The complexity of 3PL integration
Third-party logistics (3PL) companies provide extra support for various phases of shipping operations, acting as links in the supply chain’s outsourced distribution and fulfillment stages. While third-party logistics (3PL) services have always been essential in supply chain operations, their importance is growing as firms’ sourcing, manufacturing, and customer bases become increasingly global.
Brands and 3PL providers must develop dynamic connections for shared visibility of real-time data flows in order to be effective. As a result, the 3PL must be connected to the EDI system.
When properly implemented, 3PL EDI connectivity improves efficiency by increasing visibility and automating retail order fulfillment. It also enables connecting with a wider selection of businesses and trading partners, allowing you to deliver more products to a wider range of customers.
3PL integrations, on the other hand, are a complex network of EDI connections for most manufacturers. But it doesn’t have to be that way.
If your firm collaborates with numerous 3PLs, the task of creating and maintaining various custom integration environments falls squarely on your shoulders. You will have to create point-to-point integrations for all your transaction types, for each 3PL, with legacy EDI systems. Integration with fourth- and fifth-party logistics systems will be required in some circumstances, further complicating the situation.
The trick to simplifying this muddled system is to set up your transactions as efficiently as possible using a centralized EDI solution such as the one provided by HubBroker.
What happens within a typical 3PL integration
Working with a 3PL typically entails seven different types of EDI transactions. Here’s a step-by-step breakdown to assist you comprehend how these transactions work.
856 – Ship Notice Manifest. The supplier triggers the 856 Ship Notice Manifest, which notifies the client that the shipment is on its way and allows both parties to trace its status in their TMS systems. It also acts as a pre-receipt, assisting the consumer with their receiving procedures.
943 – Warehouse Stock Transfer Shipment Advice. Manufacturers and distributors use the 943 Warehouse Stock Transfer Shipment Advice EDI document to notify third-party or remote warehouses that products are being shipped to their location. It contains in-depth information about the individual goods.
944 – Warehouse Stock Transfer Receipt Advice. A receiving site uses the 944 Warehouse Stock Transfer Receipt Advice to notify the depositor or its agent that a transfer shipment has been received. It contains specific details about the product that was received in the 3PL warehouse system.
940 – Warehouse Shipping Order. The 940 Warehouse Shipping Order is an EDI transaction that a supplier sends to third-party logistics providers (3PLs) to request the shipment of products from a particular warehouse to a buyer’s location.
945 – Warehouse Shipping Advice. A 3PL provider or remote warehouse sends the 945 Warehouse Shipping Advice to alert them that a shipment has taken place.
850 – Purchase Order. The 850 Purchase Order is an electronic purchase order that serves as a formal order for products or services from a buyer to a vendor.
810 – Invoice. The 810 Invoice is an electronic form of a paper-based invoice that is generated in response to an 850 Purchase Order and serves as a payment request once goods or services have been delivered.
How do these EDI transaction types usually interact with one another?
Let’s take an example of a manufacturer that accepts orders from clients via the internet. Orders will be passed from their website into their ERP, or system of record, which will then communicate with the 3PL provider’s system via EDI to send the order to the customer.
When a customer sends an 850, the transaction begins with purchase order. The order will subsequently be completed by sending a 940-warehouse shipping order to the 3PL.
When the 3PL completes the order, they send an 856-ship notice manifest to the customer on the manufacturer’s behalf, and then send back a 945, warehouse shipping advice, confirming that the shipment has left the warehouse. The 945 can include information such as the cargo identity, item, amount, destination, mode of delivery, and quality of shipping service.
Because the manufacturer has evidence that the product has been sent, they can invoice the customer with an 810-invoice after they receive the 945.
This completes the process, but how do the 943-warehouse stock transfer shipment advice and 944-warehouse stock transfer receipt advice transactions fit into a 3PL EDI integration?
The manufacturer must ensure that the 3PL is stocked with their product in order to meet client needs. They must order directly from the supplier and send an 850, instructing them to send the merchandise to their 3PL. Meanwhile, they send a 943 to their 3PL to inform them that products have arrived at their facility and that the product will be delivered soon. When the supplier completes the shipment, they send an 856 to the 3PL to confirm the contents. After that, the supplier can send the manufacturer an 810-invoice.
When the 3PL receives the product from supplier, it will send manufacturer a 944 to let them know that it has arrived. The 944 serves as a receipt for the transaction and includes any revisions to the original 943 that may be necessary owing to potentially damaged or missing merchandise.
How to manage your 3PL EDI integrations with maximum efficiency
The complexity of the 3PL logistics process, combined with antiquated EDI integration challenges with both new and existing trading partners, are the most common issues that businesses encounter. The heavy reliance on outmoded ways of communication rather than automation hinders vital information exchanges, causing organizations to get frustrated.
Furthermore, failing to build a fundamental EDI system that can scale as your company grows may result in unnecessarily increasing work for numerous departments.
Fortunately, there are solutions to reduce the time spent on mundane activities and the risk of errors that come with manually maintaining complex 3PL integration systems. With an EDI API solution like HubBroker, you can automate or simplify most of the steps below:
● Consolidate EDI integrations. When compared to point-to-point techniques, using a supplied canonical API reduces the number of individual integrations by 90%.
● Leverage platform with flourishing networks of pre-connected trading partners. HubBroker’s network of pre-connected businesses, for example, evolves with each new user. This standardized the partners and provided explicit rules, allowing you to jump straight to EDI data validation. From transportation to warehouses to merchants, our network encompasses a wide range of enterprises.
● Rapid onboarding for new connections, 3PL and otherwise. Members of your supply chain who are not yet connected to the HubBroker trading partner network can quickly join to virtually eliminate delays. Choose from a variety of pre-configured code options, such as 12XG or JSON, with your 3PL provider. Furthermore, the HubBroker team will provide free personal assistance with every onboarding.
HubBroker: The Ultimate EDI solution for 3PL integration
Most businesses that use old EDI systems have created custom integration environments that are either maintained in-house or outsourced to a managed service provider. Regardless, maintaining this network of linkages is difficult and costly. Furthermore, scaling your firm as it grows is difficult.
You won’t have to construct point-to-point integrations if you use HubBroker Integration Solutions. HubBroker serves as a hub for your ERP, accounting software, or other business applications and your third-party logistics provider. Contact us today to tap into an existing network of 3PLs and partners, bringing all of your EDI vendors together in one place.