The EDI meaning in shipping and logistics gets complicated when you have sensitive products and limited warehouse space. How do you ensure the warehouse is ready to receive a shipment—and ready to handle time-sensitive products appropriately?
An EDI 856 document solves this problem. This common EDI document helps trading partners prepare for time-sensitive shipments, thus preventing waste, refunds, chargebacks, and other headaches.
But it takes specialist skill to implement an EDI 856 and maintain it over time. Whether you’re working with an EDI service provider or running things in-house, here’s everything you need to know.
What is EDI 856?
An electronic advance shipment notice, otherwise referred to as an “ASN,” notifies a trading partner that a shipment is coming their way. In North America, the most common standard utilized to send an electronically structured ASN is the ANSI X12 856 document type. In some industries, it’s essential to get advance warning that a shipment is coming, and EDI 856 provides this critical communication. It’s a sophisticated form of “heads up” that helps the trading partner prepare to receive the shipment.
What does it take to send or receive an EDI 856?
1. People
EDI is incredibly complex. Technology generalists can’t provide the full support required to handle EDI 856’s and other documents. EDI is a career, not a skill.
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Every EDI solution needs experts assisting with support, troubleshooting, and ongoing maintenance. You can hire those people on staff, or you can outsource to an EDI service provider. (Hint: It’s far more economical to outsource!)
2. Process
EDI isn’t a “set it and forget it” technology. And it doesn’t exist in a vacuum.
Some mapped fields in EDI documents will change occasionally, while others change all the time mainly driven by customer changes, supplier changes, or your own internal system or process changes. You have to keep your EDI solution updated to support your changing business—and you must maintain integrations to essential backend systems. As those systems receive updates, integrations can break if you don’t have a process to test new configurations and keep everything running smoothly.
You also need well-defined processes to onboard new trading partners and handle exceptions. While you can develop these processes in-house, it’s usually more cost-effective to work with a service provider who understands best practices and can adapt their established processes to your needs.
3. Technology
The 856 is a document type within a standard called ANSI X12. To send and receive an 856, both you and your trading partner need technology that supports ANSI X12 documents.
If you’re implementing EDI to comply with the requirements of a specific trading partner, it’s essential to build your EDI program around those needs—while also considering the future.
So which EDI solution is right for handling 856’s?
The answer depends on context, particularly how many trading partners you need to support today—and how big your future opportunity is with other EDI partners. Read more here: 7 Pitfalls to Avoid on Your EDI Journey.
Why are 856’s so important?
As consumers, we all get emails from Amazon telling us that a package has shipped. While this is a “nice to know” in the B2C world, the advance shipment notice is a “need to know” in many B2B scenarios. It’s essential to prevent operational disruption and inventory loss.
Here are a few common use cases in which an ASN/856 transaction plays a crucial role.
- Grocery distributors preparing grocery stores to receive perishable food. An 856 ensures the buyer has time to free up the cold storage they need to handle the incoming inventory.
- Pharmaceutical distributors preparing pharmacies to receive medication that requires refrigeration. An 856 ensures the pharmacy is prepared to handle sensitive drugs in a way that doesn’t reduce shelf life.
- Suppliers preparing warehouses to receive shipments. The more efficient the warehousing operation, the less margin there is for error. An 856 document gives the warehouse a heads up so they can prepare logistically to receive a shipment. It’s especially important for warehouses that utilize JIT (Just-in-Time) or Lean Six Sigma methodologies. Not receiving ASN’s ahead of a truck’s arrival can jeopardize acceptance of the delivery or—in extreme cases—shutdown a manufacturer’s assembly line.
- Medical practices notifying blood labs of incoming samples. If a blood lab is going to analyze a sample properly, the blood must be kept at the right temperature. An EDI 856 notifies the lab that a sample is coming so they can handle it appropriately.
What are some common pitfalls with EDI 856?
Like any other EDI document, the 856 can introduce issues if shortcuts were taken in the EDI implementation. Here are some common problems we see when clients come to us.
Pitfall 1: Using a manual workaround to parse incoming 856’s
While it’s rare, some companies try to use a manual process to receive incoming 856’s. Maybe Bob in logistics knows a little bit about EDI, so he’s been assigned to parse the incoming code and process 856’s himself. Both time consumption and complexity around hierarchal loops can introduce slowdowns and risks.
