Why EDI 846 is Used for Business Transactions?

In the world of business transactions, EDI 846 is referred to as an Inventory Inquiry/Advice document that is used by both buyers and sellers for checking inventory levels. EDI 846 is frequently used in drop-ship environments where retailer controls e-Commerce website rather than employing API integration or a merchant/manufacturer portal.

EDI 846 specification

For building strong communication support about inventory information between manufacturers, their suppliers, and resellers, EDI 846 Inventory Inquiry/Advice transaction set is primarily used. EDI 846 is used in a number of ways which mainly include sellers of goods and services to provide inventory information to a prospective customer.

EDI 846 follows the X12 EDI transaction code format, designed by the American National Standards Institute (ANSI), contains the format, and establishes the data contents of the Inventory Inquiry/Advice Transaction Set (846) for usage within the framework of an Electronic Data Interchange (EDI) environment.

EDI 846 Inventory Inquiry/Advice transaction set can be used in the following ways: –

1. It can be used by sellers of goods and services to provide substantial inventory information to the probable customers with no obligation to them to procure these goods and services.
2. It is used by a representative of a seller of goods to supply inventory information to that particular seller.
3. It is used for one location to supply another location with considerable inventory information.
4. It is used as an inquiry concerning the availability of inventory with no obligation on the seller of goods and services for reserving that inventory.

The suppliers and manufacturers use several EDI transactions to notify traders about on-hand inventory in various inventory holding locations like stores, outlets, warehouses, distribution centers, etc. The manufactures also use this document to inform their trading partners regarding the overstocked inventories available at discounted prices. The information which is included in EDI 846 transactions set comprises quantities, inventory location identification, and the item or part description.

The quantity of an item can be presented in many ways, such as: –

1. The quantity in float
2. The quantity on hand
3. Committed amount of quantity
4. The quantity of on order items
5. The amount of returned items
6. The number of backorder items
7. The number of items in transit

EDI 846 format

In simpler words, EDI 846 can be described as an electronic version of a paper inventory update. In the business world, it is important to prepare the inventory-related document and is referred to as EDI Inventory Inquiry/Advice, EDIFACT INVRPT, and x12 846. EDI 846 is frequently used by retailers to inquire about inventory levels of suppliers and can direct them about the number of units they have in stock. It also informs retailers about the availability of inventory in the future. EDI 846 is commonly used in e-commerce order fulfillment, especially for drop-shipping, and can be sent by suppliers at different frequencies, ranging multiple times a day or few times a week. In e-commerce business transactions, it is essential to updated information about the availability of goods. Therefore, one of the main EDI requirements is the capability of the supplier to transmit an EDI 846 Inventory Inquiry document.

EDI inventory

INVRPT, also referred to as an inventory inquiry document helps suppliers to provide information to purchasers about the number of goods in stock and available, and on order for future delivery dates. This inventory inquiry document helps in better management of buying needs and is frequently used in a drop-ship management model which supports e-commerce business management.

EDI Inventory inquiry documents are mainly of two types and they are EDIFACT and ANSI X12 standards. The main data elements which are included in an inventory inquiry are

1. Identifying number
2. Inventory data
3. Product item identifiers/services like UPC/EAN/GTIN needed with their respective quantities

Supplementary data required in the inventory inquiry are:

1. Out of stock items and restock dates
2. Products that are discontinued
3. Locations of Supplier warehouse with on hand and available amounts of products item-wise
4. Vendor number
5. Additional item identifiers like buyer item number and vendor part number
6. Description of items

Benefits of Using EDI Inventory Documents

EDI inventory documents are proving favourable to purchaser and supplier

The benefits of using EDI inventory documents in business transactions are: –

1. It enables suppliers to advise about the availability and non-availability of products.
   of implementing electronic trading of the inventory advice.
2. It smoothens up better management of e-commerce dropship.
3. It communicates to purchasers about the availability of products if they are out of stock.
4. It helps purchasers to better plan warehouse and store orders.
5. It enables purchasers to manage data that is available on their official website. The purchaser’s data include items the out of stock, quantity available, or remove items from the website.
6. It also supports the ability to order non-stock items and also helps in placing special orders.

EDI 846 sample file

EDI 846 works efficiently as an electronic preference of transaction which is used by a seller to issue an inventory inquiry or inventory advice to a buyer (reseller or retailer). EDI 846 can also be used by sellers to communicate the availability of a new product or inventory levels at several holding locations. EDI 846 document can be divided into functional groups which explain the contents of the transaction being conducted.

EDI 846 sample file comprises of: –

1. Item ID
2. Party ID and location
3. Administrative communications contact
4. Currency
5. Transaction totals
   The additional information that can be added are: –
6. Quantity forecasted
7. Sold Quantity
8. Available Quantity in stock
9. Information about Pricing

Conclusion

Due to the evolution of the drop-shipping business and sporadic rise in the e-commerce business and online sales, EDI 846 documents are gaining big significance in business transactions worldwide. EDI 846 is used to exchange information about stock levels and availability of goods helps in optimizing deliveries in online stores. As a result, it gives accurate information to online shoppers about the availability of stock, in a real-time mode, reducing administration fees and expenses to process orders.

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