In this article, learn about:
What EDI 846 is
What is included in an EDI 846 document
How to get the most out of EDI 846 documents
Electronic Data Interchange (EDI) is the process by which businesses and other entities communicate electronically. EDI is also used in other industries to facilitate communication between parties.
Related Reading: EDI for Retail Supply Chains Cheat Sheet
What is EDI 846?
In the retail industry, EDI 846, also known as an Inventory Inquiry, is a document designed to communicate inventory numbers mostly between buyers and suppliers. It is used most often in transactions between drop ship vendors and their buyers.
EDI 846 documents are also commonly used for eCommerce vendors that utilize a drop ship management model. Drop shipping is a fulfillment method that entails a store selling a product that is shipped directly from a third party to customers. The store never actually comes in contact with the product). The third-party suppliers will send an EDI 846 to the store stating what they have on hand and on order.
In scenarios where the retailer has more control over the .com website sales and practices, EDI 846 is essential for monitoring demand.
For example, a sunscreen supplier with an overstock of product in the middle of winter will be looking to offload some of its items by selling at a discounted rate. The supplier would send an EDI 846 informing the buyer of the excess on-hands, giving them the opportunity to make a special buy, sometimes at a discount.
What is Included in an EDI 846?
As is the case with most EDI document types, there are several pieces of data that must be included in the document:
Product item identifiers like UPC are needed with quantities listed for each
Date of inventory inquiry
Description of stocked products
Products that are currently out of stock
Products that will be discontinued
Vendor numbers
Retailer identification information
When suppliers are sending 846s to retailers, there are some other pieces of information that could be added on:
Which items will be discounted
Forecasts for restocking dates
Inventory reporting by location
How Does the Exchange Work?
A common EDI 846 scenario would be as follows:
A supplier transmits an 846 to their trading partner, letting the partner know if specific products are overstocked or understocked.
The trading partner sends back a 997 Functional Acknowledgment, which notifies the supplier that the 846 was properly received.
Based on the need, the buyer can choose to buy the supplier’s overstocked products or prepare not to receive understocked products.
In real life, this process can be much more automated via integrating into ERP/WMS systems.
Why Use an EDI 846?
Ideally, EDI 846 can remove the friction from .com sales by increasing communication speed between the buyer and the seller.
The Inventory Inquiry/Advice is an incredibly effective document for use between trading partners to properly regulate their respective stock of a product. By receiving relevant information on overstocked, out-of-stock, and discontinued products, purchasers can optimize ordering for their warehouses and stores. Purchasers can also quickly notify customers when in-demand products will be back online or back on store shelves.
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