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Not long ago, I read an article by Forrester Research about online sales in the United States. According to the research piece, online sales in 2010 are forecast to reach $172.9 billion. I felt it was important to bring this to you and discuss what is important to the e-Retailer from a warehousing and fulfillment standpoint.

This is post 2 of a 9-entry series that I have started. To start from the beginning, click to read Inventory Visibility & Synchronization.

Real-time Communication Between Shopping Cart Software and the Fulfillment House

Growth of online retail sales has been seen all year.  From mega-sites like Amazon.com and e-Bay to hosting companies that service one person operations, online retailers have streamlined the buying process by using virtual “shopping carts” with a convenient “checkout” button to complete a transaction.  Shopping cart software saves time and expenses by automating the buying/selling process.

Shopping cart software and warehouses primarily communicate through three methods:

  1. Email Alerts
  2. Batch Processing by Manual Import/Export
  3. Automated Integrations (APIs and Web Service Calls) between systems

The most basic method is e-mail alerts that are sent to the fulfillment house. This one-way notification is fine for drop shipments and partners who do not ship regularly, though message delivery is not always guaranteed.

Batch processing is the second method of integration. This method allows the fulfillment house to process multiple transactions by manually importing and exporting data files between systems.  This requires user interaction to import and export flat files to move data between systems. Batch processing is inexpensive and familiar to most experienced computer users. Flat file imports and exports can also be implemented very quickly. Keep in mind though: batch processing creates delays in the information pipeline.

Batch processing may require you to import and export a new file for each shopping cart. While retyping order data may not be necessary, you will have to manage the inbound and outbound file traffic for each of your customers, and this user interaction can delay fulfillment and status updates.

Application Programming Interfaces, aka: APIs or Web Services, provide a real-time way to integrate shopping carts with your warehouse management system that eliminates user interaction. APIs and Web Service Calls link your customers’ shopping carts with the warehouse management system in real time. As orders are filled, APIs create an automatic two-way link that sends order information to the WMS and updates the shopping cart with status and tracking information. Web Service calls are also seamless to the consumer because their systems are simultaneously updated. This process means a reduction the lag time for information sharing and an extension of your customers’ service and visibility.

Recently I read an article by Forrester Research, a leading research firm tracking online sales. In the article they reported that in the United States, online sales in 2010 are forecasted to reach $172.9 billion, an 11% increase from 2009. In 2009, it was reported that 67% of the online population made a purchase online. The most popular items being sold online include computers, apparel and consumer electronics.

This got me thinking about what is important to the e-Retailer from a warehousing and fulfillment perspective. The list below contains what I believe to be the 9 essentials for successful e-commerce fulfillment. Today’s entry will be focused on #1 – inventory visibility and synchronization. Over the coming weeks each of the 9 items on this list will be discussed, so make sure to check back. Click on any of the links below to view specific entries.

  1. Inventory Visibility & Synchronization
  2. Real-time Communication of Order Details between Shopping Cart Software and the Warehouse Management System (WMS)
  3. Amazon Integration
  4. Handling Larger Order Volumes
  5. Increased Pick Accuracy
  6. Custom Branding Packing Slips
  7. Integration with Shipping Systems
  8. EDI Integration
  9. Automatic Email Notifications

Inventory Visibility & Synchronization

Nothing can spoil your relationship with your customers like allowing them to place an order for a product that is not available. One of the most important features of having an e-commerce site is to have your inventory accurately reflected in the shopping area so clients can purchase your products. Your fulfillment partner’s warehouse management system must be able to update your shopping cart software with current inventory levels.

Keeping track of your stock with a warehouse management system (WMS) is essential because your inventory can become depleted from many different sources. Purchases and shipments can be initiated by shopping cart orders, salesperson samples, retail store orders, and wholesale/distribution channel orders to name a few.

Since these sources could quickly exhaust supply, it is important to have an automated and regularly scheduled inventory update from the WMS to the shopping cart. Typically, inventory levels are updated once a day or once per week depending on the popularity of the products. This ensures that out-of-stock items are not displayed (or are listed as such) to consumers visiting your online store. By accurately reflecting your inventory on your website, you can manage backorder issues and customer expectations.

