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Retail Value Chain 101: 6 Questions Suppliers Must Answer When Setting Up EDI

Posted By Administration, Thursday, August 10, 2017
Updated: Tuesday, August 8, 2017


Much attention is given to supplier onboarding. When a retailer begins doing business with a new merchandise supplier, the retailer must have a clearly defined onboarding process and manage that process carefully. This will set the tone for a successful, profitable trading partner relationship. The same principle applies for suppliers when setting up their EDI transactions.

When a supplier begins doing business with a new retailer, the supplier must do their due diligence to ensure that all data required by both parties flows seamlessly back and forth. Unfortunately, many suppliers take a cookie cutter approach to EDI. Because they're successfully executing EDI transactions with other retailers, sometimes suppliers cut and paste EDI programming. When this happens, you increase the risk of shipping errors, delays and deductions, all of which erode the bottom line for both suppliers and retailers.

Here are six questions you must answer when setting up EDI with a new retailer:

1) What Versions of EDI Should You Employ?
Retailers use versions such as 4050, 4030 or 4010 for EDI mapping guidelines. The lower the number, the older the version. New versions provide you and your retailer trading partners more data to help ensure that orders are filled and shipped accurately. You need to make sure you're capable of trading documents in a way that meets the retailer's expectations. If the retailer uses a more recent EDI version and has high expectations, you need to determine if your organization is capable of meeting the retailer's requirements before you start filling orders.

2) What Documents Are Mandatory, Conditional and Optional?
The retailer will always indicate in their guides what types of documents fall into these categories. For example, the purchase order, invoice and ASN are typically mandatory documents, although there may be more depending on the retailer. Some documents are conditional. If you trade document A, you'll be expected to trade document B. Optional documents aren't required but can be helpful if traded.

3) Is Mapping Programmed to the Retailer's Specifications?
Every EDI document is a roadmap that defines which types of business transaction data are mandatory, optional and conditional. Each roadmap is a mapping specification that indicates what data should and should not be provided. All retailers have sets of mapping specifications for EDI documents, or transaction sets, that they require or are capable of trading.

Suppose the retailer is expecting you to send certain information with your ASN, but you haven't mapped that information. In this case, there's no way to pull that data from the system and send it to the retailer. Either the ASN will fail and not go into the system, or it will go into the system incorrectly. Hello, chargebacks.

4) What Mediums Are Allowed – and Best – for Each Document?
EDI transmissions can be sent in different ways. If you're using a VAN, you need to make sure your retailer trading partner is using the same VAN. Otherwise, you're basically sending EDI transactions to an unmanned mailbox. Many retailers and suppliers use multiple VANs, but you want to minimize the number of VANS because you have to pay for each one you use. However, a VAN isn't a requirement. If you and the retailer are both capable of using AS2, a direct connection will enable you to exchange information more efficiently.

5) What Are the Retailer's Preferences (Timing, Frequency, etc.)?
For invoices, the retailer may not want to receive them in real time. You may prefer to send invoices in one daily batch and save money by executing fewer EDI transmissions. Inventory data, on the other hand, may need to be shared in near real time, especially in drop ship situations. Suppliers must take the time to learn the retailer's preferences so they know how often to send each type of EDI transaction and what times of day and days of week to send them.

6) Have You Agreed Upon a Grace Period for Testing Your Transactions?
Even if you plan carefully when you start doing business with a new retailer, you won't know if the EDI mapping is perfect until you test it. A lot of things can go wrong. Establish a grace period with the retailer so you can make sure mapping is programmed properly, report to each other in real time, and address any issues without chargebacks before you go live.

EDI makes it possible to automatically share data in a standard, structured format. It saves time and money and reduces errors by eliminating paper documents and the need for human intervention. However, EDI only works if transmissions are properly configured. There are no shortcuts, regardless of how long you've been using EDI. You need to go through every retailer's information and guide with a fine-tooth comb. EDI problems are very common, but they're completely preventable with proactive planning and troubleshooting.

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Tags:  EDI 

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