Monday, June 16, 2025

EDI End-to-End Flow in Supply Chain & Retail

EDI End-to-End Flow in Supply Chain & Retail 

The core interaction in retail EDI is between a Retailer (the buyer) and a Supplier/Manufacturer (the seller). However, the modern supply chain often involves multiple intermediaries like 3PLs (Third-Party Logistics Providers), Carriers, Customs Brokers, and financial institutions.

General Stages:

  1. Demand & Ordering: Retailer identifies a need for goods and places an order.
  2. Order Acknowledgment & Fulfillment: Supplier confirms the order and prepares for shipment.
  3. Shipment Notification: Supplier informs the Retailer about the impending shipment.
  4. Goods Receipt: Retailer receives and processes the goods.
  5. Invoicing & Payment: Supplier bills the Retailer, and the Retailer processes payment.
  6. Returns & Adjustments: Handling of returned goods or discrepancies.

Detailed EDI Flow with Possible Scenarios and Documents

Let's break down the flow by typical business processes and scenarios, highlighting the relevant EDI transaction sets.

Key Participants:

  • Retailer (Buyer): Supermarkets, department stores, e-commerce platforms, specialty shops.
  • Supplier/Manufacturer (Seller): Brands, producers, wholesalers.
  • 3PL (Third-Party Logistics Provider): Manages warehousing and/or transportation for suppliers or retailers.
  • Carrier: Transportation companies (trucking, rail, ocean, air freight).
  • Bank/Financial Institution: Facilitates payments.
  • Customs Authority: For international trade.

Common EDI Standards:

  • ANSI ASC X12: Predominantly used in North America (e.g., 850, 810, 856).
  • EDIFACT: Widely used internationally, especially in Europe and for global freight (e.g., ORDERS, DESADV, INVOIC).
  • TRADACOMS: Still used for some retail flows in the UK.

Scenario 1: Standard Purchase-to-Pay (Retailer Direct to Supplier)

This is the most fundamental and common EDI flow in retail.

Steps & EDI Documents:

  1. Retailer Places Order:

    • EDI 850 (Purchase Order): Sent by the Retailer to the Supplier. This is the request to purchase goods, detailing items, quantities, prices, shipping instructions, and delivery dates.
    • EDIFACT equivalent: ORDERS (Purchase Order)

  2. Supplier Acknowledges Order:

    • EDI 855 (Purchase Order Acknowledgement): Sent by the Supplier back to the Retailer. This confirms receipt of the order and indicates if it's accepted, rejected, or accepted with changes (e.g., backorder, new delivery date).
    • EDIFACT equivalent: ORDRSP (Order Response)

  3. Supplier Sends Shipping Notification (Pre-Alert):

    • EDI 856 (Advance Ship Notice - ASN): Sent by the Supplier (or 3PL) to the Retailer before the shipment physically arrives. This is critical for efficient receiving at the retail distribution center or store. It includes:
      • Detailed contents of each carton/pallet (SKUs, quantities).
      • Purchase order numbers referenced.
      • Carrier and tracking information.
      • Expected delivery date/time.
      • Packing hierarchy (e.g., serial shipping container codes - SSCC labels).
    • EDIFACT equivalent: DESADV (Despatch Advice)

  4. Carrier Sends Status Updates (Optional, but common for large retailers):

    • EDI 214 (Transportation Carrier Shipment Status Message): Sent by the Carrier to the Supplier and/or Retailer, providing real-time updates on the shipment's journey (e.g., pickup, in transit, arrived, delivered).
    • EDIFACT equivalent: IFTSTA (International Forwarding and Transport Status Message)

  5. Retailer Confirms Receipt of Goods:

    • EDI 861 (Receiving Advice/Acceptance Certificate): Sent by the Retailer to the Supplier after goods are received and counted. It confirms what was received, highlighting any discrepancies (overages, shortages, damages). This can trigger payment or claims.

  6. Supplier Invoices Retailer:

    • EDI 810 (Invoice): Sent by the Supplier to the Retailer for payment. It itemizes the goods shipped, quantities, prices, and total amount due, referencing the original purchase order and shipment.
    • EDIFACT equivalent: INVOIC (Invoice Message)

  7. Retailer Sends Payment Advice:

    • EDI 820 (Payment Order/Remittance Advice): Sent by the Retailer to the Supplier (and often to their bank for payment processing). It details which invoices are being paid and the amount, allowing for automated reconciliation.
    • EDIFACT equivalent: REMADV (Remittance Advice)

Scenario 2: Drop Shipping (Supplier Ships Directly to End Customer)

Common for e-commerce, where the retailer doesn't hold inventory.

Steps & EDI Documents:

  1. Retailer Places Order (from end customer):

    • EDI 850 (Purchase Order): Sent by the Retailer to the Supplier. The "ship-to" address will be the end customer's address.

