Connected Supply Chain Show

How to Transition from Bulk Fulfillment to Direct-to-Consumer Orders [+ EDI Essentials for Integrating a 3PL]

Posted by Peter Edlund on Wed, Aug 09, 2017

In today’s retail market, when a customer is unhappy with their experience, they simply click to another website and they’re gone. So it’s imperative to find ways to cater to modern customers who are accustomed to getting their packages delivered to their home with minimal time and hassles. 

However, many suppliers aren’t equipped to handle single customer fulfillment tasks. The vast majority have built their business around bulk shipments, not individual customer drop shipping. With more pressure to support drop shipping, suppliers may consider using a specialized 3PL (third party logistic provider) that will help them manage and scale the complex process of customer order fulfillment.

3PLs have the right technology, like pick-to-light order fulfillment systems, to manage your inventory and ship individual customer orders. The right 3PL – coupled with EDI – will also help you build stronger relationships with trading partners by providing a more consistent and reliable customer experience.

Integrating 3PLs isn’t always a cinch if you haven’t done it before; you need to plan, prepare and cultivate your partnership. 

Essential Steps to Streamline 3PL & EDI Integration

The critical piece for setting up a symbiotic relationship with your 3PL provider is a strong framework, both with technology and collaborative processes. Ultimately, this will allow you to track orders, allocate the appropriate inventory and then ship as soon as you receive an order. Before you get there, you need to take a few steps, including:

  • Adhere to retailer requirements: Automated trading partner collaboration is a crucial component of success. A robust order management platform, EDI tools, and online portals can help adhere to a retailer’s requirements for customer fulfillment. Incorporating standards compliance for order packing, branded packaging materials, usage of preferred parcel carriers and EDI transactions up-front helps avoid the pitfalls of disappointing the customer and your trading partner.
  • Create a strong alignment between demand forecasting and inventory: Set up systems so that you are always ready when business gets hot. Monitor demand from your retail partners so you can ramp up your 3PL inventory accordingly. For example, if you are a shoe seller, compare customer order information and retail sell-through information to forecast demand for seasonal models so they are ready to go when the orders roll in.
  • Streamline integration process with relevant EDI documents: Align your business processes between you, your 3PL and your retail partners. The round-trip of order fulfillment needs to be automated: you receive the order from the retailer, you notify your 3PL of the order, the 3PL notifies you when the order ships, you then notify the retailer of the shipment information and invoice them accordingly. It’s a lot of steps to manage so using automated EDI is key.

Essential EDI Documents for 3PLs

Plan to implement the three most common EDI documents 3PLs use to manage order fulfillment. You’ll also need to ensure inventory transparency for your trading partners by having your 3PL utilize the EDI 846 (Inventory Availability). The EDI 940 (warehouse shipping order) is what you’ll use to tell a the 3PL to fulfill a customer order. The EDI 945 (Warehouse Shipping advice) is how the 3PL confirms that a package was shipped to the right destination.

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DiCentral has helped retailers, suppliers and 3PLs for nearly two decades. We've worked with both buyers and suppliers from small, mid-size, and large retail organizations, and have gained extensive experience in developing solutions that simplify trading partner communication and streamline critical business processes. Our suite of supply chain products and services provide you with tools to manage drop shipping and other needs.

Topics: EDI, 3pl, third party logistics, dropship

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