Nicole Wilson
August 27, 2023
5 min read
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The retail industry was quick to adopt EDI over 30 years ago without hesitation. Businesses that traditionally had to deal with the most amount of paper have been able to replace nearly all of their paper-based processes by sending electronic documents via EDI.Despite the known benefits of EDI, many retail companies still rely on inefficient processes from the past. Unfortunately, there are a lot of retail businesses who are unaware that saving paper is only the start of how EDI enhances the retail sector.Why EDI is an Ideal Solution for Retail BusinessesSavvy managers view EDI as a vital component of their overall strategy and a significant factor in maintaining their competitive advantage. By replacing paper-based processes for orders and invoices, retail companies are more efficient and can deliver better value to their customers.In the 1980s, retail giants such as Proctor & Gamble and Walmart paved the way for EDI with their vendor managed inventory (VMI) systems. These innovative VMI systems revolutionized the industry by slashing costs and improving customer service.VMI allows suppliers to automate inventory replenishment decisions for customers and gives them greater control of the process. The result is a major reduction of oversupply, which drains resources and leads to waste.In addition to improving inventory efficiency, VMI shortens the entire replenishment cycle. This means consumers are always able to get the products they want – even during promotional events, holiday seasons, and other times where demand is exceptionally high. Ultimately, these improvements strengthen the retailer-consumer relationship for brands using VMI.VMI is only one of many applications of EDI in the retail industry, but it is certainly one of the most important. Other significant benefits of EDI include:

  • Streamlining procedures for direct store delivery
  • Lowering delivery costs
  • Decreasing labor costs
  • Moving the industry towards global data synchronization (GDS)

According to the research on vendor companies from Forrester's, approximately 41% of organizations use an EDI message format, resulting in over 20 billion messages sent electronically each year.How EDI Improves the Retail Industry Supply ChainThe supply chain of the retail industry has a distinct structure that's driven by product flow. Due to the explosive nature of retail sales, it's crucial for retailers to have products available at all times. However, demand levels fluctuate and managing the supply chain gets extremely complicated – especially when you consider the vast amount of perishable goods that travel through the supply chain.Unlike other industries that can afford occasional order delays or mishaps, retailers require the supply chain to flow efficiently to conduct business as usual. Without products on shelves and in their inventory, retailers can't serve their customers and risk sending them to the competition.As mentioned earlier in this post, the retail industry was among the first to start automating orders and invoices. However, delivery frequencies and stock-keeping unit (SKU) counts from DSD suppliers have increased dramatically over the last few decades. EDI adoption has steadily increased because of its abilities to reduce check-in times, keep products stocked consistently, and reduce human errors.A primary driver of the retail industry's success with EDI is the use of an advance ship notice (ASN). Based on the findings from Grocery Manufacturers of America, electronic ASNs shrink receiving times by upwards of 60%.For example, if a retailer with 250 stores uses ASN to automate only a quarter of their deliveries they can save 65,000 hours each year! In addition to saving resources, the ASN makes sure the status is updated at every step in the supply chain – allowing goods to be checked by the pallet, instead of by each case.The caveat is that GDS needs to be effective across the supply chain for this process to work smoothly. This requires suppliers to maintain a master file that allows the exchange of itemized information, authorization, cost, and promotional details. GDS helps retailers immediately spot discrepancies in their orders and deliveries allowing rapid resolution.Implementing EDI is a pain-free process that doesn't take long at all. Whether you're a small retail supplier, or you're an enterprise that's unhappy with your current system – BOLD VAN can help you streamline your retail supply chain!BOLD VAN offers a variety of EDI solutions. From cloud-based to full EDI system implementation, we've got the right solution for you. Speak to an EDI Solutions Specialist today 844-265-3777.

Nicole Wilson
Content Manager

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