Saturday, June 21, 2025

EDI End-to-End Flow in Warehouse Management

EDI End-to-End Flow in Warehouse Management 

At its core, the EDI flow in warehouse management revolves around the movement and management of goods within a storage facility. It connects the "order" aspect (what needs to be done with the goods) with the "physical movement" aspect (receiving, storing, picking, packing, and shipping).

General Steps:

  1. Inbound Shipment Notification: The warehouse is informed about incoming goods.
  2. Receiving and Putaway: Goods arrive, are verified, and placed into storage.
  3. Order Fulfillment Request: The warehouse receives instructions to prepare goods for outbound shipment.
  4. Picking, Packing, and Staging: Goods are retrieved, prepared, and staged for loading.
  5. Outbound Shipment Confirmation: The warehouse confirms the shipment and provides details.
  6. Inventory Management & Reporting: Ongoing updates on inventory levels and status.
  7. Invoicing: The warehouse (if a 3PL) bills for services rendered.

Detailed EDI Flow with Possible Scenarios and Documents

Let's break down the flow with specific EDI transaction sets (documents) and scenarios.

Participants:

  • Warehouse: Could be a 3PL, distribution center, or internal company warehouse.
  • Shipper/Client/Owner of Goods: The company that owns the inventory being managed by the warehouse (e.g., Manufacturer, Distributor, Retailer).
  • Carrier: The transportation company picking up or delivering goods.
  • Consignee: The ultimate recipient of the goods (e.g., a retail store, end customer).
  • Supplier/Vendor: The origin of goods being sent to the warehouse.

Common EDI Standards:

  • ANSI ASC X12: Predominantly used in North America.
  • EDIFACT: Widely used internationally.

Scenario 1: Inbound Goods (Receiving Process)

This covers how a warehouse is notified about incoming shipments and confirms their receipt.

Steps & EDI Documents:

  1. Supplier/Shipper notifies the Warehouse (Advance Ship Notice):

    • EDI 856 (Advance Ship Notice - ASN): The most critical document for inbound. Sent by the supplier or shipper to the warehouse (and often the ultimate consignee). It provides detailed information about an incoming shipment before it arrives, including:
      • Contents of each carton/pallet (SKUs, quantities).
      • Purchase order numbers.
      • Expected arrival date/time.
      • Carrier and tracking information.
      • Container/trailer numbers.
      • Packing hierarchy (e.g., carton to pallet).
    • EDI 943 (Warehouse Stock Transfer Shipment Advice): Used specifically when goods are being transferred from one warehouse location to another (e.g., from a manufacturing plant warehouse to a distribution center warehouse).

  2. Warehouse Acknowledges Receipt of ASN:

    • EDI 997 (Functional Acknowledgment): The warehouse sends this to the sender of the ASN (supplier/shipper) to confirm that the EDI 856 was received in a valid format.

  3. Warehouse Confirms Receipt of Goods (Actual Receiving):

    • EDI 944 (Warehouse Stock Transfer Receipt Advice): Sent by the warehouse to the shipper/client to confirm the physical receipt of goods. This document details:
      • What was received (SKUs, quantities).
      • Any discrepancies (overages, shortages, damages).
      • Date and time of receipt.
      • Referenced against the original ASN or Purchase Order.

Scenario 2: Outbound Goods (Order Fulfillment Process)

This covers how a warehouse receives orders, processes them, and confirms shipment.

Steps & EDI Documents:

  1. Shipper/Client sends Order to Warehouse:

    • EDI 940 (Warehouse Shipping Order): This is the primary document from the shipper/client to the warehouse, instructing them to pick, pack, and ship goods. It contains:
      • Customer order number.
      • Ship-to address.
      • Items to be shipped (SKUs, quantities).
      • Shipping instructions (e.g., carrier, service level, hazmat flags).
      • Special handling instructions.
    • EDI 850 (Purchase Order): While primarily used between buyer and seller, if the warehouse is directly fulfilling orders on behalf of a retailer (e.g., drop shipping), they might receive an 850 as the "order."

  2. Warehouse Acknowledges Receipt of Order:

    • EDI 997 (Functional Acknowledgment): The warehouse sends this to the shipper/client to confirm that the EDI 940 was received in a valid format.

  3. Warehouse Confirms Shipment (After Goods Leave):

    • EDI 945 (Warehouse Shipping Advice): Sent by the warehouse to the shipper/client after the goods have been shipped. This is the counterpart to the EDI 940. It confirms:
      • What was actually shipped (SKUs, quantities).
      • Carrier and tracking information.
      • Date and time of shipment.
      • Any backordered items.
      • References the original 940 and customer order number.
    • EDI 856 (Advance Ship Notice - ASN): Often, the warehouse will also send an EDI 856 to the ultimate consignee (e.g., a retail store or end customer) and/or the shipper/client. This ASN provides detailed carton-level information for the inbound recipient to prepare for goods receiving. This is crucial for cross-docking and retail compliance.

