Suppliers can offer a retailer a broad selection of products that can range from 10 to 300 or more different items. Considering that a large retailer (as well as a supplier) can have dozens or even hundreds of different trading partners. Exchanging such a volume of information by fax or e-mail, and manually entering an order, invoice, and other related information into the ERP system becomes completely inefficient.

The need to transfer and enter data manually has been eliminated by EDI technology. EDI saves staff time and greatly improves supply chain management.

NOTE: EDI is the exchange of electronically structured messages in accordance with agreed standards (X12, EDIFACT) between the information systems of trading partners. The message refers to the business documentation which was traditionally exchanged in paper form. Invoice, Purchase Order, Inventory Inquiry/Advice, and so on.

What is a Supplier in Business?

A supplier is a company (manufacturer, vendor, wholesaler, distributor) that provides goods and services to another organization. The supplier is part of the supply chain. Recently, more and more common suppliers are engaged in dropshipping, that is, they deliver goods directly to the buyer’s customers.

Benefits of EDI for Trading Partner

EDI integration has many benefits for both the supplier and the buyer and allows you to automate operations related to external data.

Through the use of EDI, companies can:

– ensure the security of commercial data transmission;

– guarantee fast and timely transfer of information;

– increase productivity through fast transmission and processing of information;

– minimize errors that occur during manual data entry, which often lead to additional costs;

– reduce operational costs;

– significantly increase the trade turnover between business partners, increase the profitability and competitiveness of the company in the market.

EDI Order Processing

EDI serves as a “link” between suppliers and buyers. In the retail industry, the retailer defines the format (X12/EDIFACT) and the list of required EDI documents and sets strict rules for exchanging EDI documents with all of its suppliers. Supplier companies that want to work with retailers are required to follow the established rules.

The scheme of EDI interaction on the example of the EDI order processing between a retailer (buyer) and a product supplier is shown in the figure below.

The buyer creates an order for the goods, which is converted into an electronic data interchange (EDI) format (i.e. X12, EDIFACT), encoded, and sent in encrypted format over an FTP, sFTP, AS2, API, or VPN to the supplier.

At the supplier side, this EDI transaction set is decoded and converted into the supplier application format (XML, CSV, TXT, JSON) and the incoming EDI message could be integrated into the ERP/CRM system of the supplier.

The simplest and most common business process looks like this:

– Buyer: prepare and send the order (EDI X12 850) to the supplier.

– Supplier: sends to the buyer a Purchase Order Acknowledgment (EDI X12 855) to confirm the supplier’s intention to fulfill the order.

– Supplier: Once the products are shipped, the supplier sends an Advanced Ship Notice (EDI X12 856) to the buyer.

– Supplier: send the buyer an invoice (EDI X12 810) to get paid.

The Most Used EDI Documents by Suppliers

Below is a list of the most used EDI documents between a supplier and a buyer.

Documents in X12 Standard (Common in North America)

Documents in the EDIFACT Standard Used in Europe

In addition to those listed above, trading partners can exchange other types of documents that depend on the industry in which the company operates and its business processes.

You can find the full list of EDI documents with their codes at the links below:

EDI 810 Invoice Example

ISA*00*          *00*          *12*5141231234     *12*5034564567     

*181122*1220*U*00501*000000001*0*T*> GS*IN*5141231234*504564567*20181122*122047*1*X*005010

ST*810*0001

BIG*20181122*I-0042537

N1*RI**92*10055500

N1*ST**92*00262

ITD*05*1*****100

DTM*011*20190120

IT1**2*EA*5.45**UP*888077648572

SDQ*EA*92*00682*1*70674*1

IT1**2*EA*5.45**UP*888077650123

SDQ*EA*92*00111*1*11356*1

IT1**3*EA*4.85**UP*888077648954

SDQ*EA*92*00682*1*11356*1*70674*1

IT1**3*EA*5.15**UP*888077649105

SDQ*EA*92*00011*2*00111*1

IT1**1*EA*5.9**UP*888077648867

SDQ*EA*92*00682*1

TDS*5770

CAD*A***FDEG

CTT*5

SE*20*0001

GE*1*1

IEA*1*000000001

Benefits of Using Fully Managed EDI Services for Suppliers

The use of EDI by businesses, in particular by suppliers has many benefits. However, it should be noted that there are many EDI service providers, and they all provide different services at different prices. Therefore, the benefits of using EDI may differ.

We, as  EDI service provider with more than 21 years of experience, offer suppliers to take advantage of our Fully Managed EDI Service, which can bring the following business benefits:

USEFUL: If you want to know how to change your EDI provider (or choose a new one), read this article.

We offer affordable EDI solutions for suppliers.

These proven EDI solutions improve the efficiency of our customers by making it easy to manage transactions, shipments and improve efficiency across the entire supply chain.

To get more out of EDI, we can integrate your EDI with any ERP, CRM, accounting application, shipping service, eCommerce solution, WMS, and more.

Contact us for an initial free consultation.