The Key to Seamless Order Fulfillment: Combine the Digital with the Physical in EDI and 3PL Outsourcing

Consumers today have been conditioned to purchase anything from anywhere in the world and expect to have it delivered within two days at no cost.

For suppliers, meeting the expectation is a tough order to fill.

Retailers are continually seeking to manage their suppliers better, improve product availability to consumers, streamline replenishment, and reduce stock-outs while minimizing inventory. Most suppliers primarily focus on product, innovation, merchandising, and marketing. On a small scale, it is possible to process and fulfill orders manually. However, as companies grow so does their need for technology, expertise, and software platforms to automate order fulfillment.

Labor costs and the likelihood of errors increase when trading partners enter data manually. Manual data entry can lead to project delays, unexpected expenses, and customer dissatisfaction. Companies that lack the technology, warehousing, and order fulfillment service capabilities to meet customer expectations, are severely limited in their ability to grow in today’s volatile marketplace.

Some of the challenges suppliers face range from a lack of experience in drop-shipping to the lack of geographical locations in their real estate footprint. For example, e-commerce fulfillment takes a larger footprint than bulk merchandise handling on a per order/per unit basis and requires additional space to lay out potentially thousands of units of a single item, package them in their boxes, put them through a shipping terminal, and ship them directly to a consumer. This process varies widely from sending out that same number of units ordered as a bulk shipment to a retailer.

The Integration of Digital and Physical Requirements

The key to success is marrying the digital and physical requirements to deliver service levels that today’s customer expects. If you’re not capable of managing those digital data feeds and physical requirements, in the exact way that is required, and ultimately translating those digital signals into the perfect customer experience, you could quickly imperil the client relationship. The acquisition costs for that relationship are almost incalculable, and the supplier won’t get a second chance.

Choosing the right third-party logistics partner (3PL) that has the resources and expertise to handle every fulfillment challenge will help suppliers adapt to ever-evolving market conditions and complex customer requirements.

Whether direct to consumer or bulk fulfillment, electronic data interchange has become the standard method of transacting with trading partners. As automated trading partner collaboration becomes more critical to success, a strong platform, EDI tools, and online portals are needed to enable the retailer’s EDI requirements and remove the burden of always referring to an extremely long routing guide. Most companies are not in a position and do not have the resources required to map raw data.

Outsourcing EDI provides redundant infrastructure including connectivity between the retailers and the brand or the warehouse, maps, transformation of data from retailers, and is backed up by a service level agreement. Outsourcing also frees up in-house software and IT efforts, and it enables companies to concentrate on research and development to focus on customer-specific problems.

However, 3PL and EDI should not and cannot work in silos. Whether it’s dropship or wholesale, it is probable that any 3PL provider will more than likely offer EDI as part of their service offering. An example of that symbiotic relationship is the orders that are taken in through an EDI provider. The orders are released, inventory allocated, and orders shipped following retailer requirements. The process includes special labels called UCC-128 labels. Customization including custom-branded packing lists will appear as though it comes from those particular retailers.

“To execute, you’re going to need very tight data integration capabilities, excellent physical fulfillment capabilities, and to understand how to interface properly with the transportation providers to create that seamless, perfect order,” says Thom Campbell, CSO and co-founder of Capacity LLC. It’s all transparent to the consumer, and that is a highly automated experience for the customer.