EDI is mature and highly effective for food producers. Grocers such as Kroger, food service companies such as Sysco, ingredient users such as General Mills, and the Department of Defense - over 10,000 companies - are EDI active. The standards X12 and GS1 (formerly 1SYNC) standards published by the Uniform Code Council are comprehensive and time tested. The twin components of EDI (format and transmission) have evolved over the years to increase efficiency. Unfortunately, this means more challenges for the medium sized companies and their brokers.
For companies selling to mass merchants and grocers, E-Commerce has brought evolutionary changes such as Shipment Notices (ASN, 856) especially adapted to RFID. Every traditional business process has been impacted. The business areas impacted include price/deal sheet, item, and data synchronization (GS1 and standardized XML tags), secure Internet data transmission (EDI INT AS2), public warehouse connections (940 series), payments (EFT: CTX+ and 820), and product identifiers (RFID and GTIN) changes.
Implementation of these technologies is no longer just an issue of competitiveness, but is now an issue of survival. The key then is to implement thoroughly, quickly, and economically.
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 broadcasts 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.
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.
Lot tracing and Country of Origin Labelling (COOL)
These onerous regulations must be complied with, thoroughly, reliably, and economically. DCS has found that many ERP systems can be re-configured and existing EDI documents can be merely tweaked so that these requirements are met.
Other Improvements Occurring
- Trucking Shipment Statuses (214) and Bills of Lading/Trailer Manifests (211/212)
- Report of Test Results (for ingredient providers)
- Store addresses and contacts (816)
- Broker data exchange (pricing and deals)
- 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 business is unique, yet aligning your time tested methods to key customers’ requirements is needed. This means 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. Our DCS Process™ ensure improvements will be thorough and quick. The next step is to email DCS to set your Free Assessment.
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