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Trucking Industry EDI 101

12/11/08

Trucking Industry EDI 101

  07:27:00 pm, Categories: EDI , Tags: edi, trucking edi, trucking electronic data interchange

Trucking Industry EDI 101

What Is EDI?

In today’s business climate, leaders are looking for methods that will allow their businesses to operate faster, cheaper, and better. One tool that will allow you to achieve significant improvement in all three areas is Electronic Data Interchange, better known by its acronym, EDI.

If you are not currently using EDI in your business, you may think that it is too complex and costly for you to implement, or is not applicable to your situation. With an understanding of EDI basics, however, you should be able to find ways to streamline many aspects of your business.

What is EDI? Basically it is the electronic exchange of business documents in a standardized format. In the EDI world, these business documents are called "transaction sets", and the customers and carriers with whom you do business are "trading partners".

The Old Fashioned Way

In order to better understand what EDI transaction sets accomplish, let’s first look at a non-EDI information flow example:

The customer, Acme Widgets, has a load of widgets that need to be delivered to the receiver, Wiley Coyote General Store. The logistics manager (LM) at Acme creates a load tender document and either faxes, mails, or phones the carrier, Birdflew Express.

Birdflew’s dispatcher receives the load data from Acme, faxes or phones an acceptance to Acme, and manually enters the information into his trucking software. We’ll assume the information he received and enters in his trucking software matches the information on the original load tender at Acme, but often there are input errors in the manual process.

Birdflew sends a truck to pick up the product at Acme. After the load is picked up and the dispatcher notified, the truck proceeds across the desert to Wiley’s. Later that day, Wiley runs out of widgets and calls Acme to find out when his shipment will arrive. The Acme LM calls the dispatcher at Birdflew, who calls the driver. After 10 minutes of niceties with the driver, the dispatcher calls Acme back with the current location of the truck, who in turn notifies Wiley.

After the truck arrives at Wiley’s and is unloaded, the signed delivery documents will start their journey back to Birdflew, typically with the driver, who may not be headed home immediately. Meanwhile the sales person at Acme wants to make sure Wiley received his widgets. He calls the Acme LM, who calls the Birdflew dispatcher, who calls the driver. Eventually Acme finds out their product was delivered.

When the signed delivery documents finally arrive at Birdflew, the billing clerk prints an invoice and mails it to Acme. Days later, Acme receives the carrier invoice, enters it into their system (hopefully with no additional errors), and ages the invoice for a couple weeks before issuing a check. The billing clerk at Birdflew calls Acme multiple times to check on the status of her check, which eventually arrives at Birdflew and the transaction is completed.

The EDI Way

Now let’s take the same example and watch the information flow using EDI.

There are 5 transactions sets that will be normally used by the Trucking Industry:

204 – Load Tender
990 – Response to Load Tender
214 – Carrier Shipment Status
210 – Carrier Freight Invoice
997 – Acknowledgement

The LM at Acme sees the order for Wiley on his computer and assigns Birdflew to it. In a single keystroke, a digital copy of the order is sent from Acme’s computer to Birdflew’s trucking software via a 204 "Load Tender". Birdflew’s trucking software immediately returns a 997 “Acknowledgement” to Acme indicating that the 204 was received intact. An order is automatically created in Birdflew’s trucking software and the dispatcher is notified. When he accepts the load, a 990 “Response” transaction is returned to Acme indicating that acceptance. If the load is declined, the LM can quickly assign another carrier and send out a new 204 to them.

The driver arrives at Acme to pick up the load. He sends a check-call to the trucking software via his on-board mobile device. The Birdflew trucking software sends a 214 to Acme’s computer letting them know the truck has arrived. This 214 "Status" automatically updates the Acme system so that the sales person can see the order status immediately. (Additionally, Acme could send a 214 to Wiley at this time, if desired.)

As the driver picks up the load and is rolling down the highway, his on-board unit sends in periodic location updates which automatically generate additional 214s. When the load arrives at Wiley’s, a 214 will be sent to Acme notifying them of the arrival and unloading times.

When Birdflew is ready to invoice Acme, instead of printing and mailing an invoice, they send a 210 "Invoice" directly to Acme. Acme’s computer updates its payables and marks the invoice ready to be paid.

When using EDI, the pickup-to-paid time is typically reduced significantly as you can see by these examples.

What Is Required To Get Started?

The only thing you need to implement EDI is trucking software that can send each of the various transaction sets in the standard format agreed upon between you and your trading partner. There is an American National Standards Institute (ANSI) standard called “X12”, to which all EDI in the USA should conform. Most trucking software packages have the ability to send and receive EDI in this format.

There are two basic methods for your computer to send or receive EDI transactions with your partner’s computer: direct communication, and Value Added Network (VAN).

To communicate directly, you and your partner must agree on a communication protocol (FTP, SMTP, XML, or Dial-up via modem). If you each prefer a different communication protocol, then you will need to use a third party “translator”, a VAN. The VAN will accept your transaction sets using any communication protocol you have chosen and then send it out to your partner in whichever protocol they have chosen. The VAN charges a fee for its services, so if you can communicate directly, you will save money.

Don’t have trucking software that supports EDI? Take a look at the TruckMaster Trucking Software system.

Craig Sorensen
TruckMaster Solution Provider
TruckMaster Your Trucking Company™

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