Technology

Integrating Custom EDIs for a Streamlined OMS (Order Management System)

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The radical move to e-commerce took off during the COVID-19 pandemic. It has become a necessity for most businesses, as both customers and retailers appreciate the convenience of placing orders at any time. Integrating custom EDIs offers supply chain agility that can be tailored and utilized to keep up with this new increase in demand.

With a number of competitors lurking around every corner, businesses need to optimize their ordering and fulfillment processes. Electronic Data Interchange (EDI) as part of an order management software (OMS) eliminates multiple friction points in the fulfillment process.

EDI has taken the e-commerce industry by storm. To put this into perspective, many large retailers, such as Walmart, Shopify, Target, and Best Buy, require their suppliers to use EDI as it allows them to enable efficient B2B transactions using electronic and automated means.

Such a solution as EDI has improved the operational efficiencies for more than 160,000 businesses across the globe. It is no new trend. It has been around long enough that any company worth their name uses it. So, why not let custom EDI integration work for your business as well?

Top 4 EDI Documents to Integrate with Order Management Software

EDI documents can make the difference between meeting customer expectations and running an organized business. It enables faster communication and managed responses while cutting warehouse costs and the chance of human error. 

EDI is not a specific platform but a digital language created around order management. Comprised of documents, it is a collection of data generated during each step of the fulfillment process. 

The best part is that the standardized form of EDI documents offers opportunities for integration with other software solutions. 

Though there are many, we have explored 4 documents we think are worth knowing about:

1. Purchase Order – EDI Document 850

A purchase order represents the start of a client’s interaction. At this point, the customer has finalized their decisions and hit the “Place Order” button on the website. Behind the scenes, the EDI order management system generates EDI Document 850. This document contains information such as the requested items, the number of said items, payment terms, and shipping instructions.

When the vendor receives EDI Document 850, the EDI software automatically returns an order acknowledgment form. This document confirms the order and lets the customer know that the fulfillment process is underway.

All of this information will go to a single location for processing in a small business. However, a medium-sized or larger corporation will need data to flow to several departments. 

Order information can go to all relevant platforms for the sales team, accounting, and warehouse. Along the way, other platforms may use the data to generate a new client account, trigger an inventory alert, or print shipping labels.

2. Invoice – EDI Document 810

EDI 810 is an electronic version of the paper-based invoice document. EDI 810 offers your customers an accurate invoice vital to proper payments. 

Sent in response to an EDI 850 (Purchase Order), it contains information on the payment terms, products shipped, invoice details, and order information. In a typical EDI arrangement, the client’s computer sends back an acknowledgment when it successfully receives the invoice.

The benefits of using an EDI 810 are that the system can deposit invoice information into the order history of the CRM. Then the accounting department receives automatic notification of this invoice delivery.

An integrated EDI order processing system will prevent mistakes that lead to chargebacks or cancellations. With the proper setup, the system automatically compares documents 850 and 810 and looks for differences. If there is any disagreement between the two data sets, the system will flag the order for a follow-up examination by a human employee.

3. Advanced Shipping Notice – EDI Document 856

Also referred to as EDI Advanced Shipping Notice (EDI ASN). EDI Document 856 is used to electronically communicate the process of an order, its shipment details, and its contents.

Once placed, customers want to know that their order is on the way, and this document serves as notice of the order’s processing and shipment. 

Integrating the advanced shipping notice benefits the supply chain and warehousing process. New orders may require relocating existing inventory or sending alerts to the warehouse or stockroom staff to prepare for the shipment.

For manufacturing, accurate shipping information about materials allows for a realistic estimate of production schedules. From there, an alert can warn the human resources department about additional labor needs.

Sent in advance of the arrival of a shipment (to a trading partners’ facility), this document is triggered by one of its previous transactions: EDI 850, EDI 830, and EDI 862. In other words, after being started, it sends a notification to a partner that their order is en route.

Information commonly included in an EDI 856 transaction comprises: 

  • Contents of shipment
  • Order information
  • Product descriptions
  • Type of packaging used
  • Transit information

This data is critical for large orders divided into multiple shipments.

EDI Document 856 integration can improve the accuracy of an e-commerce website by automatically updating a customer/partner of their order progress. 

4. Inventory Inquiry – EDI Document 846

On-time order fulfillment is dependent on adequate inventory. EDI Document 846 allows a customer to receive information about a seller’s products. 

EDI Document 846 integration can improve the accuracy of an e-commerce website by automatically removing or updating out-of-stock items. This eliminates the possibility of a customer trying to place an order only to be revealed as unavailable (as it was not labeled as “out-of-stock”).

Through this efficient management, the loyalty and trust of customers can be maintained. As they know, every tool available has been implemented to ensure the business’s OMS runs smoothly and efficiently.

Developing a Custom EDI Order Management System

EDI documents cover many fulfillment needs such as warehousing and ocean shipments. All businesses require a custom order management software that addresses their specific needs. 

With an experienced development team, a custom EDI OMS can be built to integrate with any software smoothly. EDI information travels automatically within a system, so your customers will benefit from faster processes and more transparent communication. But with custom features added on top of this, it can be tailored to optimize the multiple aspects of an already integrated OMS.

The advantage of today’s evergreen technological advancements is the array of tools developed for businesses. Tools such as EDI OMSs, offer a wealth of beneficial features that a company can utilize. If customized, it can be used to its full potential to aid a business in effectively managing higher demands in this growing industry. 

A Streamlined Future for OMS

Having an outdated OMS or no OMS at all can have a severe domino effect. Last year a survey found that 25% of businesses did not know how many lost orders they had. While more than half stated, they had lost more orders in 2020 than the year before. The same survey found that 74% of businesses indicated they lost revenue due to integration problems, with nearly 10% losing $1 million or more.

Because of the advanced fulfillment capabilities of large retailers, customers have high expectations of e-commerce sites (no matter how big or small the business is). Just one mistake or lost order can end a customer relationship. 

With EDI, the back and forth interactions required to move from the initial order to the final delivery are automated. When a client places an order, the necessary documentation travels electronically between computers for better tracking, transparency, and accuracy throughout the e-commerce journey.

Not only does it simplify the relationship between retailers, shipping companies, and other vendors – providing rapid, real-time information. But it also offers an accurate understanding of vendor inventory, addressing ERP concerns. 

Multi-enterprise ecosystems are rapidly expanding with the ‘new-normal’ of our demand-driven post-Covid19 world. In its simplest form, EDI OMS supports end-to-end visibility across mission-critical processes such as Procure-to-Pay, Load Tender-to-Voice, and Order-to-Cash.

As stated at the start, big names like Walmart have been using EDI for decades to speed up their external and internal processes. It has never been easy to manage supply and demand now that custom EDI integration has arrived to streamline OMS workflows. 

If you run a business that requires an OMS to maintain your order fulfillment processes, integrating a custom EDI solution is your best bet. Your competitors have already seized this opportunity with custom OMS solutions. Now it’s your turn.

Dave Wood is an industry expert within the supply chain and logistics technology landscape. He has worked at Chetu since 2013 and has since built a reputation as a thought-leader within the IT community. As the Director of Global Sales at Chetu, Dave plays a critical role in assisting companies with their supply chain, retail, marketing, and media related software projects. He offers commentary on changing tides within logistics and how inventory and warehouse management systems can propel all facets of retail and supply.