This is not a good idea. Bob can’t move as fast as a computer, which means he may not get to time-sensitive ASNs promptly. If an ASN must be processed today, but Bob has a giant queue and can’t get to it until tomorrow, that can cause significant operational issues.
Of course, Bob isn’t perfect, either. Human data entry always creates errors. If Bob enters something wrong, now you have an exception that needs to be handled.
Pitfall 2: No integration to the ERP, CRM, SCM, or other backend system
Some companies can receive an 856, but they can’t automatically enter it into a backend system like their ERP, CRM, or SCM solution. They still need human data entry to move data from their EDI solution to its final destination.
This introduces the same issues as the first pitfall. That 856 may not get processed in time, and when it does get processed, the data entry clerk may introduce errors. Both issues cause operational disruption.
Pitfall 3: Not testing EDI 856 transmissions regularly
As we said above, EDI isn’t a “set it and forget it” technology. What worked today may not work tomorrow as integrated systems evolve and trading partners update their requirements.
This means you have to test your EDI transmissions regularly. With EDI 856 playing such a crucial role in inventory management, it’s one of the most critical documents to test. Doing so requires both EDI experts and a process in place to conduct the test and make any required changes.
Pitfall 4: Using an open-source EDI solution without adequate developer resources
It may be tempting to go the open-source route and try to run EDI entirely in-house. This model can work in theory, but in reality, it often requires more resources than the company can afford. As with anything open-source, you’re entirely responsible for support, maintenance, security, and exception handling. You’ll need your own staff of EDI specialists maintaining your open-source solution.
This may work for global enterprises that can afford their own in-house EDI team. For the rest of us, it’s a great way to bite off more than you can chew. A commercial EDI solution, managed by an EDI service provider, always offers more value and reliability for a lower cost.
Pitfall 5: Using a “self-service” EDI integration solution
Unfortunately, “self-service” is usually a misnomer. A no-code interface may allow an admin to make limited configuration changes, but the solution is rarely powerful enough to keep up with evolving EDI needs over time. Eventually, that limited integration will break, and you’ll need EDI experts to fix it or replace it with something that meets your needs.
What benefits do 856’s offer?
You won’t use EDI 856/ASN documents in a vacuum. It’s an essential document in a healthy EDI practice, and that practice typically includes many other ANSI X12 documents.
That said, 856 does offer specific benefits. Here’s what you get when you use it.
Benefit 1: Improved efficiency and planning
Shipping and receiving teams don’t like surprises. This is especially true for products that have a limited shelf life or highly specific requirements for handling and storage. When you send 856’s, you empower your customers to run better and ensure mutual success.
On the receiving end, the ability to accept 856’s empowers you to handle more specialized products. It also helps your warehouse run more efficiently. Your receiving team can put a stop to the chaos, move more inventory through the warehouse, and reduce loss from expired inventory. Whether you’re a buyer or a supplier, supporting EDI 856 is a no-brainer.
Benefit 2: Improved satisfaction for trading partners
Whether you’re a buyer, seller, or both, it really matters how you onboard new trading partners. A seamless experience creates greater peace of mind and builds trust in your brand. Specifically, EDI 856 provides great assurance that you’ll be in lockstep with trading partners when handling sensitive products or interacting with a demanding supply chain. It takes extra effort to send and receive reliable information through EDI 856, so if a company promises to use this document, it says a lot about their operational commitment to their trading partners.
Benefit 3: Reducing operational cost (and errors)
We’ve touched on this a bit, but it’s worth unpacking further. EDI 856’s go a long way toward reducing operational costs and data entry errors. Inventory that’s left sitting is losing money—and space that isn’t holding inventory is also losing money. You want things moving through the warehouse as fast as possible, and EDI 856 provides essential information to handle inventory efficiently.
How to make 856’s work for you
EDI technology is so complex, it requires dedicated specialists. But it’s not economically feasible for midmarket companies to hire their own EDI staff. Outsourcing is the name of the game—but not all EDI service providers are created equal. Large EDI companies are focused on implementing their product and serving their biggest customers, which often leaves midmarket companies struggling to satisfy their trading partners.
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Here at Corsica, we offer an alternative. As a comprehensive MSP (managed services provider), we have EDI specialists on staff who offer robust EDI services backed by the operational commitments of an MSP. We’re a service company, not a product company, which means we work alongside you for mutual success. You get reliable EDI transactions for less.
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