Your 3PL has EDI, and then what?

EDI (electronic data interchange) remains a top technology offered by 3PLs (third-party logistics) providers as a service to their customers. For shippers who are retail or grocery vendors, EDI and barcode labeling are the two critical supply chain technologies that are not negotiable in terms of capability and reliability.   

Whether you are on the lookout for a 3PL fulfillment partner, or perhaps your company already has one or more 3PL partners, EDI ability should be at the top of your requirements list. You did your due diligence (or you think you did) when you asked about the EDI capability of the 3PL when you were interviewing them prior to signing the contract. Are you satisfied with the EDI service your 3PL is providing? If not, perhaps you didn’t go far enough with your initial inquiry. Not all 3PLs have the same EDI capabilities.

Is their EDI an embedded part of their warehouse and fulfillment software or integrated to it?  Does your 3PL outsource its EDI, or does it develop EDI software in-house? How dedicated to your 3PL is this outsourced partner, and are they focused on just EDI or are they also maintaining other software such as the warehouse management system? Remember: in supply chain, it’s also about knowing your supplier’s supplier. If your 3PL outsources its EDI, find out from who and research the company. (How far backlogged is the in-house EDI team if there is one?  Where are they located?  And what’s the backlog of the outsourced team too?) There’s nothing wrong with outsourcing software—it’s all the fashion these days—and there’s also everything right with making sure you fully know the expectations and risks before you sign the contract.

Depending upon how you and your 3PL intend on exchanging transactions, you may need your 3PL to send the EDI856 ASN (Advance Ship Notice) to your customers on your behalf. The industry requirement for retail and grocery is that the EDI856 ASN should be sent within one hour of the shipment leaving the facility. The question here is: can the 3PL send the EDI856 and make it look like it came from your company? This “spoofing” (normally a term associated with fraud, I’m just putting it to other use here) of the communication identifiers by a 3PL to make the EDI transaction look like it was sent by its customer and not the 3PL is an EDI capability not all 3PLs have. If this is something that you need, make sure you inquire about it upfront. If your 3PL cannot do this, you’ll need an EDI provider to get involved unless you have your own EDI software and expertise in-house.

Selecting the right 3PL is a significant task. One must examine the 3PL’s locations, operations, and technologies. This requires more than just ticking boxes on a checklist: there has to be deeper considerations for each and every requirement. Sometimes, a technical capability will be associated with an operational functionality and the two must be considered together. EDI isn’t just one of those requirements that can be ticked off as a “Yes” or “No”.

Ultimately, your choice of 3PLs will directly impact your ability to execute.  Your customers don’t want to deal with a disruptive vendor, and they don’t care about your 3PL problems.  To stay competitive, ensure that you’ve partnered with a 3PL you know and can hopefully grow with.        

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