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• Manual and sometimes redundant processing of EDI orders leads to frequent and costly errors
• Chargebacks and deductions are far too common and costly
• The order to cash cycle is elongated due to contention over invoice details and terms
• The number of trading partners has grown to the point where it's difficult to keep track of all of their unique and complex compliance requirements and ways of doing business
• Setting up trading partners takes too long, putting new orders at risk
• Maintaining and managing your own EDI operation is distracting you and your team from the real mission - growing the business
• Compliance expertise resides in one or two key individuals - the risk of losing this skill weighs on you constantly

RedTail publishes Trade Compliance Insight to share best practices in managing the compliance aspects of the order to cash cycle. If you are currently trading with big box retailers, auto manufacturers, or medical products distributors, then Insight is for you. We've created this content to educate you on trade compliance and how to achieve best in class operations. We'll address topics such as EDI optimization, emerging requirements for Global Data Synchronization, progress in RFID, and ways to make trade compliance work for you.

Whether you're the CEO, the warehouse manager, the EDI administrator, or on the IT staff there is something you can learn in the articles and stories we're sharing. They build on many combined years of experience helping companies like yours improve their compliance operations.

We'd also like to hear from you - please share your stories and let us know what other topics you'd like to see covered in future issues of Insight.

Regards,

Bob Gleason
President & CEO
RedTail Solutions

An Overview of Basic EDI Transactions

In today's competitive world, speed is critical to success. By reducing unnecessary delays and providing a product or service faster than the competition, more time is available to focus on providing customers with improved service. EDI can speed up many business functions and cut costs in a number of areas such as inventory management, transport and distribution, administration, and cash management. Utilizing EDI results in decreased errors, less time spent on exception-handling, fewer data-caused delays in the business process, and EDI compliance.

What is EDI?
EDI, a form of e-commerce, is an acronym for Electronic Data Interchange. It is a standard format for exchanging business data between different companies using networks, such as VANs (Value Added Networks) or the Internet. EDI has become increasingly important and widespread as an easy way for companies to buy, sell, and trade information.

850 - Purchase Order
An 850 Purchase Order, commonly referred to as a PO, is simply an electronic version of a Purchase Order. POs are used as a method of providing suppliers with specific information about what they are buying, such as item name, price, quantity of each item to be delivered, shipping and billing information, payment terms and contact information.

997 - Functional Acknowledgement
Most trading partners require a 997 Functional Acknowledgment (FA) back after the supplier receives the 850 Purchase Order or other transaction. The supplier sends a 997 Functional Acknowledgment, an electronic version of a receipt, back to the buyer indicating that they successfully received the transaction.

856 - Advance Ship Notice (ASN)
An 856 Advanced Ship Notice (ASN) tells the buyer that the order has been shipped. It also acts as an electronic packing slip - information such as which products were shipped, which carrier was used, the number of items that were shipped, and how they were packed is provided in the ASN.

UCC-128 Label
Often, trading partners requiring an ASN will also have a UCC-128 labeling mandate. UCC-128 labels are crucial to EDI trading because they bridge the gap between the electronic ASN document and the actual cartons containing this order. Although the information on the UCC-128 label as well as the format of the label may vary by trading partner, most of the information remains standard. The UCC-128 label contains information such as Ship From and Ship To addresses, PO number, and carrier information. There is also a barcode on the bottom of this label that contains information such as the supplier's manufacturer's ID and carton serial number. Receivers of the shipment scan the barcode label and using an ASN software receiving system, pull up the ASN previously sent to route these cartons without having to first open them.

810 - Invoice
The 810 Invoice transaction is an invoice that is sent electronically from a seller to a buyer rather than being sent on paper. The 810 invoice includes (but is not limited to) information such as Remit to name and address, Bill to information, and item details (such as quantity, costs and taxes).

What is Global Data Synchronization (GDS)? 

Global data synchronization (GDS) allows organizations to share the latest item, location and price data with each other, preventing costly mistakes and delays. GDS is comprised of three elements: data synchronization, data quality and product identification and classification.

Data synchronization is the electronic transfer of standardized information and the continuous synchronization of that data over time. The Global Data Synchronization Network (GDSN), an internet based, interconnected network of interoperable data pools and a global registry known as the GS1Global Registry, enables organizations around the globe to exchange standardized and synchronized supply chain data with their trading partners.

There are five steps involved in sharing item information using the GDSN:

• The supplier registers the product information in its data pool after internally cleansing the data.
• The data pool sends a small subset of this data to the GS1 Global Registry.
• A buyer, through its own data pool, subscribes to receive the supplier's information.
• The supplier publishes the requested data through its data pool to the buyer. The data is routed based on the buyer's subscription.
• The buyer sends a confirmation to the supplier informing the supplier of action taken regarding their data.

Data quality is key to the success of data synchronization. Both suppliers and buyers are responsible for making sure that their data is complete, consistent, accurate, time-stamped and based on industry standards.

Product identification and classification gives suppliers and buyers a common language for distinguishing product data that is uniform across the entire supply chain. The key to the unique identification of product data are the following:

• Global Location Number (GLN) - A unique 13 digit number that distinguishes physical, functional and legal entities (e.g., companies, warehouses, stores, etc.).
• Global Trade Item Number (GTIN) - The new name for the 14-digit data structure used to uniquely identify trade items (products and services) within the evolved EAN.UCC system. This is a new term only, not a standards change.
• Global Product Classification (GPC) - Standard groupings of products and services with like attributes established by GS-1.

