CovalentWorks Blog

Pay On Receipt Speeds Up Payment

Pay On Receipt speeds up payment to suppliers by eliminating the invoicing step. Here is how it usually works:

  1. The customer sends an EDI purchase order to the supplier.
  2. The supplier sends an EDI Advance Ship Notice and ships the goods to the customer in cartons with bar code labels that correspond to the Advance Ship Notice. The Advance Ship Notice is basically an electronic packing slip.
  3. The customer receives the goods at their loading dock, performs the appropriate checking process, and permits the Advance Ship Notice information from the supplier to automatically update their systems for operations and payment. The check process may be a verification that all products match the Advance Ship Notice or there may only be periodic audits of some shipments.
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New EDI Trading Partners Added

CovalentWorks provides EDI service for our clients with over 1,600 different trading partners. View the list.

Every year we add more. In the past 12 months over 100 new EDI trading partners were implemented.

Clients can request implementation for any trading partner that is their customer and that requires EDI of them. All versions of the ANSI X-12 and EDIFACT standards are supported.

Our cloud EDI solution includes all of the components necessary for compliance with the trading partner’s specifications. EDI software, mapping, testing, communication, and on-going support are all part of the cloud solution. Integration with the client’s system is available if needed.

Not only are new trading partners implemented as needed, but clients do not have to worry about specification changes their existing trading partners may make. Upgrades for new EDI document types and changes to existing documents are included.

Contact us anytime to find out more about how we can assist your small business.

Why Omnichannel Matters to Small Businesses

Omnichannel, sometimes called multi-channel, refers to consumers shopping and buying from any channel: online, from their smartphones and from stores. The growth of Omnichannel is an important trend for small businesses. The reason it is important is that shelf space is no longer a limiting factor for having products sold by major retailers.

In the past, in order to get your product into a retailer’s store, you had to displace another supplier already on the shelf. Shelf planagram cycles determined when a supplier might be chosen. Now retailer ecommerce sites can carry a much large assortment of products online than can be displayed in stores.

We are seeing retailers start with online sales to prove the marketability of a new supplier’s products and then move the supplier into brick-and-mortar stores as sales increase. Here are some examples that demonstrate how having products online contributes to increasing sales.
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New Trends – Retailer Expansion in Canada

Several retailers have identified Canada as an area ripe for new revenue growth. They have noticed the stronger Canadian dollar, the opening of availability of retail locations as some other retailers shutter their stores, and 50% higher average sales per square foot than the U.S.

The new entrants hope to replicate the success over the last several decades of Home Depot, Staples, Costco, and Wal-Mart. Canada’s population of 35 million is close to California’s population of 38 million, making it an important area of opportunity.


Cabela’s, the $3.6 billion retailer of products and apparel for hunting, fishing, and camping, is picking up their pace of expansion in Canada. Cabela’s entered the market slowly in 2007 and explored what it takes to be successful with a new cohort of consumers in a different country. Its plans now include doubling the number of stores by next year.

Cabela’s currently has 58 stores in North America and plans to add a total of 19 more in the coming two years. They seem to be on track for continuing to grow revenue and profitability by double digits as they have for the last five years.


This year Nordstrom is adding its first Canadian store. Nordstrom will open one store per year and plans to have a total of six stores by 2017.


Target opened 124 stores in 2013 after acquiring over 100 Zeller store locations. While Target’s troubles have been widely publicized, it has addressed one of the most difficult aspects of expansion in Canada – the acquisition of store space in a very tight retail market controlled by a few major players.

Wal-Mart had a similar strategy in 1994 when it acquired Woolco’s Canadian stores and it has not looked back since. In contrast, Lowe’s wants to expand north of the U.S. border, but is having trouble lining up locations.

Target’s sophisticated supply chain is adapting quickly to the fulfillment needs of the new stores and to ending the problem of empty store shelves. Over 30,000 new items will be stores by Christmas as Target adapts to the tastes of Canadian consumers.

Canadian Retailers’ Response

Canadian retailers are reacting. Hudson’s Bay Company is remodeling stores. Canadian Tire is emphasizing its digital strategy like many U.S. retailers.

