Companies producing and importing hardlines and softlines for mass merchants and specialty stores are encountering the next evolution in EDI. While process automation for customer orders, shipment notices, and invoices is proven and stable the next step is maturing. The future is now for e-catalog, price sheet, and store locations: GS1 (formerly 1SYNC). Many now realize that manual and error prone uploads to service bureaus result in too many charge backs. It is time for a direct and automated ERP to GS1 link. Fortunately your existing system and hard earned EDI knowledge can be used.

E-Commerce has brought other evolutionary changes to the way business is conducted. Every traditional business process has been impacted. The business areas impacted include but are not limited to:

• Shipment Notices
• Data Synchronization (GS1, formerly 1SYNC)
• Data Communication (AS2 and AS3)
• Public Warehouse Connection
• Payments (EFT, ERA)
• Product Identifiers (RFID, UPC) changes.

Shipment Notices (ASN)

Target, Wal-Mart/Sam’s Club and other mass merchants require Shipment Notices (ASN, 856). The notice is important because mass merchants have automated their store-level check-in process.

The details of the shipment are sent immediately when the goods are shipped. Details include the contents of each pallet, the PRO number, trucker, and more. Failure to send at the time of shipment or inaccurate ASNs cause chargebacks.

Price, Item, and Data Synchronization

Industry experts estimate that as much as $40 billion of total sales are lost each year due to supply chain inefficiencies. These need to be systematically ironed out. The whole Back-Office participates in a concerted effort necessary to internally merge and synchronize the various systems (price/deal sheets, catalogs, spreadsheets, databases, etc.) used by the company to manage their product codes, nutritional labeling, and more. Data synchronization will result in savings about 0.5% of sales.

There is one industry standard/process that is being used to accomplish data synchronization: GS1. While the objective is to provide automatic data synchronization with customers, the majority of the effort will take place within a supplier’s organization. Suppliers can attempt this daunting task on their own, or they work with an expert such as DCS for planning and training.

Data Transmission

AS2 is a secure internet communication method that will replace the traditional roles that Value Added Networks (VANs) have played. The benefit is elimination of pricey VAN fees.

The EDI INT AS2 standard is required by mass merchants such as Wal-Mart, in healthcare (HIPPA) to ensure privacy of patient records, and in the Department of Defense. AS2 is an extremely secure process that uses Certificates and Triple DES Encryption as part of the transmission process. The transported data is received outside the firewall, security checked, moved to the EDI System, and then moved to the ERP system.

Public Warehouse Connections

The orders necessary to successfully use a public warehouse are now becoming automated. The flow of order, replenishment, and inventory information is faster and more accurate with automation. An example is the onerous television commercials for FedEx and UPS. To achieve operational savings most merchants now require their third party public warehouse to send/receive the 940 series of EDI documents. Connections to several public warehouses may be needed to support mass merchants in different regions. This complexity can now be overcome by linking the warehouse and EDI applications. For more information see Logistics from a manufacturer's perspective.

Product Identification

There are a several looming changes that will impact the markings and/or identification of products. The two most imposing changes are the requirements for use of Radio Frequency Identification (RFID) transmitter and the expansion from a 12 digit to a 13 Digit UPC Code.

RFID

RFID technology is emerging as a replacement for bar codes. An RFID is a small radio transmitter capable of transmitting a number exactly 96 digits long called a “character number”. As the product is being received or once it has been warehoused, an RFID Control Unit emits a radio wave that powers the RFID to then broadcast its “character number” back to the Control Unit. The Control Units (whether hand-held or stationary) are strategically placed and networked throughout the DC to receive the returned “character number”. When working properly, an entire DC can be inventoried nearly instantaneously and just as important, the exact location of each product can determined.

The biggest challenge in implanting RFID will the creation of a “perfect” pallet level Shipment Notice (ASN, 856), which contains the “character number” of the RFID attached to the pallet. Changes at the packing station must occur so that the precise content of every pallet can be captured and sent to the EDI system. Failure to do so can result in heavy penalties for being non-compliant. DCS specializes in assisting business create and maintain correct ASN hierarchies, which will ensure any business a smooth transition using this technology.

Wal-Mart, Target, and the Department of Defense are requiring all merchandize stocked in DC’s to have RFID. Other larger retailers will soon follow. Although Retailers do not provide an incentive for mandating RFID labeling, suppliers will benefit by being better organized and more responsive.

Dot Com Internet Vendors

Mass merchants such as Amazon.com transmit an order for each consumer since each has a different ship-to address. This means a torrent of orders, which can drastically increase the cost of an out-sourcer or VAN. Additionally the cost is multiplied by the number of related documents such as the Invoice. The remedy is direct transmission and automatic loading of orders. DCS has experience with your existing EDI, AS2, and ERP systems to help achieve this integration.

GTIN and GLN

To simplify worldwide commerce the Uniform Code Council Sunrise initiative requires you to move from the 12-digit UPC number to a 13-digit called Global Trade Identification Number (GTIN). The additional digits are needed as the current numbers are being exhausted.

Second, the Global Location Number (GLN) provides needed sanity to the problem of one ship-to address having several variations of the address.

Other Improvements Occurring

• Trucking Shipment Statuses (214) and Bills of Lading/Trailer Manifests (211/212)
• Store addresses and contacts (816)
• Lot numbers and expiration dates
• Chargebacks (844 or 867)
• Vendor managed inventory (consignment, 852)
• Capping head count through process automation

Another effective use of EDI is to automate Accounts Payables.

Conclusion

Your existing ERP and EDI systems must be adapted over time to meet these evolving requirements. The process is straight-forward but not trivial. It should be broken into small, manageable tasks; from which valuable experience is learned. It is also wise to have expertise to avoid costly detours. The next step is to email DCS to set your Free Assessment, or read more information in the pages below.

• See emerging information on Transportation from a manufacturer's perspective.
• See emerging information on Logistics from a manufacturer's perspective.
• Be ready when RFID mandates impact EDI
• Match Freight Charges Actually Paid to Customer Invoices to Ensure Surcharges are not Missed.
• Electronic Purchasing
• Request for Routing Instructions and Response Provides Better Customer Service
• How does EDI affect Third Party Fulfillment?