Third Party Fulfillment

Introduction

Shortening fulfillment windows frequently means automation is needed. Manual data entry and error correction wastes valuable time. The resulting costs are large due to disruptions in packing and conflicts inherent in expediting. Now medium sized manufacturer's systems have improved EDI systems, which they intend to use to provide leverage against vendors, which means more EDI requirements for 3rd Party Fulfillment (3PF).

Overview

Routine, high volume communications should be automated. Customer service then has more time to focus upon other expectations. Greater accuracy results when the data received from customers is entered without manual data entry.
The data flow mirrors the EDI requirements of the large Mass Merchants such as Target. Unfortunately, the processes used by various Mass Merchants are not identical. Typically, Purchase Orders are issued with cross docking requirements. This level of complexity means the PO is copied to the fulfillment house directly from the Mass Merchant. The time delay due to the customer reprocessing the Mass Merchant's order must be eliminated.
At the time of shipment, EDI formatted data must be sent directly to the Mass Merchant and the carrier, and copied to the Customer. All of this must occur without errors.

To lower costs and inventory levels, Mass Merchants such as Target send all orders electronically. At fulfillment, electronic Ship Notices and Invoices are required. There are no exceptions, and the process must be in place for the initial order.

Data Flow
• The Mass Merchant sends a PO (850) to the Vendor and a carbon copy of it to the 3PF provider. The data is entered directly to both the Vendor and 3PF systems.
• Upon shipment, the 3PF sends a Shipment Notice (856) to the Mass Merchant and a carbon copy to the Vendor to signal delivery.
• The Vendor then sends the Invoice (810) out to the Mass Merchant for payment, and the 3PF sends an Invoice to the Vendor.

Automation may not include all pieces for every Customer, Mass Merchant, and Carrier due to their system constraints. For example, some Mass Merchants may require Shipment Notices (ASN's) to contain the details of each assortment. Non-routine tasks are likely to remain manual due to complexity.

Conclusion

Automation should be considered as a competitive advantage as it provides better service at a reduced cost. As their systems improve, Customers, Mass Merchants, and Carriers will seek 3PF companies most willing to accommodate their systems and who provide the quickest most reliable service. Adding or improving EDI can therefore help you capture a larger market share.