Author: Chad Rubin Sep 06, 2017 4 Min READ

Integrating EDI for Multichannel Inventory Management

4 Min READ
Integrating EDI for Multichannel Inventory Management


EDI or Electronic Data Interchange is a communication method, like a language, that allows you to exchange documents between servers and locations in real time. Using an EDI client like Crossfire EDI, you can automate processes such as invoicing, order supply form submission, stocks, sales, ledgers, and more.

Because the EDI solution will automatically pick the documents up from email or your FTP server, and send them where they need to go, you can automate manual document processes to reduce human error, improve communication, and speed up supply chain and accounts payable. This will, in turn, streamline your supply chain and inventory management process, while reducing the costs of paper management. 

In fact, most big box retailers such as Walmart, Shopify, Target, Nordstrom, Best Buy, and many others already use EDI for their internal and external document processes.

While EDI is taking over in large retail chains, it can greatly benefit multi-channel e-commerce retailers as well. For example, you can use EDI to automate purchase orders, streamline communication with manufacturers and trading partners, and create a common business language you can use to quickly integrate any new partner.

Why use EDI for multichannel inventory management

Adopting EDI can save you money, improve processes, and help you to streamline inventory management across multiple channels. However, it will likely require some setup time, a learning curve, and new business processes (for example, you will likely receive invoices before you receive shipments using EDI). For this reason, you should consider why you are integrating it and how it benefits your e-commerce store.

Reduce human error

EDI uses automation to pick, create, and send business documents automatically. This means that if the document is available, the EDI solution will send it automatically. EDI also allows you to send documents to FTP and email, and the solution can pick and send them in real time. This reduces human error for forms and supply lists, ensures that documents are sent in a timely manner, and reduces error in repetitive tasks like submitting order form requests and creating purchase forms for customers. For example, EDI prevents you from ordering the wrong item by accidentally typing the wrong SKU or UPC.

Automate Data Entry

Data entry for order volumes, purchase records, and other repetitive tasks is time-consuming and expensive. EDI allows you to automate a great deal of this so that you save time and cut costs. For example, if your EDI solution works with Extensiv Order Manager, you can set reorder points in our software, and then automatically generate an order form and send it to your supplier or manufacturer with EDI when stock on that item drops below your specified level.

Increase data

Handling your documents electronically enables you to collect data at every step of every process. This gives you more control over business processes, the ability to track where shipments and purchases are, and the ability to see updates in real time. If configured correctly, you can achieve end-to-end supply chain transparency, better warehousing and logistic analytics, and transparent data through your entire inventory management process. 

Rapid communication

EDI enables real-time communication, which means that you can submit a purchase order and your supplier will receive it instantly. This can greatly speed up every part of your supply chain.

EDI performs better

Whether you're currently using spreadsheets to track product movement or have another solution, EDI can improve your performance. However, actual performance will typically depend at least partially on how you set EDI up, and your focus on transparency and agility rather than just automation and cost savings. EDI can ensure prompt processing of business documents, shorten order processing, improve transparency at every level of the supply chain and fulfilment, which simple excel management cannot do.

How to use EDI to improve e-commerce

EDI enables you to take advantage of specific services and technologies to improve your e-commerce operation. While there are dozens of options and possibilities, the following include a few ways you can use EDI to improve your business.

EDI with barcodes for scan & pack

Automatic and real-time data processing allows you to create automatic documents and updates based on specific actions. This enables you to improve warehousing and logistics by integrating barcodes to automatically track inbound shipments as well as outbound products. For example, you can create a "scan and pack" system, where your EDI will automatically create shipping notifications and change the status of an order when it is scanned out of the warehouse. This can be upgraded to include notifications each time the product is scanned into a new location. EDI also allows you to automatically update the warehouse inventory when you scan products in or out, so that you know exactly what is in the warehouse at any given time.

Integrating 3PL

Most major third party logistics companies will use EDI because it enables faster communication, and allows the kind of communication speed to allow for next day shipping. An EDI solution allows you to transfer part of your inventory to a third-party logistics solution, so that you can cut warehousing costs, improve shipping speeds, and possibly reduce the total cost of inventory and warehousing as well.

Big Box retailers

Bix box retailers like Walmart and Nordstrom are increasingly adding and integrating their own third party marketplaces. These channels give you exposure to millions of customers who trust the brand of the platform they are on, but many require that you use EDI. Walmart is among the most prominent of these as the second largest e-commerce retailer in the United States. The Walmart Marketplace requires you to use EDI to meet their product confirmation and shipping speed demands.

Improving customer service

EDI allows you to create more transparency, more visibility in your supply chain, and faster communication across all your channels and branches. This allows you to improve shipping time, prevent stock outs, and offer better updates to consumers. And, because all your data is created and stored electronically, you can more easily search orders, shipping times and dates, and arrival times to help customers with their order.

Big box retailers have been using EDI for decades to speed up internal and external processes. EDI offers numerous advantages to multichannel e-commerce, because you can more easily track all your inventory and supply across all your channels, in real time.

To that effect, Extensiv offers EDI integration through Integration Manager.

Written By:
Chad Rubin

Chad Rubin is the co-founder and chief executive officer of Skubana, a multichannel e-commerce software the enables brands to unlock growth by unifying their back-office operations.

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