356*1*70674*1

IT1**3*EA*5.15**UP*888077649105

SDQ*EA*92*00011*2*00111*1

IT1**1*EA*5.9**UP*888077648867

SDQ*EA*92*00682*1

TDS*5770

CAD*A***FDEG

CTT*5

SE*20*0001

GE*1*1

IEA*1*000000001

Benefits of Using Fully Managed EDI Services for Suppliers

The use of EDI by businesses, in particular by suppliers has many benefits. However, it should be noted that there are many EDI service providers, and they all provide different services at different prices. Therefore, the benefits of using EDI may differ.

We, as  EDI service provider with more than 21 years of experience, offer suppliers to take advantage of our Fully Managed EDI Service, which can bring the following business benefits:
  • Increase productivity and performance of administrative and sales departments.
  • No manual data entry and no lost documents.
  • Reducing administrative costs.
  • Improve the quality of incoming and outgoing business data.
  • Flexible and adaptive pricing plan. Depending on the amount of transmitted information, EDI prices can both increase and decrease monthly. (Request Fully Managed EDI Service Pricing Plans)
  • The ease of use of our EDI service – you don’t need any IT or EDI skills.
  • Support from our EDI and business experts.

USEFUL: If you want to know how to change your EDI provider (or choose a new one), read this article.

EDI Solution for Suppliers

We offer affordable EDI solutions for suppliers.

Web EDI

Fully Managed EDI

On-Premises EDI

These proven EDI solutions improve the efficiency of our customers by making it easy to manage transactions, shipments and improve efficiency across the entire supply chain.

To get more out of EDI, we can integrate your EDI with any ERP, CRM, accounting application, shipping service, eCommerce solution, WMS, and more.

Contact us for an initial free consultation.
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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.
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EDIFACT – Delivery Just in Time for manufacturing

EDI for logistics

Advanced and successful enterprises whose activities are highly dependent on the exact timing of deliveries of goods use an efficient and reliable way to solve the supply problem – implementing electronic data interchange (EDI).

EDI Implementation in JIT (Just in Time) concept

EDI allows companies to streamline deliveries within the framework of the Just in Time concept.

The Just-in-time concept is the organization of the flow so that goods are delivered in the required quantity, to the right place, and exactly at the appointed time.

At the same time, companies do not need large reserve stock that “freezes” the company’s money.

DELFOR, DELJIT, DESADV – key EDI messages in supply chain management for manufacturing

UN/EDIFACT DELFOR Delivery Schedule message transmits in electronic structured form information about the delivery plan. The DELFOR message is sent by the purchasing company to the supplying company to indicate the need for products. This message can be used by retailers with their trading partners or a manufacturing company receiving components or raw materials from their partners.

The delivery schedule message DELFOR is used to provide continuous material flow between the supplier and the buyer when the delivery specifications cannot be fully defined in the contract or order.

DELFOR message allows refining and detailing the requirements and providing the supplier with information that enables him to predict the future needs of the buyer.

Time management and UN/EDIFACT DELFOR message

Delivery schedules transmitted through DELFOR message can be of two types:
  • urgent
  • perpetual

Perpetual is used to describe regular orders and deliveries. Urgent is applied for a limited period (for example, with an increased delivery regime) with a start-and-finish date.

A DELFOR message can be sent at any frequency (once a month, once a week, etc.) and covers any period (e.g., week, month, quarter, half-year, year). Medium- and long-term schedules transmitted every month may change to short-term ones issued every week.

All products and materials indicated in the delivery schedule message must be uniquely identified by the order, item number, article number, or part number.

The identification number can be determined either by the customer or by the supplier – the parties agree on this issue at the stage of concluding the contract.

The delivery schedule message may indicate the place of delivery of the goods it could be:
  • warehouse of the enterprise;
  • specific assembly line;
  • distribution center;
  • warehouse of the logistics company.

By receiving such a message, the supplier gets the opportunity to confirm or reject the request, or make changes. Using the DELFOR message, business partners can agree on which day the buyer can accept the order and on which day the supplier can deliver it.

DELFOR message can also be used for the forecast plan. In this case, the supplier has the opportunity to understand the long-term needs of his customer. This helps to plan the delivery of raw materials and more flexibly manage production.

Business partners usually agree in advance on the purpose of sending DELFOR messages – for a quick order or for planning deliveries for a long time.

How EDI is implemented in practice

In a world practice, DELFOR is one of the most widely used transaction in the manufacturing industry, where supply chain can be very complex and fragmented. At the same time, all the collaborators must be strictly coordinated. Errors in the exchange of information at one stage can affect subsequent elements of the chain, up to the end consumer. For this reason, EDI is one of the most used technologies in production planning, inventory allocation, logistics, and transportation.

Using the DELFOR message, a manufacturing company can send its partners an approximate supply plan on a weekly basis.

In the case of more operational tasks, companies can implement DELJIT (Delivery Just in Time) message.

In this way, suppliers are informed of the exact shipping schedule requirements in the next 24 hours. However, each enterprise can flexibly customize processes exclusively for its needs and production cycles.
EDI 856

The third message related to the delivery schedule in the manufacturing space, is the DESADV Despatch advice message (or EDI 856 Advanced Ship Notice in the X12 standard). The supplier should send this message immediately after shipment leaves its premises.

The message indicates the contents of the delivery and additional information about the shipment, the order, type of packaging and product description and characteristics.

A dispatch message improves supply chain management. Manufacturers and distributors can control and track shipments, orders, and inventory more effectively. The whole process becomes traceable; it becomes possible to know when the goods will be sent when it will reach its destination.

According to Industry Week’s Best Plants analysts who studied more than 100 companies with the Just in Time logistic concept implemented using EDI messages, their average results were very positive:
  • The volume of stock instead of the maximum 15 days was reduced to 2 days
  • Stock of finished products decreased by one third
  • The duration of the production cycle decreased by 40%
  • Production costs decreased by 20%

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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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