What are Electronic Shipping Notes and Why Use Them?
Electronic shipping notes are documents that form part of the automated exchange of distribution data. The shipping note accompanies merchandise in transit and helps to verify that the delivered goods match the ordered goods.
In the logistical supply chain, the efficient exchange of commercial documents between trading partners is fundamental. Thanks to EDI (Electronic Data Interchange) technology, electronic messages can be exchanged automatically, in real time, securely and efficiently.
Shipping notes may be referred to in a number of ways, depending on the EDI standard in use. For example, in the X12 standard – the most common standard in the United States – the message is called an 856 ASN (Advanced Shipping Note). In the EDIFACT standard, most used in Europe, it is known as the DESADV (Despatch Advice).
Shipping notes contain as much information as required by the trading partners. Generally, the message includes: the origin of the merchandise, its recipient, delivery date and time, item(s) delivered, and codes identifying the goods. Depending on the product being shipped, its expiration date or a list of items contained on the pallet can also be included. The more information provided, the more streamlined is the logistics supply chain.
The function of the shipping note (or despatch advice) is to inform the client of the shipment of merchandise. It offers many advantages to both clients and their suppliers.
Advantages to clients using the electronic shipping note:
Security. Allows recipients to confirm that the merchandise being delivered matches the purchase order. With EDI, documents are tracked so that any discrepancy triggers a notification.
Forecasting. Allows recipients to track the delivery of materials. The shipping note informs users of when the merchandise is ready to ship or has been shipped.
Planning. Warehouses can plan to unload new merchandise when it arrives, having been informed ahead of time of their shipment. It streamlines the reception process, optimizes space and resources, and allows for stock control.
Traceability. Allows internal departments to track delivered goods and their related invoices when both messages are integrated with the purchase management system.
Advantages to suppliers using the electronic shipping note:
Optimized product delivery. EDI automates the exchange of commercial documents, streamlining the delivery of merchandise.
Guaranteed product delivery. Once the client receives an advance notice, the EDI solution automatically responds with a confirmation message, proving that the merchandise has been delivered.
Shortened payment cycle. The invoicing and payment cycle for both client and supplier is shortened by automating the purchase order confirmation process.
How to integrate the shipping note with your EDI solution:
In supplier ERPs, the shipping note is created using information from the purchase order. Users select the number of units and items from the purchase order to be included in the shipping note.
The EDI solution takes the information to be included in the shipping note and automatically delivers it the destination. The message is integrated into the client’s management system.
The client verifies the shipping note by comparing it to the original purchase order. This process is typically automated where all documents (order, shipping note, invoice) are exchanged via EDI.
The supplier receives a notification confirming that the information is correct. In the case of any disparity between the purchase order and the shipping note, the client will send a notification to rectify the error.
One great advantage of an EDI solution is its scalability. After implementation, new messages can be added to optimize commercial processes and get the most value out of the solution. The most common flow of information in EDI (purchase order & invoice) is enhanced with the addition of other messages, like the shipping note.
EDICOM, a leading provider of EDI and electronic invoicing solutions, offers two modalities for implementation:
Integrated EDI. Integrates with the ERP and automates commercial transactions without changing established processes.
Web EDI. An alternative for companies with a low message volume. No changes are made to processes already in place. EDI messages, like shipping notes, are exchanged securely online.
Businesses are increasingly investing in EDI technology for their own internal processes and for transactions with suppliers, sometimes making it a requirement to do business with them. This makes adopting EDI solutions a competitive advantage for companies seeking to enter new markets.
The more businesses that communicate via electronic data interchange, the greater are its advantages.