Amazon.com Fulfillment Center going live in October 2010

by Oliver Schmid

Unitech EDI explains what the latest EDI news means to you.

You may have recently received this email from Amazon announcing the opening of new DCs:

Amazon.com Fulfillment Center PHL3 going live in October 2010

Find out more about it at http://compliance.unitechedi.com/2010/09/15/amazoncom-fulfillment-center-going-live-in-october-2010/


The Pros’ of EDI


How does EDI reduce cost and increase Profits?

Shared Forecast

 

right_arrow

Inventory Turns Increase right_arrow

Lowered Costs!

Transaction Automation right_arrow Reduce Labor right_arrow

Lowered Costs!

Automated Systems Integration right_arrow Fewer errors, rework, less paper right_arrow

Lowered Costs!

Electronic Payments (EFT) right_arrow Increased Cash-Flow right_arrow

Lowered Costs!

Shared Sales & Inventory Data right_arrow Improved Product Availability right_arrow

Increased Sales!

Integration and automated data transfer right_arrow Improved Access to Quality Information right_arrow

Increased Sales!

Transaction Automation right_arrow People add value right_arrow

Increased Sales!


Increasing profitability through EDI outsourcing


The economic downturn is forcing organizations to review their current IT business processes.
Increasingly Third Party Outsourcing (TPO) providers are reporting of being approached in regards to outsource EDI operations.


Initially the decision on doing EDI is an easy one. It is considered of making a one-time upfront investment in hardware, software and development and then pocket the gains from decreased transaction costand over a short time the initial investment cost have been recovered.

This is the time, when EDI moves from being a profit center, to being a cost center and companies start looking how they could save even more money. At this point outsourcing EDI may become a consideration.

Outsourcing EDI comes in many varieties and flavors. Finding and implementing the right solution depends of the readiness state of an organization. A readiness state is defined as followed:

  • Is the business just beginning EDI operations?
  • Does the business perform already EDI is one or more trading partners?

Continue reading

Definition of EDI

Electronic Data Interchange means for companies to exchange business documents, such as purchase orders, ship notofications, invoices and many other.

EDI eliminates the need for sending paper documents through traditional means — including mail, faxes or e-mail — it is a major contributor to creating a “paperless” office environment.

EDI messages adhere to a set of rules and regulations governing the flow of electronic data, known as “protocols.” The use of standardized data formats allows computers to exchange various business documents without companies needing to customize their hardware or software system.

EDI can be formally defined as ‘The transfer of structured data, by agreed message standards, from one computer system to another without human intervention’.

EDI standards were designed to be independent of communication and software technologies. EDI can be transmitted using any methodology agreed to by the sender and recipient.

edi_square_image_rdax_95

There are four major sets of EDI standards:

Today, EDI is used by a large number of businesses. EDI has a number of benefits. Cost is one of the main benefits. Processing one paper based order usually costs between US$ 50.00 and US$80.00, depending on the complexity of the order, where as processing the same EDI based order will cost less than $2.00.

Another benefit is time. A paper order can take up to 2 weeks from the time it is issued by the purchasing entity, send to the vendor and entered into the vendors system and shipped. The same order can now being processed in less than a day. This in return will allow to keep more efficient stock levels, better use of warehouse space which in return means reduced warehousing cost and improved cash flow.

EDI BENEFITS

► Speed

► Accuracy

► Simplicity

► Security

► Faster sell-buy cycle time

► Improved Cash Flow

► Reduced Order Lead Time

► Reduced Inventories

► Ability to have Just-In-Time (JIT) Production Runs

► Improved Customer – Vendor relationships

Does EDI Outsourcing Make Sense?

Electronic Data Interchange or EDI has been becoming increasing popular since the early 90’s. Often pushed by large organizations, like retail chains, large warehousing and distribution providers, etc.,  with high transaction volumes in order to reduce cost. Cost that occurs through manual data entry labor, printing documents like orders, order confirmations, shipping documents, etc.

