All About EDI 846 (Inventory Inquiry/Advice)

EDI (electronic data interchange) is a big deal. Fortune Business Insights estimates that the U.S. EDI market will be worth $4.52 billion by 2030. Although that’s probably no surprise to anyone familiar with the EDI’s benefits for seamless communication.

EDI saves time, increases accuracy, and improves relationships with trading partners, making it one of the most significant advances in communication since Gutenberg invented the printing press. Therefore, it pays for any aspiring industry expert to have in-depth knowledge of different EDI systems and commonly transmitted documents.

If you're preparing to implement an EDI system, you may need to use EDI 846. Learn more about the 846 EDI document type, who uses it, and how it can transform your business.

What is EDI 846?

EDI 846, also known as Inventory Inquiry/Advice, is an EDI transaction commonly used by drop shippers and companies that sell directly to consumers. Buyers and sellers use it to communicate about their inventory levels.

The raw format of EDI 846 is only readable by machines. An EDI software solution is required to translate it into a human-friendly format.

With EDI 846, you won't have to wonder if your trading partners have the items you need in stock.

EDI 846: Key elements

This EDI inventory document provides several details related to product availability:

• Inquiry date and time: EDI 846 includes the date and time of the inquiry.
• Identification information: The 846 EDI document type includes the retailer's and the vendor's ID numbers for easy reference.
• Product identifiers: EDI 846 product identifiers typically include stock keeping units (SKUs) or universal product codes (UPCs).
• Units of measure: EDI 846 documents specify whether the product is measured in pounds, ounces, kilograms, cups, quarts, or another unit of measurement.
• Inventory quantities: Crucially, the document indicates the stock of each item.

When a supplier receives an EDI 846, it responds with the following information:

• Forecasted restocking dates: This information on an EDI 846 lets vendors tell suppliers when they plan to restock specific items.
• Discontinued items: If a supplier discontinues an item, they include it in an EDI 846 to give advance notice. This affords vendors enough time to come up with an alternative.
• Inventory reporting by location: If a supplier has multiple warehouses, this line identifies how many units of an item are available at each one.

How to use EDI 846

EDI 846 is a bidirectional transaction set, meaning information flows between seller and buyer. This makes it useful for a variety of business scenarios.

Here are common circumstances where an EDI Inventory Inquiry/Advice document proves integral:

E-commerce fulfillment

If you run an e-commerce company, your reputation rests on your ability to source high-quality products and promptly deliver them to buyers. Use EDI 846 to alert suppliers when stock is low to get your next shipment sooner.

Retail

Retailers use EDI 846 the same way e-commerce companies do. The Inventory Inquiry/Advice document alerts suppliers to current stock levels, helping them make informed decisions. For example, if a retailer indicates it’s low on multiple items, the supplier can send out their next shipment ahead of schedule.

Inventory management

Most use cases for EDI 846 focus on communication between buyers and sellers, but sellers can also use this EDI format to streamline communication between warehouses. For example, if Warehouse A is running low on a particular item, it can send an EDI 846 to Warehouse B to find out how many units B has in stock.

Supplier selection

Suppliers also use this EDI document to share information about their inventory levels with potential customers. This data helps buyers determine which supplier will most likely meet their needs.

EDI 846: Benefits and essential considerations

Like other EDI document types, 846 offers many benefits. Here are some of the ways it can improve two-way business communication:

• Increased accuracy: If you manually fill out paper forms, it's easy to write down the wrong item quantity or unit of measure. EDI increases accuracy by preventing data-entry errors and ensuring every form is legible.
• Real-time updates: EDI 846 provides real-time insight into your stock levels, making it easier to determine when to order more items.
• Improved relationships: With EDI, you don't have to wait for a trading partner to receive a printed document and find time to respond. Building positive relationships is easier.
• Competitive advantage: Companies already using EDI don't want to return to manual processes. If you employ EDI 846 and other EDI documents, you have an advantage over competitors who still do things manually.
• Increased efficiency: Using this EDI document eliminates the need for periodic inventory counts and handwritten forms, increasing productivity without using additional resources.
• Better decision-making: The information in EDI 846 helps users make better decisions. For example, if one of your suppliers frequently runs out of an essential item, you know to build relationships with other suppliers, so you always have a backup.

The 846 EDI document type has myriad advantages, but there are some potential pitfalls.

• Timing: When a trading partner sends you an 846 document, you must respond as quickly as possible. You may need to change some of your current processes to eliminate unnecessary delays.
• Inventory accuracy: If you want your EDI documents to be accurate, keep precise tabs on your inventory. Before you begin using this document, you may want to update your inventory management processes to ensure you're reporting accurate stock levels.

EDI 846 specification

EDI 846 adheres to the X12 standards developed by the Accredited Standards Committee (ASC). These standards meet the following criteria:

• Consensus-based: ASC develops standards based on input from key stakeholders.
• Syntax-neutral: The X12 standards work with various computer systems and programming languages.
• Complementary: ASC created these standards with interoperability in mind, meaning each one complements the standards developed by similar organizations.

Get guidance on implementing EDI solutions with Orderful

Orderful offers a cloud-based EDI platform, making it easier for small- and medium-sized companies to benefit from the electronic interchange of business documents. To start using EDI 846 documents to your advantage, speak to one of our experts about implementing a trusted EDI solution for your business.