EDI documents: how suppliers can work effectively with retail chains

Electronic data interchange (EDI) is not just a convenience, but a necessity for effective cooperation between suppliers and retail chains. Its main advantage is a single standard. Supplier and network systems exchange unified EDI documents, which allows the entire supply process to be automated.

In this article, we will examine which EDI documents are used when working with networks and which business processes they support.

What is an EDI document and what problems does it solve?

An EDI document is an electronic document with a standardized structure. This allows the supplier’s computer systems and networks to exchange business data directly, without manual entry and the risk of errors.

Unlike regular electronic files such as .doc or .pdf, in EDI documents, each piece of data has a clearly defined place and format. The data set depends on the type of document (e.g., order or shipping notification), but there are key blocks of information that are almost always present:

• Sender and recipient identifiers (GLN — Global Location Number). This data specifies exactly who is sending the goods and where.
• Document identifiers — a unique number and creation date.
• Commercial information — contract number, payment and delivery terms. Everything related to the financial terms of cooperation.
• Product items — for each product, the barcode (GTIN), quantity, unit of measurement, price without VAT, VAT rate, etc. are indicated. All details about the product.
• Delivery information — delivery address (GLN code of the store or distribution center), desired date and time. Detailed logistics data.

The need for document standardization arose with the development of retail chains. Previously, they faced the following problems:

1. Inconsistent product names. Each company used its own names for product items. Chains that worked with many suppliers were unable to accurately track inventory. EDI solved this problem by enabling accurate accounting and determining order volumes.
2. Incorrect delivery of goods to the wrong location. As a result, suppliers spent a lot of time delivering goods and were fined for late deliveries. Thanks to the GLN code, suppliers now know exactly which warehouse or store to ship goods to.
3. Errors in order data. When chains ordered goods from suppliers by phone or manually filled out Excel spreadsheets, errors often occurred (for example, the chain’s supplier might hear the wrong quantity or item number over the phone). As a result, the chain received incomplete orders, the supplier delivered goods that the chain did not order, etc. In EDI documents, the risk of such errors is minimized.

Data from EDI documents can be uploaded to accounting systems through the integration of EDI services. This gives managers additional opportunities to:

• create primary accounting documents (invoices, acts);
• control deliveries from order to shipment in the store;
• analyze deliveries of goods and optimize warehouse stocks.

What documents do suppliers exchange with chains?

The EDI system has over 100 standardized documents. However, in practice, chains most often use those that accompany their key business processes. Typically, they collectively include 5–8 EDI documents. Companies that supply goods to different networks use up to 15 documents.

Let’s take a look at the documents that accompany typical business processes in cooperation between a chain and a supplier.

📦 Supply of goods

The Law of Ukraine «On Accounting and Financial Reporting in Ukraine» requires invoices to be issued for each delivery. In retail, schemes with an expense invoice (from the supplier) or a profit invoice (from the chain) are common. EDI providers configure the document flow scheme for the business processes of each chain.

🔄 Returns

Returns are an integral part of retail operations. Retail chains return goods for various reasons: expiration of shelf life, defects, damage, removal of items from the product range, or contract terms. The return process is initiated by the retail chain and confirmed by the supplier.

💻 Provision of services

EDI exchange is effective not only for goods but also for services. Networks order marketing, logistics, IT services, cleaning, etc. from service companies. Document flow is simpler here than in the supply of goods. Thanks to EDI, networks receive services faster, and service companies receive payment faster.

Exchange of EDI documents in the Vchasno.EDI service

EDI providers help retail chains standardize all documents accompanying their work with suppliers. Any document can be brought into compliance with the EDI standard. However, the most valuable documents are those whose data changes with each delivery.

If the chain’s business processes require the supplier to accompany deliveries with legally significant documents (quality certificates, acts, etc.), they can be added to the EDI service as attachments (.pdf, .doc). The Vchasno.EDI service uses a separate message for this — CONDRA.

If a retail chain has specific business processes, the provider can customize the necessary EDI documents for them. This is relevant, for example, when an international chain starts working in Ukraine with local suppliers, and their business processes may differ from the generally accepted ones.

Vchasno.EDI provides customers with reliable document exchange. In the event of disputes between the supplier and the network, the provider can confirm or deny the fact of ordering goods, as it records all cases of data exchange.

All EDI documents are securely stored in the Vchasno electronic archive on Amazon S3 servers. They are located in the European Union and are protected from cyber threats. The customer always has access to the data needed for supply analytics, tax reporting, etc.

Standardized EDI documents are the basis for fast and error-free data exchange at every stage of the supply chain. They create uniform rules of interaction, allowing suppliers and networks to work smoothly and efficiently. With Vchasno.EDI, you get not only a tool for seamless document exchange, but also a guarantee of their secure storage. This makes your business resilient to any adverse situations.