Slideshow: Critical EDI Evaluation Components

filed under Blogroll, EDI

A Closer Look

For consumer goods companies, business processes can be significantly impacted when having to adhere to specific EDI requirements.  While evaluating a new EDI system, you will want to analyze how it can accommodate you and your EDI customers.

This presentation will highlight common problems associated with managing EDI customers and review what to consider when identifying an EDI solution best- fit for your business model.

Scalability of Operations

When choosing an EDI system, be sure to consider whether your retail customers employ a ship-to-store or ship-to-distribution center program.

  • Shipping specific orders containing many line items to one DC may be manageable with a hosted EDI solution, but entering into a ship-to-store program can heavily tax your work flow.
  • To ensure accurate delivery, you will need to manually enter sales orders for each ship-to address and figure out a way to communicate this information to your warehouse staff.
 

Managing Markdowns and Discounts

How will you manage markdowns and discounts against inventory availability?

  • For pick and pack companies mixing SKUs throughout orders, this process can be problematic.
  • If you don’t have a good handle on inventory availability and you’re hand-entering EDI orders, you will have to manually configure and sum up markdowns and discounts based on what inventory you’ve shipped.
 

Remote Warehouse Capabilities

When using a public warehouse, it’s recommended you review the EDI solution capabilities of the warehouse carefully.

  • The optimal set-up is to choose a warehouse that can transact EDI with you for visibility, better pricing, and fewer manual processes.
  • Evaluating fee structures associated with ASN (advanced shipping notices) services is also important. Generating the ASN yourself may lower your remote warehouse costs, improve order accuracy, and increase the number of complete shipments processed.

 

Expertise with Customer Requirements

Who will “own” the knowledge of the business rules associated with each customer and what’s your backup plan?

  • Your EDI customer provides you with complete instructions, guidelines, and routing requirements for how they want orders to be processed.
  • If employees responsible for managing this information leave, or your organization brings on more customers than staff can support, your company runs the risk of losing thousands of dollars in penalty fees for non-compliance.
 

Tiered or Extended Pricing

How will you accommodate tiered and contract pricing with your EDI customers?

  • Ensuring that the customer’s designated price in the sales order matches the negotiated amount is imperative.
  • Many companies find contract pricing so difficult to manage they settle for transmitted prices from the customer. This can leave behind a significant amount of money on the table that could’ve otherwise been captured.
 

Focus on Fulfillment

Can your EDI solution help you streamline the fulfillment process?

  • Often times there is not enough of the requested product to ship. When this occurs a handwritten note is typically made to the pick ticket, and directed back to the department responsible for changing the quantities filled. Packing slips and additional labels may need to be reprinted. The shipment process is paralyzed until all these steps are completed.
  • Many companies encounter customers that want multiple orders consolidated into one shipment. If this shipment requires an ASN, a manual process can be grueling. The right orders must be grouped together, the right quantities must be captured and fulfilled, and the ASN must arrive before the shipment to avoid penalty fees.
 

Cross Dock Requirements

Are you prepared to handle cross dock orders?

  • Some customers provide you with one order that contains multiple items designated for multiple ship-to-addresses.
  • For pick and pack environments, it’s important to consider how fulfillment instructions will be communicated to the warehouse personnel processing these orders.
 

Deduction Management

How will you manage charge backs?

  • Penalties are commonly assessed for errors or non-compliance, as are other known deductions. These allowances and penalties are noted on an EDI remittance document detailing what was taken against your original invoice. You’ll need to capture these and create debit or credit memos associated with these payments in order to balance your books.
  • Analyzing your reductions is also a great way to analyze where issues are occurring and what departments to focus on improving.

 

Point-of-Sale Data

Will you be able to derive value from point-of-sale data?

  • Many retailers will send you periodic POS documents via EDI, letting you know what sold, and in what timeframe.
  • This data can be extremely valuable to running your business and anticipating your customer’s needs by bringing visibility to user trends in regions, stores, and products.