EDI for Third Party Logistics (3PL) Transactions Guide
Logistics companies certainly don’t have it easy. From finding ways to support just about every bit of a customer’s shipping operations, to managing all aspects of transporting goods from manufacturers and distributors to the end customer, they do it all. Of course, each company has its own method to its madness in order to thrive in 2024.
One such way they do thrive is that many choose to outsource shipping and fulfillment operations to third-party logistics (3PL) companies. Businesses do so because EDI provides better visibility and allows companies to expand into more markets and deliver new products to more customers.
There is one technology constant across those successful logistics companies. A technology that can handle the myriad standards or protocols required in order to make it easy to do business with the members of their digital ecosystem, from trading partners to customers. Of course, we’re talking about EDI software.
What is 3PL EDI?
3PL EDI (Third-Party Logistics Electronic Data Interchange) is the exchange of electronic business documents between third-party logistics providers (3PLs) and their customers or retailers. This may include purchase orders, invoices, shipping notices, and other important documents that are used in the supply chain.
This reduces errors and improves data accuracy by eliminating the need for manual data entry. This can result in faster order processing times and fewer errors in the supply chain. This leads to cost savings and improved business performance.
How Does EDI Work for Third-Party Logistics Companies?
EDI is used by many companies in order to exchange business documents digitally through an efficient and standardized format. Instead of relying on postal mail, fax, or email, EDI connects directly to business systems, such as e-commerce solutions or enterprise resource planning (ERP) systems.
The most common documents that are digitally transmitted using EDI include common transactions like those featured in the EDI order processing series: purchase orders, invoices, and advanced shipping notices. Logistics companies that utilize EDI are able to cut down on costs, increase speed and agility, and remove the often error-prone and cumbersome manual processes.
Because so many companies require the members of their digital ecosystem to be EDI-compliant, it is integral for 3PL companies to have reliable automated order processing and inventory management capabilities. EDI systems provide that and more. Oftentimes supply chain companies will contract out EDI management to third-party EDI providers and instead focus on their direct business.
How 3PLs use EDI is that it connects them to their customers and from there, companies can streamline their order processing and increase the predictability and accuracy of their supply chain. EDI allows companies to become more scalable, affordable, and easier to do business with.
Overview of EDI Transactions for 3PLs
While there are countless EDI transactions, there are several that are most commonly used by 3PLs. Some of those recurring transactions include:
EDI 846 - Inventory Inquiry
An inventory inquiry, and is intended for the supplier to provide the purchaser the amount of goods that they have on hand.
EDI 856 - Advanced Shipping Notice
An advanced shipping notice, used in the exchange of transaction information between commercial trading partners.
EDI 940 - Warehouse Shipping Order
This transaction is a warehouse shipping order that is designed to inform remote warehouses that it is time to ship orders.
EDI 943 - Warehouse Stock Transfer Shipment Advice
A warehouse stock transfer shipping notice serves as an advanced shipping notice to a remote warehouse that a transfer shipment has been made from the manufacturer.
EDI 944 - Warehouse Stock Transfer Receipt Advice
A warehouse stock transfer receipt is an acknowledgment to a manufacturer that its transfer shipment has been received.
EDI 945 - Warehouse Shipping Advice
A warehouse shipping notice provides confirmation of a shipment. It is commonly used by a warehouse to notify a trading partner that a shipment was made.
EDI 946 - Delivery Information Message
A delivery information message, meaning that it can be used by a receiving location to inform that a transfer shipment has been received.
EDI 997 - Functional Acknowledgement
A functional acknowledgment notifies the sender that their document arrived and has been processed.
Why Cleo Integration Cloud for 3PLs?
Cleo Integration Cloud lets companies modernize their integration, onboard trading partners and customers quickly, and provide real-time business insights to deliver true value. EDI tools have been around for a while now, but it’s the logistics companies that are taking advantage of Cleo Integration Cloud’s centralized and modern platform that are finding new kinds of revenue and greater success.
Logistics companies must be able to connect with their 3PLs and know that their order process is fully automated. From there, EDI on a centralized integration platform will deliver every EDI transaction needed, from advanced shipping notices to purchase orders and acknowledgments. Logistics companies have it difficult enough to manage all of their customer's needs. But with a trusted partner by their side who can deliver modernized EDI, logistics companies can far outgrow their competition.
According to Gartner, integration platforms like Cleo Integration Cloud...
"..help 3PL organizations overcome issues by providing legacy EDI, modern cloud-based centralized EDI and API-based integration support, leading to more automated business processes with supply chain partners."