How to Simplify Your Third-Party Logistics (3PL) Integrations Using EDI Software

Third-party logistics (3PL) providers offer additional support for specific stages of shipping operations, serving as links in outsourced distribution and fulfillment stages of the supply chain. While 3PL services have always been a significant player in supply chain operations, their involvement continually increases as companies’ sourcing, manufacturing, and customer bases become steadily more multinational.

In order to be effective, brands and 3PL providers must establish dynamic connections for shared visibility of real-time data flows. For this reason, your 3PL must be integrated with the EDI system.

When executed correctly, 3PL EDI integration optimizes efficiency through enhanced visibility and the automation of retail order fulfillment. Furthermore, you can connect with an expanded range of companies and trading partners, enabling you to ultimately deliver more products to more customers.

However, for most manufacturers, 3PL integrations are a tangled web of EDI connections. Yet it doesn’t have to be.

If your company works with several 3PLs, it weighs heavily on your shoulders to build and maintain multiple custom integration environments. With legacy EDI systems you’re creating point-to-point integrations for all your transaction types, for each 3PL. In some cases, there will be a need for integrating with fourth- and fifth-party logistics systems, furthering the convolution.

The trick to simplifying this muddled system is to set up your transactions as efficiently as possible using a centralized EDI core rather than point-to-point integration.

Click here to skip ahead to learn solutions for streamlining 3PL integration with EDI.

Working with a 3PL normally involves seven core EDI transactions types. Here’s a step-by-step breakdown, to help you understand the process flow of these transactions.

856 – Ship Notice Manifest. The 856 Ship Notice Manifest, triggered by the supplier, notifies the customer that the shipment is on its way and allows both parties to track its progress in their TMS systems. It also serves as a pre-receipt to assist the customer in their receiving operations.

943 – Warehouse Stock Transfer Shipment Advice. The 943 Warehouse Stock Transfer Shipment Advice is the EDI document manufacturers and distributors use to tell third-party or remote warehouses that products are being sent to their location. It includes detailed information about the specific items.

944 – Warehouse Stock Transfer Receipt Advice. The 944 Warehouse Stock Transfer Receipt Advice is used by a receiving location to advise the depositor or its agent that a transfer shipment has been received. It includes detailed information about the product that has been received in the 3PL warehouse system.

940 – Warehouse Shipping Order. The 940 Warehouse Shipping Order is the EDI transaction sent by the supplier to third-party logistics providers (3PLs) to formally request the shipment of goods from a specified warehouse to a buyer’s location.

945 – Warehouse Shipping Advice. The 945 Warehouse Shipping Advice is sent from a 3PL provider or remote warehouse to notify them that a shipment has taken place.

850 – Purchase Order. The 850 Purchase Order is an electronic purchase order sent from a buyer to a seller, serving as a formal order for goods or services.

810 – Invoice. The 810 Invoice is the electronic version of a paper-based invoice, sent in response to an 850 Purchase Order, serving as a request for payment once goods have shipped or services have been provided.

For more information, read our article about Transportation EDI Transactions or What EDI Transactions Do Your Trading Partners Require.

How do these EDI transaction types usually interact with one another?

Suppose you’re a manufacturer taking orders from customers online. Your website will pass orders into your ERP, or system of record, which will then communicate via EDI with your 3PL provider’s system so that the order can be sent to the customer.

The transaction begins when a customer sends you an 850 (purchase order). You will then send a 940 (warehouse shipping order) to your 3PL asking for the order to be fulfilled.

Once your 3PL fulfills the order, they send an 856 (ship notice manifest) on your behalf to the customer and then communicate back to you via a 945 (warehouse shipping advice) that the shipment has left the warehouse. The 945 can include information like the shipment identification, item, quantity, where it’s shipping, the transportation method and shipping service level.

Once you receive the 945, you can invoice your customer with an 810 (invoice), because you have confirmation that the product has been shipped.

943 and 944 EDI Stock Transfer Transactions

This covers most of our diagram (at the top of this section), but how do the 943 (warehouse stock transfer shipment advice) and 944 (warehouse stock transfer receipt advice) transactions fit into a 3PL EDI integration?

To meet customer demands, you need to ensure that your 3PL is stocked with your product. You must order directly from your supplier and instruct them to send the product to your 3PL, by sending them an 850. In the meantime, you send a 943 to your 3PL to let them know goods are coming into their warehouse and when the product will be delivered. Once your supplier prepares the shipment, they send the 3PL an 856 to confirm the shipment’s contents. The supplier can then send you an 810 (invoice).

Once your 3PL receives the product from your supplier, it will send you a 944 to notify you that they received the product. The 944 serves as a receipt of your order and includes any adjustments that need to be made to the original 943 due to potentially damaged or missing products.

Common problems that companies face usually come from the complexity of the 3PL logistics process itself, combined with outdated EDI integration challenges with both new and existing trading partners. Heavy reliance upon antiquated forms of communication rather than automation slows essential information exchanges, leading to detrimental frustration between companies.

Additionally, failure to create a foundational EDI system that can scale as your business grows will yield unnecessarily mounting work for various teams.

Luckily, There are ways to minimize menial tasks and potential mistakes that come from manually managing complicated 3PL integration systems. You can automate or condense most actions below with an API for EDI like Orderful:

• Consolidate EDI integrations. Leveraging a provided canonical API, you can minimize the number of individual integrations by 90% compared to point-to-point practices.
• Leverage platform with flourishing networks of pre-connected trading partners. For example, Orderful’s ecosystem of pre-connected companies evolves with each new user. This codifies the partners and arms you with specific guidelines, letting you skip ahead to EDI data validation. Our network includes a full spectrum of businesses, from transportation to warehouses to retailers.
• Rapid onboarding for new connections, 3PL and otherwise. Members of your supply chain not currently part of the Orderful network can swiftly join to near-eliminate delays. You and your 3PL provider can choose from multiple pre-configured code settings, such as 12XG or JSON. What’s more, the Orderful team will personally assist with all onboarding, free of charge.

Most companies working with legacy EDI systems have built custom integration environments maintained by an in-house team of EDI experts or outsourced to a managed service provider. Regardless, this web of integrations is complicated and expensive to maintain. On top of that, it’s challenging to scale as you continue to grow your business.

By integrating with Orderful, you do not have to build point-to-point integrations. Orderful is a central point of integration for your ERP, or system of record, and your 3PL. Connect once to our platform and tap into an existing network of 3PLs and partners, consolidating all of your EDI vendors into one hub.

Speak with one of our EDI experts to learn more.