RedTail Solutions®, Inc.

What Is True ERP-EDI Integration?

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Integration Defined
In previous posts we talked about the importance of integrating EDI to ERP. Reaching the desired state of integration means minimizing keystrokes and eliminating redundant effort through electronic, system-to-system updates of information. Suppliers using email, FAX, and/or webforms with trading partners must read and key everything separately into their ERP system and have no integration. Those who import and translate files with some manual effort have achieved partial integration. Only suppliers with direct connections to EDI premise software or direct interface to  managed EDI cloud services are truly integrated.

Suppliers with automated shipping, barcode scanning, and warehouse management systems and Third Party Logistics (3PL) providers are special cases. Full integration requires EDI and ERP communication among all back office, warehouse, 3PL, and shipper feeds.  Eliminating paper, FAX, or webforms in these critical processes is essential to maximize the benefits of EDI-ERP integration.

Critical EDI-ERP Integration Points
Here are some of the key steps in the order-to-cash cycle that must be automated through EDI-ERP integration.

Order Management

  • Receive Purchase Orders (EDI 850) from trading partners all of whom implement EDI uniquely
  • Generate Sales Orders from POs:
    • Cross reference Item Numbers, Customer Numbers and other key data elements
    • In ERP system, handle inventory shortfalls as required by business practice – fill or kill, backorder, etc.
    • Apply all other business rules such as shipping warehouse, credit oversight, etc.
  • Process Store Delivery Quantity (SDQ) orders
    • Each item will have order quantities by store or DC so these will have to be split for handling by your ERP system
  • Process Change Orders (EDI 860) and replacement orders
    • Some combination of automation and manual processing will be required
  • Log and Resolve Errors during Sales Order creation
  • Acknowledge Purchase Orders (EDI 855)
    • Inform the trading partner as required about dates, substitutions, backorders, etc.
  • Complete Fulfillment and Delivery – Pick, pack, ship and track (EDI 853, 857, 940, 945)

Fulfillment and Delivery

  • Pick, pack and ship
  • If using 3PL
    • Initiate 3PL order fulfillment with EDI 940 – should be as simple as generating a pick list for your own warehouse
    • 3PL should return EDI 945 to update order status as shipped and adjust inventory
    • Integrate other EDI transactions for stocking order management and inventory management as required and supported by 3PL
  • Send Routing and Carrier Instructions (EDI 853), Request/Routing Instructions (EDI 753/754), Shipment and Delivery Notice (EDI 857) as required by trading partner.
  • Generate accurate, timely Advanced Shipping Notice (ASN or EDI 856)
    • If using a WMS or automated data capture system carton detail should be added to ASN automatically
    • If using a 3PL the EDI 945 should include adequate header and item detail to auto generate an ASN
    • Automate capture of shipping information for ASN from shipping system
    • Ensure that each trading partners unique ASN data requirements are met – capture a superset of information for this purpose
  • Generate GS1-128 labels consistent with ASN information


  • Complete Invoice in ERP System
  • From ERP Data, Prepare Accurate Invoice Transaction (EDI 810)
  • Send Invoice Transaction as EDI 810

Process Criticality
Improving customer satisfaction, sales, and profitability demands excellence in every step of the order-to-cash cycle. Each of the steps can involve managing high transaction volumes, difficult tasks, or both. Exceptions can occur even in the most carefully automated processes. That means expertise is required – either in-house or from a managed services vendor – to maintain efficient flow.

ERP-EDI integration is a foundation upon which warehouse, shipping, 3PL fulfillment, and other process automation is built. Businesses that succeed at integrating ERP and EDI experience immediate benefits, including lower costs, fewer returns and chargebacks, and better customer satisfaction. As automation is extended to other systems, dramatic improvements in operational efficiency and profitability are within reach.

By RedTail Solutions, provider of Cloud-Delivered Managed EDI Services

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