Unfortunately EDI has one big drawback. As mentioned, EDI is usually first implemented at larger organizations and then pushed down to their vendor. These larger organizations developed their own standard within the already existing ANSI X12 (mainly deployed US/Canada) or EDIFACT (mainly deployed in Europe and Asia). This standard is then passed on to their trading partners. These trading partners or vendors can be larger organizations that have the resources to maintain their own EDI department, but they can also be smaller organizations that do not have the resources available to have their own EDI department or people.

Now why would I need my own EDI people you may ask. The answer here to is: You have a number of customers of which only a handful may require from you to be EDI compliant. These are usually organizations that deal with a large number of vendors. The way it usually works is that these organizations dictate the trading standard, meaning they tell you what your transaction sets you trade with them has to look like. The most common transactions organizations usually start out to trade are purchase orders (ANSI X12 – 850 / EDIFACT – ORDERS)  and invoices (ANSI X12 – 810 / EDIFACT – INVOIC), since these documents lay the base for all other subsequent transactions and are the easiest to setup.

The problem now is, that you have only a small number of customers that do EDI, but usually every single one of them has a standard developed that fits their ERP Solution and they force you now to adhere to this standard even if it does not fit your system. Your organization needs somebody to develop maps that translates your customers standard into a file format that your system can understand and vice versa any document coming from your system will have to be translated/mapped into a file/transaction that can be read by your customers ERP Solutions.

This process is called “Certification”. It means that your organization needs to get certified by your trading partner as EDI-compliant. EDI compliant means that your trading partner certifies that you were able to import  the transactions (e.g. purchase orders) you received into your system in such a way that you were able to produce an order in your system and then fulfill the order and send back an invoice, which was correct in regards and relation to the original sent purchase order and  that it  could be read and imported into your trading partner’s system without any issue.

Developing these maps and perform testing and certification can be a fairly lengthy and expensive process if you have to do it on you own. The reasons here for are that you will have to invest into you own EDI Mapping Software Solution (Translator), have people who not only are familiar with your Translator but also understand the various EDI Transaction sets (orders, invoices, advanced ship notices, order confirmations, change orders, etc.).  Remember maps have to be developed for every single one of your trading partners and be tested.

You may think that should not be to difficult. Let us just take an order. An order that is  entered manually from a printed form has various information in various places. Take now these manual orders from all your trading partners and compare them side by side. Non of them looks the same. None of them has the same information in the same place on the purchase order form. One PO may require you to ship the product on a certain date. Another PO asks for the product to arrive at the customers location on a certain date. Others give you shipping windows, meaning a product can arrive as early as … but not later then … .

When these orders are now sent in a file the same happens. All the relevant information is in different places within the file.  A human eye can easily detect the various information that is required to process the form. A software unfortunately has to be programmed and told where the information is located within the file and then mapped/pointed into a new file format that fits your system.  This must be done for each trading partner and each single document type for each trading partner.

On top of this, there are various communication methods in which organizations want to send and receive their transactions. Some utilize a Value Added Network or VAN. A VAN is more or less an electronic mailbox in which transactions are stored until they are picked up by the respective party. Then others want to trade directly with you using AS2, Secure FTP (S-FTP) or Secure HTTP (S-HTTP). Some want to send you the transaction in its native ANSI X12 or EDIFACT Form others use their own file format using XML. The variations are almost endless.

For an organization that deals only with a small number of trading partners it may be to expensive now to invest and acquire a translator and have their own resources to develop and maintain transaction sets and on top of it monitor the daily transaction volume.

This is when outsourcing makes sense. Outsourcing providers come in various flavors. There are the ones that require you to invest in your own mapping solution and they then develop the maps. You invest in hardware, software and monitoring resources. Then there are the ones that provide you with the whole service; meaning  they not only have the software and the resources to develop the translation maps, but they also monitor the transaction and are your first line contact for all your trading partners EDI issues and deal as intermediary between you and your trading partner for any questions or issues that may arise.

