A Practical Guide to EDI for 3PLs: Challenges, Use Cases, and Solutions

Third-party logistics providers (3PLs) face a critical inflection point. As more businesses shift from B2C to B2B models, a new challenge emerges: mastering EDI. While EDI forms the traditional EDI systems can be complex, costly, and slow to implement, often becoming a significant hurdle for growing 3PLs and their merchants. This post explores how 3PLs use EDI, the common challenges they face, and how Orderful helps them solve these issues with a modern EDI platform and faster time-to-market.

Understanding the EDI Challenge

For 3PLs, EDI is essential for managing relationships with trading partners and automating the exchange of critical documents, such as:

• Purchase Orders (850): To receive orders from retailers.
• Advance Shipping Notices (856): To inform retailers of shipments.
• Invoices (810): To bill retailers for products.

These documents must be exchanged efficiently, especially as 3PLs manage growing networks of trading partners. But the complexity of EDI systems can slow down business processes and delay onboarding.

What Does the Current EDI Process Look Like for 3PLs?

Before we explore how Orderful is reshaping the landscape, let's break down why EDI can be such a headache for 3PLs and their clients.

While EDI is crucial for operations, traditional systems create significant challenges:

• Custom Integrations: Each retailer or trading partner often has unique EDI requirements, leading to time-consuming, custom-built integrations that require extensive coding and testing.
• Manual Data Entry: Many 3PLs still rely on manual data entry, which increases the likelihood of errors and delays.
• Slow Onboarding: Setting up new trading partners can take weeks or even months, limiting how quickly 3PLs can respond to new opportunities.

For example, if a 3PL provider like Shipbob receives its first order from a large retailer such as Target, it must integrate Target’s specific EDI guidelines to ensure smooth transactions. This could involve exchanging multiple documents, such as a Purchase Order (850), Warehouse Order (940), Advance Shipping Notice (856), and Invoice (810), all requiring precise formatting and timing.

For a 3PL, these challenges don't just affect your operations – they become your merchants' problems too. And when your merchants have a problem, it often becomes your problem to solve.

Real-World EDI Scenario

Let's consider a real-world scenario. Imagine one of your merchants, Libby Lou Shoes (LLS), has been selling direct-to-consumer and now receives their first order from Target. Here's what typically happens:

1. Target sends a Purchase Order (850) to LLS
2. LLS needs to send a Warehouse Order (940) to you for fulfillment
3. You ship the products and send a Warehouse Shipment Advice (945) back to LLS
4. LLS sends an Advanced Shipping Notice (856) to Target
5. LLS sends an Invoice (810) to Target

Each of these steps involves different EDI transactions, each with its own complexities. Without a streamlined EDI solution, this process can quickly become a logistical nightmare.

How Orderful Transforms EDI for 3PLs

This is where Orderful comes in, offering a cloud-based API platform that simplifies the entire EDI process. Here's how Orderful handles EDI for 3PLs:

1. Faster Time to Market: With Orderful, you can onboard new trading partners in days, not weeks or months. This means faster revenue recognition for both you and your merchants.
2. Reduced Complexity: Orderful provides a single integration point, eliminating the need for custom point-to-point integrations for each new trading partner.
3. Cost-Effective: By streamlining the EDI process, Orderful reduces the upfront investment typically required for EDI setup and maintenance.
4. Improved Accuracy: Automation reduces the need for manual data entry, minimizing errors and improving overall data quality.
5. Enhanced Visibility: Orderful provides clear visibility into EDI requirements and transaction status, allowing you to proactively address issues.

Orderful in Action: Two Key Use Cases

Orderful's flexibility allows it to cater to different merchant scenarios:

Use Case 1: Merchant Without EDI Solution

A merchant working with your 3PL does not have its own EDI solution and relies on you to handle EDI compliance. Your 3PL uses Orderful to manage the entire process, exchanging Purchase Orders (850), Advance Shipping Notices (856), and Invoices (810) on the merchant’s behalf. This simplifies the merchant's logistics operations while ensuring compliance with their retailer’s EDI standards.

Use Case 2: Merchant with Existing EDI Solution

In another scenario, a merchant already has its own EDI solution for communicating with retailers but needs your 3PL to handle warehouse communication. The merchant uses their EDI system for retailer transactions while leveraging Orderful to send Warehouse Orders (940) and Warehouse Shipment Advice (945) to your 3PL. For warehouse communications, they can easily add a connection to your 3PL using either their merchant guidelines or your guidelines in Orderful. This integration allows the merchant to manage both retail and warehouse EDI needs seamlessly.

The Bottom Line for 3PLs

By partnering with Orderful, you're not just solving an EDI problem – you're opening up new opportunities for growth and improved service:

1. Expand Your Service Offerings: With Orderful, you can now confidently offer EDI services to merchants transitioning from B2C to B2B, or those you previously had to turn away due to EDI complexities.
2. Improve Client Relationships: Offer your merchants a smoother, faster onboarding process and ongoing EDI support, strengthening your position as a valuable partner in their growth.
3. Boost Your Bottom Line: By simplifying EDI, you can take on more clients, expand into new markets, and increase your revenue without proportionally increasing your costs or complexity.

The Future of EDI for 3PLs is Here

EDI has long been a necessary evil in logistics, but it doesn't have to be a roadblock to your success. With Orderful, you're not just managing EDI – you're leveraging it as a strategic advantage. This shift allows you to offer a complete commerce solution that spans all fulfillment models, setting your 3PL business apart in a competitive market.

Orderful transforms EDI from a complex technical challenge into a streamlined process that drives growth. It empowers you to:

• Onboard clients faster, accelerating your revenue recognition
• Expand into new markets with confidence
• Offer comprehensive EDI services without increasing operational complexity

The question isn't whether you can afford to upgrade your EDI processes. In a market where speed and flexibility are paramount, the real question is: Can you afford not to?

Are you ready to turn EDI from a pain point into a powerful tool for growth and innovation? Speak to an expert to learn how Orderful can empower your 3PL today.