Retailers Mandate GDS
Many large retailers and manufacturers now require their suppliers to synchronize product data using the GDSN as part of establishing a trading relationship.
As of January 1, 2007, Wal-Mart required its trading partners to join a GDSN certified data pool and begin the process of data synchronization. Wal-Mart cited the need for improved supply chain efficiencies for themselves and their suppliers as the reason behind its initiative. Many other buyers including Lowe's, Home Depot, Target, Wegmans and McLane have informed their suppliers that they must implement data synchronization in order to continue doing business. Information regarding adoption is available at the 1Sync data pool website http://www.1sync.org/home.html . Further information about adoption in the hardlines sector is available at http://www.gs1us.org/Hardlines/tabid/213/Default.aspx .

How Does This Affect You?
In addition to satisfying buyers' requirements, there are many benefits for suppliers to adopt GDS:

• Increase speed-to-shelf for new items
• Decrease invoice deductions
• Reduce time spent researching and resolving item data and other discrepancies
• Lower transportation costs by improving outbound logistics processes

What is RedTail's Global Data Synchronization Solution
Our Xpress Conveyor managed service provides an easy to use, simple spreadsheet upload tool that allows complete item data synchronization with your trading partners through the Global Data Synchronization Network (GDSN). Xpress Conveyor provides you the ability to manage all your GDS transactions as well as generate pertinent reports regarding your item data.

Emerging Trend – Turn EDI Over to the Experts

For years most mid-market suppliers had only one choice when it came to EDI operations - do it yourself. High-end EDI vendors offer outsourcing options, but they are designed for large scale operations and priced prohibitively for smaller organizations.

On the low end, web forms solutions work well until the hours spent at "rip, read, and reenter" make it clear there has to be a better way. In the past most firms would bring EDI in-house when they reached this inflection point. Choosing the only available option, they would license mapping software and communications management software, buy new hardware, sign up for VAN services, etc. - all before making the biggest investment - mastering the science, and art, of setting up trading partner connections and overseeing the daily flow of 850's, 856's, 810's and other required EDI transactions.

Few CEO's would argue that mastering the complex world of EDI is an activity core to the mission of their business. It requires a special expertise - so you hire an expert. But why do tens of thousands of firms all need to hire their own expert to do the same thing. The answer is they don't.

An interface layer on the supplier's ERP system connects seamlessly with an EDI operations center accessible over the Internet to receive purchase order transactions and send ASN's and invoices. The EDI operations center handles on-going transaction management including translation, data validation, monitoring, error checking and resolution. The EDI operations center, running in a high-end data center, ensures reliability, security and performance. Accessible 24 hours a day it provides complete back-up and audit trails, ensuring that every transaction reaches its destination correctly.

Managed service solutions have been widely adopted for applications such as payroll (ADP). RedTail offers the only managed EDI service in the market today. A depiction of this offering is provided here.

Managed service providers don't license software. There is typically a minimal up-front fee and then a subscription or transaction based pricing model. RedTail offers transaction based pricing for its EDI service and subscription pricing for its Managed GDS Service. To learn more about the benefits of this new approach for EDI and/or GDS trade compliance and how it would work for you attend one of the webinars listed above or visit www.redtailsolutions.com.

RedTail Solutions Managed EDI Service Helps Wiley X Eyewear Manage Explosive Growth

Two decades ago, start-up Wiley X Eyewear entered an almost nonexistent niche - safety glasses and goggles. Approached by the FBI to develop shooting glasses, the company soon found itself making protective eyewear for the U.S. military. Business mushroomed after September 11, 2001, when American troops were mandated to use protective eyewear. Wiley X has sold more than two million units for Operations Enduring and Iraqi Freedom to date.

John Barrett, COO, knew there had to be a better solution. He began to research third-party EDI solutions. "After kicking the tires of various manufacturers, I was most impressed with RedTail Solutions Managed EDI Service. The first reason was their pricing structure. Others charged separately for transaction, VAN, licensing and annual fees, which was very confusing. RedTail bundled them all together. I liked the simplicity."

But it was RedTail's unique business model that clinched the deal for Barrett. "RedTail is a hosting hybrid," Barrett explains. "Although EDI software resides on our system, all document mapping is done at their end. If anything goes wrong, it's their problem, not mine."

Then RedTail transmits purchase orders to Wiley X, where they can be downloaded using a single icon. "A similar process occurs with invoices and advance shipping notices," notes Barrett. "The invoice is the final document we exchange with RedTail. You click once or twice, and everything just happens. It's beautiful."

Visit RedTail Solutions with Microsoft Dynamics at Convergence 2009 in New Orleans March 10 - 13  (Booth #326)

Visit RedTail Solutions partnered with Sage at Insights 2009 in Nashville May 11 - 14

Managing Logistics and Trade Compliance in the Global Supply Chain

Traits of Supply Chain Excellence -- or Having the Supply Chain You Designed and Deserve

RedTail Solutions
www.redtailsolutions.com | dbacon@redtailsolutions.com
69 Milk Street, Suite 100, Westborough, MA 01581 • 508-983-1900
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