Boost Sales, Cut Costs: The EDI Edge in CPG Distribution

Boost Sales, Cut Costs: The EDI Edge in CPG Distribution

Your B2B sales are increasing, and you’re getting some requirements from retailers, including adding EDI to receive their orders. EDI seems like some techy software that IT nerds love but you don't totally get. As we described in previous blog posts, EDI is quite simply a data standard that facilitates streamlined exchange of business documents between various entities - it is not a technology. Implementing EDI in your consumer packaged goods distribution operation delivers hard dollar returns that go straight to your bottom line. There is a tangible return on investment for implementing EDI, and specifically, implementing it effectively.

Cost Savings

First and foremost, EDI cuts your labor costs dramatically by eliminating all the manual order processing and data entry your staff does today. You may have started with a web EDI portal to  make things easier. This process has multiple steps:

1. Receive email notification for a new purchase order

2. Log in and confirm:

  1. Ship windows
  2. Inventory availability
  3. Inventory expiration dates
  4. Payment terms
  5. Correct SKUs 
  6. Confirm adherence to minimum order quality. 
  7. Confirm per unit price. 

3. Download and send packing slip to 3PL warehouse

4. Confirm with warehouse on ship window dates

5. Receive packing geometry from warehouse

  1. Confirm item count
  2. Confirm carton count
  3. Confirm no mixed SKUs per carton
  4. Confirm expiration dates or lot numbers

6. Log back in to portal

  1. Confirm how many cartons
  2. Confirm weight
  3. Confirm dimensions
  4. Confirm ship window
  5. Create draft ASN
  6. Generate labels (UCC-128 labels / GS1-128 shipping labels)
  7. Generate mailing labels (if shipping provided by trading partner)
  8. Download labels

7. Email labels to warehouse

  1. If labels include shipping/tracking, no further action required
  2. If labels are just the UCC-128/GS1-128 labels, wait for tracking from warehouse

8. Log back into EDI portal

  1. Copy and paste all tracking into proper cartons in the draft ASN.
  2. Confirm and finalize ASN
  3. Generate invoice after shipping is confirmed
  4. Download pdf of invoice
  5. Send invoice to internal accounting team

It takes a minimum of 2 hours on each order for manual EDI order processing. Orders with multiple back and forth on ASN, labels and complex shipping requirements will take longer. If you’re paying staff $25 per hour, you’ve just added at least $50 to the cost of goods on that order. Research shows EDI automates 60-70% of those tasks that humans now handle. When you think about the overhead involved - wages, benefits, HR costs, facilities, management - that's a ton of savings. Multiply those hard dollar labor cost reductions across your entire distribution organization and you’re looking at hundreds of thousands in savings or more.

Speed & Accuracy

EDI also speeds up order fulfillment by up to 80%. Instead of printing orders and having staff type them in, orders flow electronically right into your warehouse management system. That near real-time fulfillment makes your retail buyers ridiculously happy. Considering each order touch requires about 20 minutes of labor, the time and cost savings really add up. Plus you turn inventory faster when orders get out the door quicker.

Let’s talk accuracy - manual processes average error rates of 1-2% due to data entry typos and mistakes. EDI eliminates those blunders, along with all the wasteful aftermath - chargebacks, shipment delays, invoicing issues. One large distributor calculated that automating EDI helped them avoid nearly $500k in annual chargeback fees. Those are savings that go straight to your bottom line.

Visibility & Insights

Inventory management visibility is another big ROI factor. EDI provides advance shipment notices detailing exactly what products are in transit. With that real-time data, you align incoming inventory seamlessly with current stock levels. That means far fewer losses from expired or spoiled goods. It also means less stock-outs that make your buyers unhappy. One study showed brands can reduce inventory costs by 7-12% with automated EDI shipment visibility.

In addition to the hard cost savings, EDI provides major strategic benefits. The data insights unlocked by EDI integration allow more informed decisions about inventory levels, supplier relationships, sales projections, and more. With the detailed business intelligence EDI makes available, you can optimize everything from warehousing to transportation.

New Business Expansion

Here’s a big one - EDI opens the door to major new business opportunities that may have been out of reach before. Large retailers and grocery chains increasingly require EDI capabilities from distributors. With integrated EDI, you can onboard new high-volume partners quickly thanks to Crstl’s library of pre-configured mappings. The increased revenue from landing those big new accounts delivers massive ROI.

On top of all that, automated EDI means your staff is free to focus on more value-added tasks. Instead of doing data entry and order processing, they can provide top-notch customer service, find operational efficiencies, and identify new opportunities for growth. That translates into higher employee satisfaction along with better service for your trading partners.

Choose your EDI solution thoughtfully 

It's also crucial to choose the right EDI platform. Look for a solution where EDI is their core expertise, and that it integrates easily with your other systems like WMS, ERP, and accounting software. Make sure it includes top-notch onboarding assistance, customer support, and the flexibility to scale as your needs evolve.

The more optimized your EDI implementation, the faster you'll see major efficiency gains, cost reductions, and revenue growth. There’s no question that for CPG brands, a well-executed EDI strategy delivers game-changing ROI. Want to improve your profit margins? Contact us today to implement Crstl for EDI now.