In a recent Auburn University Supply Chain Management study developed by Brain J. Gibson, Ph.D. and Brent D. Williams, Ph.D., retailers reported that on average 7.1% of EDI Advanced Ship Notices (ASN or EDI 856) are inaccurate. The study, titled “Facilitating Supply Chain Visibility and Accuracy – An Analysis of ASN Benchmarks and Best Practices,” was sponsored by Compliance Networks and the Vendor Compliance Federation and surveyed 40 executives at 28 leading retailers.
The authors did a thorough job of identifying the causes of ASN inaccuracy and quantifying resultant impacts on retailers and suppliers, namely increased costs and lost sales.
The EDI 856 is the supplier’s way of informing the retailer what will arrive at the distribution center or store in each box. Given how heavily retailers rely on the ASN for operational efficiency, it’s not surprising they are working hard to improve accuracy. The target is a 98-99% accuracy rate and they are pursuing higher levels of performance in several ways including:
- Quantifying financial impact
- Assessing deductions or chargebacks – penalties imposed on suppliers for erroneous ASNs
- Collaborating more closely with suppliers
While collaboration is welcomed by suppliers, audits and deductions certainly are not. So if you are a supplier struggling with generating timely and accurate ASNs, here is where you should focus your efforts:
Engagement – collaborate with your customers to make sure you know how well, or poorly, you are doing in their eyes. While your vendor scorecard is a starting point, take it the next step, and engage in a dialog with your customer’s supply chain organization. Know what they expect and why. Know where they would like to see improvement and why.
Education – Educate everyone involved in your order to cash cycle about your findings.
Goal Setting – Set your own goals, share them and publish performance.
Automation – A key to accurate ASNs is minimizing manual data entry. If you have the data in your systems, and you should (more on that in our next blog), then use it to generate your ASNs electronically.
Paying attention to the problem, getting everyone on board and streamlining processes is a straightforward formula, but it requires determination and hard work. Take these steps and your reward you will be loyal customers and profitable business.
By Bob Gleason of RedTail Solutions, Leading Microsoft Dynamics Electronic Data Interchange (EDI) Solution Provider