Jan. 3, 2007

Since the beginning of B2B and eCommerce online sales, one of the most important advantages of using EDI (electronic data interchange) is communicating vital information about specific business transactions automatically.

Using EDI technology, creating a PO (purchase order) for products, receiving ordered services or getting an invoice for specific goods and services is a rather simple step that happens many times in a single day between large and medium-size trading partners located all over the world.

However, knowing exactly what is included in an EDI order has become increasingly critical in today's busy and complex B2B segment.

In a simple B2B or B2G transaction where one purchase order requests products to be shipped to a single location, and that PO is shipped complete, there is relatively little additional information needed other than knowing when the order shipped and when it is expected to get there.

However, this dosen't mean that there can't be problems with even the simplest shipment. As order and distribution schemes grow in complexity, the margin for errors or delivery delays from manufacturers erodes rapidly.

More and more today, an emerging trend is the increased importance of the Advanced Ship Notification (ASN) more commonly referred to as the 856 document.

While the 856 document certainly isn't new, its overall use and its complexity has grown because of several significant factors. A "standard" ASN is like any "standard" EDI document in that each one has its own specific content and format based on the trading relationship it supports.

Nevertheless, the Advanced Ship Notification has literally been exploded in order to accommodate these more complex transactions. With simple shipments from a manufacturer or distributor to a central warehouse, an ASN could be as simple as a turn-around document, copied directly from the contents of the purchase order that originally initiated the shipment.

But small shipments, multiple destinations, and differential packaging requirements all mean that ASN's supporting their shipments are anything but standard! The wholesale food industry is one that appears to be finding increasing importance and benefit from the use of complex ASNs.

Corey Felten, EDI Coordinator with Dot Foods Inc. headquartered in Mt.Sterling, Illinois says, "it makes a whole lot of sense that the ASN helps our overall processes and we are going at implementing them across the board. We require both the 855 and the 856 document from all our B2B trading partners."

Overall, Dot Foods has been using the 856 document for many years, but has increased its importance lately. As Felten says, "we used to update our ordering system manually, but the process is now fully automated. We begin by using the 855 PO acknowledgement to confirm prices, location and quantity."

The automated updates help Dot's buyers get ahead of the curve by letting them know if they need to take proactive measures to supplement a short shipment.

The 856 provides the detailed shipping information Dot needs prior to receiving. "We want our suppliers to send the ASN as soon as the truck leaves the dock," says Felten. "It updates our system and gives our buyers a final alert if there are any problems."

Increasingly today, in the food industry, one big problem is the issue of variable weight.

"The combined weight of each shipment is collected so that we can update the final invoice and stay ahead of the game" said Felten.

She sees the use of the ASN as an advantage in staying competitive and improving the company's performance, particularly with respect to preventing out-of-stock conditions.

As Felten puts it, "even today, we still struggle to get suppliers to send their ASNs on time." She explains, "our buyers are happy to be able to react quickly to shortages or similar problems, and then initiate alternate buys, but they need to know about the shipment right away in order to react in time for their actions to make a overall difference."

While there is always a certain cost involved in any new system implementation, for trading hubs like Dot Foods, the initial expense of setting up the 856 has been made long ago. "We don't experience any cost to implement an ASN with a new vendor," says Felten. However, vendors looking to comply with their customers' mandate to send ASNs may have several hurdles to overcome, depending on the kind of orders they are shipping.

Most of the complexity in the ASN originates with the vendor, even if they are filling only a single PO.

As Dot's Felten points out, one of the most direct examples of problems with ASNs is the timely creation and transmission by the vendor to the customer. Even though the vendor's EDI transaction can be automated, collecting the information about the final shipment and converting that information into data, then into an EDI transaction may still be a manual task.

Finally, the last step in the EDI order process may require additional time-critical steps or the addition of equipment and systems capable of capturing information and relay it to the automated applications that will ultimately create the ASN to be sent to the customer.

Overall, those costs may be less than trivial but could be what separates a B2B vendor from a trafing partner in the long term.

Source: Line 56