EDI is the Best Kept Secret in Logistics

Posted by Kelly Nichols on Jun 23, 2016 3:01 PM


On Sunday my wife and I went to our local large grocery store chain to get what we needed for the week like every other Sunday.  While walking into the store I saw all the plants for sale outside of the store, with firewood.  I walked in to see all the bakery supplies, flowers, Japanese food bar, the deli, bread aisle, fruit and vegetables etc.  When I looked at the labels, I saw that the tomatoes were from Mexico, oranges from Florida, etc.  I wondered, how did all this food from different countries get to one store?  Do all the items just show up at each store?  Is there one person that coordinates all the shipments from the vendors?  The store would have to have an army of employees to coordinate all these orders and shipments.  For them to make money it would have to be automated, right?

Fotolia_73639054_XS.jpgI went onto their website and saw in 2015 gross sales were $109.8 Billion Dollars at 2,778 stores in 34 states and the District of Columbia.  I have always heard that the profit margin is small with grocery stores so they have to have some type of automated system to coordinate all the shipments to each store.  So I went onto their career page and under integration opportunities looked for the software they use.  They use IBM’s WebSphere MQ for their EDI translation software that connects to SAP for their ERP.  This is what separates the big companies from the family owned grocery stores. 

To do business with this large grocery store chain I am sure you have to be setup as a vendor in their EDI system.  You have to have EDI at your plant that can trade documents back and forth to automate the ordering process, shipments, billing to name a few.  Having an EDI system setup helps reduce the manual processes and the need of having a huge staff.  This grocery chain is then able to pass these savings to the customer and helps them to be more profitable.

They will send the manufacturer’s EDI documents electronically through IBM’s Connect Direct.  You will receive them and have to upload to your EDI Translator.  They will send you a purchase order electronically to purchase the products needed for the upcoming week.  The manufacture will send back an Advanced Shipping Notice to make you aware when the product will arrive.  While the tractor trailers are in motion, they send updates to EDI from the GPS of where they are in transit and estimated time of arrival to the docks in the Motor Carrier Shipment Information document that your EDI sends to the store.  Once the product arrives, each product is uploaded to SAP from the RFID’s on the packaging to update the inventory.  Once the product has been sold the store will have a reorder point if the inventory drops below a certain level which then triggers a future purchase order and the cycle continues again.

As you can see, family owned companies are at a huge disadvantage if they don’t have EDI.  The large chain stores have to keep their prices down to remain competitive.  That is also a big reason why prices are higher when you go to the family owned grocery stores.

If you really want to scale your company, you have to have an EDI Translation software in house.  If you would like more information to see what product would work best for your company, reach out to one of REMEDI’s Account Managers to get started today. 

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