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EDI a vital tool for the retail sector

EDI a vital tool for the retail sector
12/07/2019

The mass distribution of EDI (computerized data exchange) has been one of the major advances of the retail sector, who are pioneers in terms of EDI. For more than 30 years, paper documents have been replaced in this industry by electronic exchanges to control costs and streamline the supply chain.

Discover in this article how the retail industry is using computerized data exchange and what its challenges are for tomorrow.

The peculiarities of the retail sector

The constraints of the retail sector

Large and specialty supermarkets have a unique supply-chain structure where inventory management and rapid sales are both important requirements. Similarly, the management of a multitude of references, the volume of transactions, in-store availability, the management of uncertain demand, and the obligation to trace food and perishable goods, are constraints requiring efficiency and flexibility in the business process and large EDI distribution.

In retail, the slightest delay or snag in the supply chain directly affects the level of service to the end customer.

A pioneering sector in EDI

The retail sector was one of the first to automate document exchange, such as orders and customer invoices – for example, through purchasing centers. These practices have encouraged the emergence of EDI large-scale distribution.

Subsequently, the automation of the receipt of electronic shipping notices was the industry’s solution to relieve congestion on warehouse receiving docks as a result of the increased frequency of deliveries.

The implementation of large-scale EDI workflows has saved time and improved inventory status. As a result, the company’s responsiveness to the unexpected has greatly improved.

For trade to go smoothly, one of the most important issues in this industry is Global Data Synchronization (GDS).

Each supplier provides a reference file for its goods, relating to product information on products, classifications, authorizations, prices, and promotions.

EDI scenarios exploited in the retail sector

A classic EDI scenario

The classic EDI scenario involves the sending of purchase orders (ORDERS EDIFACT) and the receipt of corresponding delivery vouchers (DESADV EDIFACT) and invoices (INVOIC EDIFACT), between the supermarket and its suppliers.

In Europe, the EDIFACT standard is most commonly used in large-scale industries. GS1is responsible for managing the overall implementation of bar codes in standardized messages.

In the case of cross-docking, the supplier must deliver products to a single warehouse grouped in separate batches which are and destined for different end points. Allotted orders and shipping notices are then utilized.

NOTE: Allotted orders are also sent electronically in the EDI ORDERS format (and DESADV messages for corresponding shipping notices).

DESADV messages are key for food traceability. It makes it possible to reconcile each pallet with batch numbers and use-by dates to get them where they need to go in a timely fashion.

NOTE: With regard to electronic billing, which is widespread in this sector, paperless tax is possible thanks to a suitable computer system that meets the needs of processing and archiving large volumes of documents, at a lower cost.

A focus on the shared management of EDI retail supplies

SSM (Shared Supply Management) is a method of organization in which logistics providers are jointly involved in supply management.

SSM enables a collaborative approach to supply-chain management with reduced inventory levels, supply times, and the total cost of the supply chain.

Two types of SSM are:

  • VMI (Vendor Managed Inventory): the manufacturer is solely responsible for supply-chain replenishment based on the sales data provided to it. This is the main mode of supply, in particular, in the retail sector;
  • CMI (Co-Managed Inventory): the supplier proposes the replenishment of supplies to the distributor according to previously established rules, and the distributor’s approval is required before any final delivery.

NOTE: EDI messages used in SSM are stock inventories (INVRPT) and sales data (SLSRPT). Based on this information, the supplier offers a delivery via an ORDER proposal and receives an ORDER confirmation in return.

What is the future of EDI in retail?

Changing consumer habits

The decline of superstores, the development of e-commerce, the explosion of convenience stores, home delivery, health crises, food waste, and transparency demand ... are signs that the retail industry is constantly forced to reinvent itself, especially on the Web/Internet.

To meet these new challenges, it is important that businesses have access to comprehensive, reliable, and up-to-date product information when it is needed.

According to the EDI retail solution, this means enriching the information gathered from the sales of consumer products and making them more qualitative.

Establishing a reliable, efficient, and responsive supply chain

Throughout all the future changes that await them, retail companies will need to be able to rely on a reliable and flexible supply chain. This naturally leads to the establishment of communication protocols and closer partnerships between suppliers and distributors.

Automatically recovering suppliers’ inventory statements and communicating with them via Internet and Web solutions are avenues for future developments.

EDI is mainly used by industry players, and is approaching its maximum development level. Faced with the increased complexity of supply chains and the need for real-time data transmission, it may be time to take a new step and turn to a promising field: block chain.

The goal of retail players and their suppliers is to provide the right product to their end customers: to the right place, at the right time, and at the right price. This would not be possible without computerized and efficient B2B exchange – which are also key to meeting the challenges of the future.

An expert on EDI in the automotive market, Tenor is also a major player in EDI in retail. If you are interested in the topic, check out this excellent article on EDIFACT. Please contact our teams about your project.