  4. Carrier Communication (Integrated with Transportation EDI):

    • EDI 204 (Motor Carrier Load Tender): Warehouse might send this to a carrier (or the 3PL if the warehouse is separate) to request a pickup.
    • EDI 990 (Response to Load Tender): Carrier responds to the 204.
    • EDI 214 (Transportation Carrier Shipment Status Message): Carrier sends status updates to the warehouse (and/or shipper/consignee) throughout transit.
    • EDI 210 (Motor Carrier Freight Details and Invoice): Carrier sends invoice to the billing party.

Scenario 3: Inventory Management and Reconciliation

Maintaining accurate inventory records is vital.

Steps & EDI Documents:

  1. Warehouse sends Inventory Report:

    • EDI 947 (Warehouse Inventory Adjustment Advice): Sent by the warehouse to the shipper/client to report changes in inventory levels due to adjustments (e.g., cycle counts, physical inventory, damage, loss, return to stock from a short pick).
    • EDI 846 (Inventory Inquiry/Advice): Can be used for periodic inventory reports, providing a snapshot of current stock levels for specific items or the entire warehouse. The shipper/client might also send an 846 as an inquiry.

  2. Shipper/Client sends Inventory Adjustments (less common, but possible):

    • EDI 947 (Warehouse Inventory Adjustment Advice): Shipper might send this to instruct the warehouse to make specific inventory adjustments in their system.

Scenario 4: Returns Management (Reverse Logistics)

Handling returned goods.

Steps & EDI Documents:

  1. Shipper/Client authorizes return to Warehouse:

    • EDI 940 (Warehouse Shipping Order - for returns): Can be adapted to instruct the warehouse to expect a return and process it (e.g., receive, inspect, put back to stock, dispose). It might reference an RMA (Return Merchandise Authorization) number.
    • EDI 856 (Advance Ship Notice - for returns): The party sending the return (e.g., a retail store, end customer via a return label) might send an ASN to the warehouse to notify them of an incoming return.

  2. Warehouse receives and processes return:

    • EDI 944 (Warehouse Stock Transfer Receipt Advice - for returns): Warehouse confirms receipt of the returned goods, detailing quantities, condition, and any discrepancies.

Scenario 5: Warehouse Services and Billing (for 3PLs)

How 3PL warehouses invoice their clients for services.

Steps & EDI Documents:

  1. 3PL sends Invoice:

    • EDI 810 (Invoice): The 3PL sends this to their client (shipper/owner of goods) for warehouse services rendered. This can include storage fees, handling fees (receiving, picking, packing), value-added services (VAS), shipping charges, and other charges.
    • EDI 819 (Automotive Inbound Advice): Specific to the automotive industry, providing detailed breakdown of inbound costs.

  2. Client sends Payment Advice:

    • EDI 820 (Payment Order/Remittance Advice): The client sends this to the 3PL to detail which invoices are being paid and the amount.

Ways EDI is Implemented and Transmitted

  • VAN (Value-Added Network): A common method where a third-party acts as a secure intermediary for EDI document exchange, handling routing, protocol conversions, and error checking.
  • Direct Connect (Point-to-Point): Warehouse and trading partner establish a direct, secure connection (e.g., AS2, SFTP) for high-volume, real-time exchanges.
  • Web EDI: A web-based portal where smaller trading partners can manually key in or download EDI data, often for lower volume or less frequent transactions.
  • EDI Integration Software: On-premise or cloud-based software that maps internal WMS (Warehouse Management System) or ERP data to EDI standards, manages communication, and monitors transactions. This is critical for automation.
  • API (Application Programming Interface) Integration: Increasingly used in conjunction with or sometimes instead of EDI for real-time, dynamic interactions. For example, a WMS might use APIs to get instant inventory updates from an e-commerce platform or to trigger a small package shipment directly with a carrier. While EDI is strong for batch processing of structured documents, APIs excel at granular, on-demand data exchange. Many modern warehouse solutions offer both EDI and API connectivity.

Benefits of EDI in Warehouse Management:

  • Increased Accuracy: Eliminates manual data entry errors in receiving, picking, and shipping.
  • Improved Efficiency: Automates data flow, significantly speeding up order processing, receiving, and putaway.
  • Reduced Labor Costs: Less manual effort for data entry, reconciliation, and issue resolution.
  • Enhanced Inventory Accuracy: Real-time updates via EDI documents (like 944, 945, 947) ensure better inventory visibility and control, reducing stockouts and overstocks.
  • Faster Turnaround Times: Quicker processing of inbound and outbound shipments leads to faster order fulfillment and delivery.
  • Better Resource Planning: ASNs (856) allow warehouses to plan labor, equipment, and dock space more effectively for incoming shipments.
  • Stronger Partner Relationships: Seamless data exchange fosters trust and better collaboration with clients, suppliers, and carriers.
  • Compliance: Meeting EDI mandates from major retailers or manufacturers is often a prerequisite for doing business.
  • Improved Traceability: Detailed shipment and inventory data supports robust audit trails.
  • Scalability: EDI systems can handle high volumes of transactions, supporting business growth.