If you have a large number of trading partners and a high traffic volume it may make sense for you to invest in your own EDI resources (hardware, software, staff, knowledge, etc.)

Often organizations feel overwhelmed with the task evaluating what is the best solution for them and finding the right software and or outsourced EDI Service Partner.

Here is where you may want to talk to me. With more than 15 years of EDI experience, I have dealt or worked  with many different possible solutions. Whether it is doing everything inhouse, partially outsourcing EDI or completely outsource the whole solution, I have spend many ours and days, evaluating various EDI Translators. I have talked to and dealt with various solution partners.

I not only now what to look out for and what questions to ask, but I also have the experience to evaluate with you what may be the right EDI Solution for you, this includes providing a cost/benefit analysis for your business.

Feel free to contact me for a free 1 hour consultation by calling me at 770-776-6182 or sending me an email to oliver.schmid@4954itc.com

(c) Oliver Schmid

Common EDI Transactions Within The Retail Industry

Most common EDI Transactions within the retail industry

ANSI-X12

EDIFACT Transaction Name

Transaction Description

212 Motor Carrier Delivery Trailer Manifest This transaction set can be used to allow motor carriers to provide consignees or other interested parties with the contents of a trailer, containing multiple shipments, that has been tendered for delivery. It is not to be used to provide the recipient with data relative to a full truckload shipment.
214 Transportation Carrier Shipment Status Message This transaction set can be used by a transportation carrier to provide shippers, consignees, and their agents with the status of shipments in terms of dates, times, locations, route, identifying numbers, and conveyance.
810 INVOIC Invoice The transaction set can be used to provide for customary and established business and industry practice relative to the billing for goods and services provided.
812 CREADV DEBADV Credit/Debit Adjustment The transaction set can be used to notify a trading partner of an adjustment or billback and may be used to request an adjustment or billback. It identifies and contains the details and amounts covering exceptions, adjustments, credits, or debits for goods or services.Often has variations for LTL (less than truck load, FTL (full truck load) and SP (small package).
820 REMADV Payment Order/Remittance Advice The transaction set can be used to make a payment, send a remittance advice, or make a payment and send a remittance advice. This transaction set can be an order to a financial institution to make a payment to a payee. It can also be a remittance advice identifying the detail needed to perform cash application to the payee’s accounts receivable system. The remittance advice can go directly from payer to payee, through a financial institution, or through a third party agent.
824 Application Advice Used to notify trading partner of transaction errors.
846 INVRPT Inventory Inquiry/Advice Used to notify a trading partner of on hand inventory.
850 ORDERS Purchase Order The transaction set can be used to provide for customary and established business and industry practice relative to the placement of purchase orders for goods and services.
852 Product Activity Data The transaction set can be used to advise a trading partner of inventory, sales, and other product activity information.
855 ORDRSP Purchase Order Acknowledgement The transaction set can be used to provide for customary and established business and industry practice relative to a seller’s acknowledgment of a buyer’s purchase order.
856 DESADV Advanced Ship Notice The transaction set can be used to list the contents of a shipment of goods as well as additional information relating to the shipment, such as order information, product description, physical characteristics, type of packaging, marking, carrier information, and configuration of goods within the transportation equipment. The transaction set enables the sender to describe the contents and configuration of a shipment in various levels of detail and provides an ordered flexibility to convey information.
860 ORDERCHG Purchase Order Change Request This transaction can be used: (1) by a buyer to request a change to a previously submitted purchase order or (2) by a buyer to confirm acceptance of a purchase order change initiated by the seller or by mutual agreement of the two parties.
864 Text Message The transaction set’s purpose is to provide communication to the recipient in some human-readable form. The recipient’s network will dictate what capabilities are available for delivery of the information.

Oliver Schmid Twitter