More and more retail sales are made through online mediums. As a result, one of the preferred methods for retailers to fulfill their orders is through dropshipping processes. By using dropshipping methods, inventory, packaging, warehousing, and shipment costs for retailers are significantly reduced, because all they have to do is tell a wholesaler or manufacturer what the order is and where to send it to. The wholesale or manufacturer then sends it to the customer. Additionally, dropshipping makes the supply chain as a whole more efficient, because there is just a single warehouse in which all orders are picked, packaged, and shipped. This means that there are significant savings on both shipping and inventory, all of which can be passed on to the customer. If done right, this could increase sales.

However, dropshipping supply chains are unique and present some unique challenges as well, therefore. The greatest concern is that a store has little to no insight into the inventory level of the wholesaler or manufacturer. The result is that it is difficult for them to show whether or not an item is available. If they have incorrect inventory data, or non-available data, this can lead to a drop in customer loyalty and even loss in sales. There are other significant issues as well, all of which can have a negative impact on overall customer satisfaction of their purchasing experience. Things such as inefficiency in order status updates, exchanging transaction details, poorly branded packing slips, RMAs (return merchandise authorizations), and more, are all issues that must be addressed. A good EDI dropship system can help to improve this.

Four Key Ways an EDI Dropship Improves Processes

1. In order to ensure a vendor’s inventory levels are visibly automated and implemented, trading partners that are EDI capable can exchange different inventory inquiry documents between each other. The supplier or manufacturer can use these to ensure full details of available inventory are provided. It is vital to agree on how often these exchanges of information are made, which usually varies depending on the season. Sometimes, for instance, it is done several times per day.
2. EDI dropship systems provide two key transaction documents, being the purchase order and the invoice. A good system, however, adds a third document to this, which is the purchase order acknowledgment. This is an important supply chain document that shows the buyer when the merchandise is in stock or has been shipped.
3. If an order has a longer lead time or is a custom product, an order status report may be requested by a retailer. This report updates them on where an order is in the fulfillment chain.
4. When an order has been fully or partially shipped, an advanced ship notice can be sent by the supplier. On this note, the EDI dropship system will add shipment and tracking information. This means that the retailer can keep their customer up to date of where different orders are and when they can be expected.