As the end of the year has been approaching I see a definite interest in E-commerce activity within the retail sector as an initiative for 2011. Some, has to do with retailers continuing to support E-commerce via their Distribution Centers while others are looking at working with Factory direct shipments to the .com consumer.
For those retailers only looking at the DC fulfillment, if you're not already doing so, you're going to have to automate the receiving process next year in order to keep up with the influx of inbound shipments from your suppliers. I'm sure that you're expecting the inventory turns during the last quarter to be 10 times what it is in the other part of the year. In order to support this kind of change, if you're not already supporting the Advance Ship Notice and automating the receiving process through Scanning the GS1-128 shipping labels I'd recommend you take time in 2011 to get that in place.
Working with retailers in this scenario over the years, I've heard horror stories of hot items being on back order even though the retailer actually has the products buried in some trailer in the DC yard. Without the ASN (856) as at least a Visibility data feed, you may experience what these retailers have. The ASN can provide information about which PO's/items are in which trailer so decisions can be made to unload specific trailers as these Hot items are approaching "out of stock" status. While visibility alone can assist, the real value of the ASN is in the speed of receiving a trailer. For Suppliers that have gone through the Cabela's Vendor Outreach program, you heard that the time it takes to receive a shipment through the use of the ASN is a fraction of the time verses without the 856 data.
If you're in agreement with me and are indeed looking at the ASN for the Warehouse receipts, take time to work with your partners to build out your ASN program that is consistent with your industry and is consistent with "Best Practices." Standard usage is to have one ASN per the trailer/shipment, so as not to require your suppliers to create one ASN per PO on the trailer or an ASN per carton. Don't ask for information that is not typical for a supplier to know. Anything that you do or ask for that is outside the typical ASN will mean that you'll have delays in implementing the ASN with your partners, thus low rates of adoption. Also, the ASN is one of the more complex EDI Transactions, so requesting it from a supplier that is new to the ASN may need coaching. Even advanced level EDI coordinators struggle, thus its quite an exercise to get suppliers production ready in time. Where needed, don't forget that there are companies that can provide a service of getting a larger group of suppliers to test and become production ready quicker, so don't be afraid to investigate that option, it's well worth the cost.
For those considering the Factory Direct model, again make sure that your EDI program is consistent with what is "Best Practice." A while back I shared the common documents used to support this type of program but thought it wouldn't hurt to revisit -
* 850 Purchase Order - the data elements with a Factory Direct order are different than those for stores or DC so make sure that your clear on what the supplier should expect from you.
* 855 Purchase Order Acknowledge - this document is popular for the retailer to get confirmation that the supplier has inventory and will ship within a very small window
* 856 Advance Ship Notice - this document will communicate that the supplier has indeed released the shipment to the carrier and provide tracking numbers for the cartons
* 810 Invoice - this document is for billing against the customer Drop Ship order. do not require the suppliers to create a single invoice per day or week for all customer orders. Your suppliers receive, process and invoices per 850 received thus suppliers are not able to create a "Consolidated" invoice. Home Shopping Network and Borders.com are starting to realize this as they have tried to implement this method with DS orders with limited success.
Regarding the ASN, take time to work with your partners to build out your ASN that is consistent with your industry and is consistent with the "Best Practices" of Drop ship. Standard usage is to have one ASN per the shipment/customer order, so don't require your suppliers to create one ASN with multiple customer orders or a request Bill of Lading for this type of shipment as these are usually moved via small package carrier like UPS or FEDEX. The ASN for a DS shipment can be the same ASN structure as your DC or Store order (Pick and Pack) so don't ask for tracking numbers at the Shipment level of the ASN as this assumes that there is only one carton per customer order. This may be true for many, but don't make that assumption and thus use the HL Pack loop and have each carton reported in the MAN segment like you do with shipments to the DC.
Also, remember that consumers do not scan shipments when they receive orders, thus there is not a need for the GS1-128 label on direct to customer orders. I've seen retailers require the SSCC-18 number in the DS ASN data which always puzzles me as that is not a Carrier Assigned tracking number which is primarily what is of use for tracking a customer shipment, carriers are not using that number when tracking shipment rather they are using their assigned number and labels so the ASN data should contain each cartons number.
Lastly, keeping track of customer orders is probably the one most important thing for a retailer shipping to an E-commerce customer. As mentioned above the ASN for a Drop Ship order helps with that, however what are your strategizes for tracking shipments outbound from your DC to the customers? Many retailers are now looking at using EDI to communicate Retailer assigned tracking numbers to outbound packages loaded on a dropped trailer and then routed by Logistics companies. The value of providing this information electronically is that these carriers will then report the status of the cartons throughout the life cycle of the shipment through proof of delivery. The outbound data is using a 204 - Manifest document, and the carriers provide the 214 - Shipment Status message.
If you're not exchanging the ASN in the DC order fulfillment I suggest doing so to avoid leasing additional warehouse space to support the peak in anticipated receiving activity. If you're worried that you will need temporary warehouse space, perhaps consider a Drop ship distribution method. Be prepared for working with your outbound Logistics carriers for Proof of Delivery requirements as another way for preparing for customer inquiries.
Have a great end of year and we'll update you after the holidays on how things went 4th quarter.