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Electronic Data Interchange (EDI) in Warehousing and Logistics Processing

   

Logistics Series

   
 

 

INTRODUCTION

This section will explain the process of the public or private warehousing cycle. There are two major functions in the Warehousing Process:

1.       Receiving merchandise from the manufacturer to the warehouse.

2.       Transferring merchandise from the warehouse to the retailer.

The process is very simple; the public warehouse works as a "middle man" in the logistics process. The manufacturer produces product and ships the product to the public warehouse. The public warehouse stores the product until the manufacturer requests that they ship the product to another company (usually to a grocery retailer).

Increasingly, public warehouses are changing their market niche from being just warehouses of product, to being repositories of product and information on the movement of product. In this new role of the "information warehouse," the warehouses provide manufacturers with important information on product movement.

The following discussion is geared toward the traditional warehousing functions. This document will conclude with the ‘future trends’ in warehousing as public warehouses move to the "information warehouse" model.

 

Receiving Merchandise from the Manufacturer at the Warehouse

A public warehouse receives product from a manufacturer and holds the product until the manufacturer specifies to ship the goods. The first step in this process is to maintain product in the warehouse. To do this, the manufacturer will send shipment notification to the warehouse to specify that an order is to arrive. In EDI, this stock transfer is either an EDI 943 (Warehouse Stock Transfer) or Advanced Shipment Notification (EDI 856) document. Once the product arrives at the warehouse, the warehouse will confirm the notification of product arrival to the manufacturer sending back an EDI 944 (Warehouse Stock Receipt) document. The information sent back and forth contains the following information:

  • Manufacturer Information

  • Shipment Identification and Dates

  • Carrier Identification

  • Item Identification (UPC, Vendor Number, Retailer SKU)

  • Shipment quantity

The "automation" of this process is extremely important to warehouses, as an automated process for the receipt and notification of goods is an essential method for reducing costs. Prior to automation, paper based systems were expensive to maintain. In addition, delays in information greatly reduced processing efficiency. For example, if an order is received but the warehouse inventory systems are not updated quickly, the product can not be sold.

 

Transferring Merchandise from the Warehouse to the Retailer

The second function that a public warehouse must facilitate, is to receive requests from the manufacturer, to ship product to a retailer and to confirm the shipment of product to the manufacturer. This is accomplished in EDI by the manufacturer sending the warehouse an EDI 940 (Warehouse Shipping Order) and the warehouse confirming the shipment of the order by an EDI 945 (Warehouse Shipping Order Confirmation). In this cycle, the following information is passed:

  • Manufacturer and Retailer Information

  • Shipment Identification and instructions

  • Financial Accounting information

  • Carrier Identification

  • Item Identification (UPC, Vendor Number, Retailer SKU)

  • Shipment quantity

As with the stock transfer from the manufacturer to the warehouse, the automation of the shipment process has significantly reduced costs and improved the flow and speed of information.

 

Future Trends

As the public warehouse business becomes more competitive, many warehouses are trying to expand their traditional "product processing" business into the "information processing" business. The warehouses are looking at the following trends:

Sales Order processing:

Presently, inventory is being managed by the retailer or by the manufacturer. The newest trend is to have the warehouse managed inventory at a retailer site. The warehouse already has accurate information on product sales transfers to the retailer. If the retailer can send back accurate sales information (normally using an EDI 852 (Product Sales Activity Report) document, then the warehouse would have the ability to manage the inventory. See Appendix A for a description of the Sales Order process and Vendor Managed Inventory).

Logistics processing:

Warehouses are providing many functions to manufacturers including pricing, packaging, shipping merchandise in specific formats and advanced notification of orders to meet retailers' needs. For further details, please review Appendix B Logistics Process.

Transportation Management:

As warehouses are becoming more involved in supply chain management, the management of transportation is being looked upon as a natural extension to their business. For further details, please refer to Appendix C - Transportation Process.

Promotional Announcement process:

As warehouses are much closer to product than the manufacturer, they have the ability to determine if product is becoming dated product (i.e., the expiry date on a carton of milk is close to being reached). In this scenario, warehouses have traditionally sent Inventory reports to the manufacturer notifying them that the product is reaching its "best before" date. The manufacturers are looking to move the management and selling of this product to the warehouses.

 

Continue to: Appendix A - Order Process...

 

For more information about SoftCare, TradeLink EDI Management System,
and the SoftCare Solutions Group please contact us at:

Web: www.softcare.com

Tel : 1-888-SoftCare   (604) 983-8083

email: info@softcare.com

 

Click here to Download  PDF Version

 
 

 

EDI for the Logistics

 

Customer Case Studies

    Tennessee Commercial Warehouse

    Bartle & Gibson

 

SoftCare EC Solutions for Logistics

    Narrated presentation

    Introduction to EDI

 

 

 
 
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