  2. Supplier Acknowledges & Ships:

    • EDI 855 (Purchase Order Acknowledgement): Supplier confirms order receipt.
    • EDI 856 (Advance Ship Notice - ASN): Sent by the Supplier to the Retailer (and sometimes the end customer if the retailer provides a portal). This provides tracking details directly to the retailer.
    • EDI 214 (Transportation Carrier Shipment Status): Carrier sends updates to the Supplier and potentially the Retailer.

  3. Supplier Invoices Retailer:

    • EDI 810 (Invoice): Supplier bills the Retailer for the shipped goods.

  4. Retailer Sends Payment:

    • EDI 820 (Payment Order/Remittance Advice): Retailer pays the Supplier.

Scenario 3: Collaboration with a 3PL (Supplier or Retailer uses 3PL)

The 3PL acts as an intermediary, managing warehouse and/or transportation functions.

Steps & EDI Documents:

  1. Shipper/Client (Supplier or Retailer) to 3PL (Inbound to Warehouse):

    • EDI 856 (Advance Ship Notice - ASN): Sent by the Shipper (e.g., Manufacturer) to the 3PL's warehouse, notifying of an incoming shipment.
    • EDI 943 (Warehouse Stock Transfer Shipment Advice): If goods are transferred between warehouses managed by the same party.

  2. 3PL Confirms Inbound Receipt:

    • EDI 944 (Warehouse Stock Transfer Receipt Advice): Sent by the 3PL to the Shipper/Client, confirming receipt of goods into the warehouse.

  3. Shipper/Client (Retailer or Supplier) to 3PL (Outbound from Warehouse):

    • EDI 940 (Warehouse Shipping Order): Sent by the Shipper/Client to the 3PL's warehouse, instructing them to pick, pack, and ship goods for specific customer orders (could be for the end-retailer's stores or direct to end-consumers).

  4. 3PL Confirms Outbound Shipment:

    • EDI 945 (Warehouse Shipping Advice): Sent by the 3PL to the Shipper/Client after goods have been shipped from the warehouse, confirming details.
    • EDI 856 (Advance Ship Notice - ASN): The 3PL will also send this to the ultimate recipient (e.g., Retailer's DC, Retail Store, End Customer) for efficient receiving.

  5. Inventory Reporting & Adjustments (between 3PL and Shipper/Client):

    • EDI 846 (Inventory Inquiry/Advice): For periodic inventory status reports.
    • EDI 947 (Warehouse Inventory Adjustment Advice): For reporting changes due to counts, damage, returns etc.

  6. 3PL Invoicing:

    • EDI 810 (Invoice): 3PL invoices the Shipper/Client for warehousing and fulfillment services.

Scenario 4: Returns Management (Retailer to Supplier)

Handling of returned merchandise.

Steps & EDI Documents:

  1. Retailer Initiates Return/Requests Authorization:

    • EDI 180 (Return Merchandise Authorization Request): Retailer requests authorization to return goods to the Supplier.

  2. Supplier Authorizes Return:

    • EDI 180 (Return Merchandise Authorization): Supplier sends authorization back, including an RMA number and return instructions.

  3. Retailer Ships Return & Notifies Supplier:

    • EDI 856 (Advance Ship Notice - for Returns): Retailer sends an ASN to the Supplier's receiving location (or their 3PL) to notify them of the incoming return shipment.

  4. Supplier Acknowledges Return Receipt:

    • EDI 861 (Receiving Advice/Acceptance Certificate): Supplier (or 3PL) confirms receipt of returned goods.

  5. Credit/Debit Adjustments:

    • EDI 812 (Credit/Debit Adjustment): Sent by either party to request or confirm a credit/debit for returned goods, damaged items, or other discrepancies.

Scenario 5: Product Catalog and Pricing Updates

Maintaining up-to-date product information and pricing.

Steps & EDI Documents:

  1. Supplier Sends Product Data/Price List:

    • EDI 832 (Price/Sales Catalog): Sent by the Supplier to the Retailer to provide detailed product information (description, SKU, UPC, size, color) and pricing.

  2. Retailer Requests Product Data:

    • EDI 832 (Price/Sales Catalog Request): Retailer requests specific catalog information.

Scenario 6: Financial Reporting and Forecasting

Beyond direct transactional documents.

Steps & EDI Documents:

  1. Sales Reporting:

    • EDI 852 (Product Activity Data): Sent by the Retailer to the Supplier, detailing sales data by item and location, often used for vendor-managed inventory (VMI) or replenishment forecasting.

  2. Forecasting:

    • EDI 830 (Planning Schedule with Release Capability): Sent by the Retailer to the Supplier, providing forecast data for future demand.
    • EDI 862 (Shipment Planning Schedule): A more specific release against a blanket purchase order or forecast.


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