Benefits of EDI for 3PL’s and Logistics Service Providers

by | Dec 5, 2019 | 3PLs, Automation, Logistics

If you’re a third-party logistics provider (3PL), EDI may or may not be on your radar.

Often, it’s not explored unless a trading partner has asked you to pursue it as a condition of working together. In that case, it’s often viewed as a business expense, but in truth, it’s a technology approach that can not only improve and streamline your current business but pay for itself and grow your opportunities for more profits in the future.

Go beyond just meeting retailers requirements

EDI offers many benefits to third-party logistics providers beyond necessary retailer compliance. EDI’s ability to facilitate automation of common tasks can reach across multiple departments within your organization, as well as support communication with the rest of your retail and even supplier trading partners.

Forms and paperwork are plentiful in the 3PL world –– EDI changes that

As a 3PL or Logistics provider, your day-to-day life is a sea of details. Faxing, phone calls, and emails can’t keep up with the speed (and transparency) that more and more retailers are demanding from their 3PL providers. All of that can be managed automatically and digitally via an EDI system.

Having the ability to ensure your shipments are going through and getting to where they need to be is vital. You also need to be able to track their progress and update people on their location and imminent arrival. EDI helps automate all of these processes that you currently require manual labor to manage.

In a typical EDI system, retailers and suppliers are continually streaming information back and forth about their different orders — transactions that you play a part in. A retailer places an order, and the supplier confirms it. The supplier sends an advanced shipment notice, followed by the order and inside that, a packing list.

There may be amendments to purchase orders and acknowledgments of those amendments within the process. Somewhere in this scenario, both suppliers and retailers are looking for a shipping timeline to the retailer or the end-user.

Depending on whether the retailer is waiting for the shipment, or an order has been drop shipped to an end user, all parties expect to access that information easily. This is where the EDI will help.

EDI allows you automatically send an alert when an order is leaving the warehouse, provide shipping updates as it reaches different waypoints, and send a final notification when it arrives at the destination.

EDI has other attractive benefits for 3PLs

  • Lower costs: One of the reasons retailers and suppliers like EDI is because things that require paperwork and manual communication happen automatically. It reduces overhead costs for staffing as well as time spent dealing with each transaction. You can see the same reductions by letting your EDI system manage your part of the transactions.
  • Improved speed: As you process greater numbers and volume of orders, your time to process those orders will only increase, unless you’re using EDI, which allows for the movement of larger volumes of data within the EDI ecosystem––even sharing analytics details with your trading partners, showing your strengths and improvements on their performance. This can be especially when it comes time for contract renewal with your trading partners.
  • Improved efficiency: Not only does your speed improve, but the number of transactions a single person can manage also improves. Ultimately can you can process more shipments with fewer people, reduce costs tied to operational overhead, and gain the ability to take on more shipments as your company grows.
  • Improved accuracy: Retailers and suppliers have also found improved accuracy of inventory counts. Inventory gets counted as it comes into the supplier warehouse, counted as it reaches the retailers, and counted everywhere in between. You can also keep track of items coming on and off your trucks, which will help in the reduction of packing errors, shrinkage and loss.

Gain the ability to upsell services to your trading partners

Beyond all of these very top-line benefits, there are other lucrative benefits to 3PLs and Logistics Service Providers that can help in growing your bottom line.

Differentiate yourself within the logistics service provider marketplace. Using EDI to better sell your services to retailers and suppliers –– especially those that require EDI from every trading partner they work with.

SPS Commerce has global retail connections that can allow you to find new revenue opportunities by helping your customers become EDI compliant and building collaboration with current or prospective retail trading partners.

When a need for a pre-qualified logistics service provider arises within the SPS partnership community, members can easily find providers that meet their needs.

EDI also makes it easier to add and manage additional services like drop shipping. Consider for a moment how having the ability to partner with a supplier and manage their drop shipping program for them could do for your profit margins?

Or if you could set aside some warehouse space to manage the drop shipping for a specific region?

SPS Commerce has helped many 3PL’s and Logistics Service Providers find unique and profitable ways to embrace and benefit from EDI, and we’d love to help you do the same in 2020.

Learn more about EDI for 3PLs or speak to one of our EDI experts to get answers to all your questions.

SPS Commerce Blog Team