Electronic Data Interchange, or EDI, is computer-to-computer communication of business documents, in a standardized format, between two companies. Even though publishers are being put under pressure by big distributors to implement EDI transactions, there is much confusion about what an EDI transaction really is.

Electronic data interchange has created a vocabulary of specific terms that publishers will need to be familiar with. Below is an English version of some of those technical terms.

You can now download the “Guide to EDI for Publishers,” which includes the full glossary of terms, from the white paper library on the Ware-Pak website, along with any of our other white papers. To do so, please click here.

Purchase Order Acknowledgements:
A POA tells the bookstore the status of their Purchase Order: what books were shipped, back-ordered, canceled, the list price, and discount.

Transaction Set:
A transaction set is the EDI term for a business document. Each transaction set has a standard three-digit numerical code that identifies it.

The four most common sets are: 850: Purchase Order (PO); 855: Purchase Order Acknowledgement (POA); 856: Advance Ship Notice (ASN); 810: Invoice

Important Note: Your first two EDI transaction sets must be Purchase Orders and Purchase Order Acknowledgements. Future transaction sets are your choice.

This cryptic term refers to the overall set of standards governing the use of EDI documents by all industries in the U.S. It is the protocol that makes sure all items on a document land in the right spaces. Usually called “X12.”

Translation Software:
The program that takes an EDI standardized X12 document and converts, or translates it, into a format that your Order Processing computer can recognize.

Communication Software:
The program that allows you to connect to your EDI mailbox.

Descriptions of EDI Mailbox, VAN, EDI Provider and several additional terms can be found in the white paper “A Guide to EDI for Publishers” in the Ware-Pak White Paper Library. If you’d like to request a PDF of any of the white papers in our library, please contact me directly. I can be reached at (708) 587-4116 or kshay@ware-pak.com

Publishers are being put under a great deal of pressure by the big distributors, such as Amazon, Baker & Taylor and Border’s, to implement EDI transactions. There is a lot of confusion about what an EDI transaction is. I decided to put together this blog post to help explain some of these technical terms.

EDI: What does it stand for and what exactly is it?

EDI, or Electronic Data Interchange, is a computer-to-computer of business documents, in a standardized format, between two companies.

Although it has a technical-sounding name, EDI is fundamentally a business initiative that has been developed over the past 30 years. It was pioneered by the transportation, retail and grocery industries in an effort to increase quality and customer service, and offer long-term cost benefits. EDI also represents a major step in creating a paperless office.

By replacing paper documents, such as purchase orders or invoices, with their EDI “equivalent” (a computer-readable EDI document), four key benefits are realized:

  1. Accuracy is increased because human intervention (the acts of entering and re-keying data) is eliminated.
  2. Timeliness is increased (the electronic transmission of forms eliminates the delays inherent in conventional mail, or even Fax).
  3. Customer service process is automated.
  4. Bottom line costs are reduced for the trading partners.

The Definition of EDI Explained:

“Computer-to-computer” means that the data you send or receive from a bookstore (the most common examples are invoices or purchase orders) is communicated via electronic transmission, without human intervention or interpretation.

“Business documents” means that EDI will be used for the exchange of specific documents only, such as purchase orders or invoices.

“Standardized format” is at the heart of EDI and causes much confusion among publishers. EDI requires you to follow standards that define the format and content of your business documents. When you start using EDI, PO’s and invoices will be converted by the EDI translation software program into the exact same format as those used by all the other publishers using EDI. (The publishing industry EDI standards have been set by the BISAC – recently renamed BASIC – committee of the Book Industry Study Group.) This means that each purchase order, invoice, or pack slip will be completely readable by any computer used by any bookseller using EDI.

In Summary:

When you do business via EDI, you send business documents directly from one computer to another, the documents are in a machine-processable format, the exchange is limited to documents, and the document exchange is governed by standards.

EDI has also created a vocabulary of terms that publishers should know. These terms will be posted in a separate entry later this week. The terms, as well as this guide to EDI for publishers, will be available in whitepaper form on our website, in our Whitepaper Library, shortly. Stay tuned! If you’d like to request a PDF of any of the whitepapers in our library, please contact me directly. I can be reached at (708) 587-4116 or kshay@ware-pak.com

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