(Reprinted with permission from Redtail Solutions, one of PC Methods EDI partners)
By Jeff Franklin
The best retailers (Walmart, Sears, Costco, etc.) are expert at anticipating what customers will buy and ordering just enough inventory to fill demand. From there on, their revenues and profits depend greatly upon suppliers delivering accurate quantities at promised times.
Retailers rely on you as their vendors to let them know ahead of time what goods will be in each carton and when they will arrive at distribution centers or stores. This information is communicated through an EDI document called an Advance Ship Notice (ASN), also known as an EDI 856. The ASN allows them to plan operational efficiency in getting merchandise on display and available to consumers promptly. Inaccurate ASNs cause disruption that can lead to lost sales, extra handling costs and spoiled inventory. No wonder retailers put constant pressure on suppliers to increase ASN accuracy.
Despite the attention paid to the problem, ASNs are wrong an average of 7.1% of the time according to a recent Auburn University study. That means far too many vendors are causing pain to their customers, earning ill will instead of increasing sales and loyalty. Many suppliers receive penalties, called deduction or chargebacks, which can be significant profit drains. Ordinary human error is to blame for most ASN inaccuracy, often from mishandling data, not goods. Vendors who must enter and re-enter data using manual processes are most susceptible to these mistakes.
Manual data handling is inherently expensive, slow and error prone. Documents can get lost, transcription mistakes can happen and audit trails may disappear. Shipments can be delayed, or worse - undetected mistakes mean cartons get sent out with wrong quantities or incorrect packing. ASNs can misstate carton contents, arrive after the products are received or, both. Costly dispute resolution can be aggravated by missing information, delaying cash collection further.
ERP systems, pick-pack applications, warehouse management systems (WMS) and third-party logistics (3PL) systems together already contain in electronic form all the information needed for ASNs. The key to ASN accuracy is connecting them so that ASNs are generated automatically in a hands-free operation. Once released in ERP, orders can be transmitted to WMS or 3PL order fulfillment systems for picking. When the warehouse software indicates the order has shipped, order and item status can be updated in ERP and the ASN automatically generated and sent to the vendor's trading partner. Carton ID's and contents, SCAC codes and other shipping information are included in the ASN as required for trade compliance.
Suppliers who implement ASN automation achieve lower error rates and fill orders faster with lower labor costs. Accurate ASNs mean fewer returns, less waste and reduced chargebacks. Better customer service ensures faster collections and can increase sales. In addition, the reporting and visibility from integrated systems makes continual process improvement much more realistic.
Speeding the order-to-cash cycle while lowering costs is a sure formula for improving vendor profitability. Automating ASNs could be the critical component needed to make it happen.