Key Entities (represented as distinct boxes/swimlanes):

  1. Supplier/Vendor: (Left side, where goods originate)
  2. Shipper/Client/Owner of Goods: (Central, orchestrating the flow, could be a Manufacturer, Distributor, or Retailer)
  3. Warehouse/3PL: (Central, the core of the diagram's processes)
  4. Carrier: (Lower section, handling physical transport)
  5. Consignee/End Customer: (Right side, where goods end up)

Main Flow Lines (Arrows with Labels): These represent the EDI documents and the direction of communication.

I. Inbound Process (Receiving Goods into Warehouse)

  • From Supplier/Shipper to Warehouse:
    • Arrow 1: Supplier/Shipper → Warehouse/3PL
      • Label: EDI 856 (Advance Ship Notice - ASN)
      • Description: Notification of incoming goods (what, when, how it's packed).
    • Arrow 2 (Alternative/Complementary): Shipper/Client → Warehouse/3PL
      • Label: EDI 943 (Warehouse Stock Transfer Shipment Advice)
      • Description: For internal transfers between facilities.
  • Acknowledgement of ASN (Optional but good practice):
    • Arrow 3: Warehouse/3PL → Supplier/Shipper
      • Label: EDI 997 (Functional Acknowledgement)
      • Description: Confirms receipt and validity of the ASN.
  • Physical Goods Movement (Non-EDI, but crucial context):
    • Arrow 4 (Physical): Supplier/Shipper → Carrier → Warehouse/3PL
      • Label: Physical Shipment of Goods
      • Description: The actual delivery of inventory.
  • Warehouse Confirms Receipt:
    • Arrow 5: Warehouse/3PL → Shipper/Client
      • Label: EDI 944 (Warehouse Stock Transfer Receipt Advice)
      • Description: Confirms goods received, notes discrepancies (over/short/damaged).

II. Outbound Process (Shipping Goods from Warehouse)

  • Shipper/Client Requests Shipment:
    • Arrow 6: Shipper/Client → Warehouse/3PL
      • Label: EDI 940 (Warehouse Shipping Order)
      • Description: Instructions to pick, pack, and ship specific items to a consignee.
  • Acknowledgement of Shipping Order (Optional but good practice):
    • Arrow 7: Warehouse/3PL → Shipper/Client
      • Label: EDI 997 (Functional Acknowledgement)
      • Description: Confirms receipt and validity of the 940.
  • Warehouse Confirms Shipment:
    • Arrow 8: Warehouse/3PL → Shipper/Client
      • Label: EDI 945 (Warehouse Shipping Advice)
      • Description: Confirms what was shipped, tracking info, carrier used. This is sent after shipment.
    • Arrow 9: Warehouse/3PL → Consignee/End Customer (and/or Shipper/Client)
      • Label: EDI 856 (Advance Ship Notice - ASN)
      • Description: Detailed carton/pallet contents, tracking, and delivery info for the recipient to prepare for receiving.
  • Warehouse to Carrier Communication (Integration with Transportation Flow):
    • Arrow 10: Warehouse/3PL → Carrier
      • Label: EDI 204 (Motor Carrier Load Tender)
      • Description: Request for a carrier to pick up a shipment.
    • Arrow 11: Carrier → Warehouse/3PL
      • Label: EDI 990 (Response to Load Tender)
      • Description: Carrier accepts/declines the tender.
  • Physical Goods Movement (Non-EDI, but crucial context):
    • Arrow 12 (Physical): Warehouse/3PL → Carrier → Consignee/End Customer
      • Label: Physical Shipment of Goods
      • Description: The actual delivery of inventory.

III. Inventory & Financial Management

  • Inventory Reporting:
    • Arrow 13: Warehouse/3PL → Shipper/Client
      • Label: EDI 846 (Inventory Inquiry/Advice) / EDI 947 (Warehouse Inventory Adjustment Advice)
      • Description: Periodic inventory status or specific adjustments (e.g., cycle count results, damages, returns to stock).
  • Invoicing for 3PL Services:
    • Arrow 14: Warehouse/3PL → Shipper/Client
      • Label: EDI 810 (Invoice)
      • Description: Billing for storage, handling, value-added services.
    • Arrow 15: Shipper/Client → Warehouse/3PL
      • Label: EDI 820 (Payment Order/Remittance Advice)
      • Description: Details of payment for services.

Written By
Labels: , , , , , ,

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)