Selling groceries is a very competitive and very low margin business. The average margin for a grocery store is a scant 1.3 percent according to grocery industry analyst Jeff Cohen with IBIS World. Consequently, grocery retailers have focused on operational efficiency for a long time.
The first scan of a product UPC barcode at a supermarket checkout stand was almost 40 years ago in June of 1974. Operational improvements have continued in the decades since then. The use of product barcodes has become almost universal because it greatly increases speed and accuracy.
Kroger recently deployed a combination of infrared sensors, data analytics and flexible staffing in 2,300 stores. The new system keeps the average check-out wait time for customers to no more than 30 seconds, or approximately one person ahead of them in line.
Similarly, EDI greatly improves supply chain efficiently. Electronic orders and invoices are faster and more accurate than faxes, emails, or phone calls. Every major grocer requires all of their suppliers to be EDI compliant.
Electronic orders are sent from the grocer to the supplier as either an 850 type , or as an 875 type EDI transaction. The 850 type EDI order is used in many industries. The 875 type is specific to the grocery industry and is called a Grocery Products Purchase Order.
In actual usage, the 850 and 875 types are quite similar. Both include line item numbers, prices, and quantities as well as shipping instructions and discounts where applicable. Some grocers support both EDI order transaction types. Some use just the 850.
Electronic invoices are sent from the supplier to the grocer as either an 810 type, or as an 880 type EDI transaction. The 880 invoice is paired with the 875 order. The 810 invoice is paired with the 850 order. The 810 and 880 transaction types are also very similar.
Why are there seemly redundant 850/810 and 875/880 grocery EDI transaction types?
In the early days of EDI the 850 and 810 transaction types were less sophisticated than they have been in more recent decades. The ANSI standards folks felt that special 875 and 880 types were needed for the grocery industry. The 850 and 810 types evolved to be much more complete and flexible over the years. However, the 875 and 880 transaction types are still around because of wide-spread use in the past by many trading partners and a reluctance to “not fix what is not broken.”
Some grocers require suppliers to send ASN’s (Advance Ship Notices) which are an 856 transaction type. However, 856 transactions are not as prevalent in the grocery industry as they are in many other industries. We typically see 856 ASN’s in tandem with 850 orders and 810 invoices rather than 875 orders and 880 invoices because the 850 orders have information that is useful for the 856 ASN’s.
Suppliers that deliver direct to stores in many cases do not receive EDI orders, but are still required to send EDI invoices. See the blog post on direct to store delivery transactions for more on this topic.
Contact us anytime to discuss easy-to-use EDI compliance with grocery customers.Grocery EDI Transactions by Steve Brewer