EDI Requirements

Canadian EDI invoices can be complicated because of taxes. Taxes on invoices can vary by product type and province. As always, EDI invoices have to be perfect in order to be paid.

We have extensive experience with Canadian retailers and over 1,000 EDI trading partners world-wide. Contact us anytime to find out more about how we can assist your small business with Canadian EDI solutions.

Trading Partner EDI Updates

Trading partners of small businesses change their EDI compliance requirements from time to time. Here are a few notable changes for the summer of 2014. Import Vendors used to exchange order information with import vendors using email and fax. The requirements have changed. Now order information with import vendors must be exchanged using EDI documents. Even If your import company already does business with Target Stores, you will need to have set up because the EDI ID used for is different from the ID used for Target Stores.

Currently the mandatory document types are an 850 purchase order and an 860 purchase order change. Although other document types are not yet required, document types used by domestic vendors such as advance ship notices, invoices and inventory update will probably be added in the future.

Saks Fifth Avenue

Saks Fifth Avenue was recently acquired by Hudson’s Bay Company (HBC) and EDI operations are being standardized across the combined companies’ supply chain technologies. Vendor numbers are changing and new store numbers are being used for both Saks Fifth Avenue and for Saks OFF 5th stores. Bill of Lading and Tracking information continues to be a stringent requirement for Advance Ship Notices (ASN’s) and Invoices. The Billing of Lading information on ASN’s and Invoices must match.

Two new transaction types are being added. Saks will start sending 824 Application Advice EDI documents to communicate EDI errors to speed up response from suppliers and EDI 180 Return Merchandise and Notification EDI documents will be sent so that detailed information can be sent by Saks concerning returns.


McKesson Corp has added to new requirements for suppliers who send them Advance Ship Notices. The ASN’s for products regulated by the FDA now have to include product strength, product dosage, container size, and a statement concerning the tractability of the product through ownership changes. Read more about McKesson and other trading partners affected by FDA regulations in this blog post – ASN Changes in the Pharmaceutical Industry

CovalentWorks EDI solutions keep up with the changing EDI requirements from our clients’ trading partners. Contact us anytime to find out more about how we can assist your small business by handling EDI headaches for you.

20 Reasons to Switch EDI Providers

Many of our clients have switched to CovalentWorks from another EDI provider. Clients made the change because their provider’s service did not meet their expectations, the solution did not satisfy their needs, or costs were too high.

Here are the 20 most common reasons our clients have given us for switching their EDI provider to CovalentWorks.


  • 1. The client was not happy with the support personnel of their old provider.
  • 2. Implementation of a new EDI partner was taking too long.
  • 3. The client was initially mislead into believing they had to use a certain “preferred” EDI provider. The service, cost, and solution of the old provider did not add up to the value they needed.
  • 4. The EDI provider they were using was acquired by another company and subsequently service had declined, pricing had increased, or both.
  • 5. Little or no online help was available for self service.


  • 6. The EDI software they were using was not supported any longer.
  • 7. Their EDI software was not working anymore and the people who understood how to fix it had left the company.
  • 8. Rather than using EDI software, they had web forms, but the web forms were slow or hard to use. The solution was not scalable as their business grew. There was no capability to quickly do batches of advance ship notices and invoices.
  • 9. They could not download a simple csv file or raw EDI file from their web form pages.
  • 10. EDI Integration with their systems was not available, or was too expensive. Manual data entry into their systems was slow, labor intensive, and prone to errors.
  • 11. The client had a 3PL (Third Party Logistics Provider) and the solution did not meet the needs of the client and their 3PL.
  • 12. A new EDI customer partner they needed was not supported. For example, the client wanted to add Walmart but the old provider did not support them.
  • 13. Their EDI customer had new required EDI transaction types that were not supported.
  • 14. New versions of EDI being used by their EDI customers were not supported.


  • 15. The cost of the old provider was too high.
  • 16. There were expensive add-on fees for additional trading partners, for additional users, or hidden fees they found out about after they started using their old provider. Integration was prohibitively expensive.
  • 17. Their old EDI provider had expensive premium partner fees for some partners which the client found out about when they needed to add a new partner.
  • 18. Upgrades and maintenance to their EDI software were too expensive.
  • 19. Adding a new EDI partner to their software was too expensive.
  • 20. Their old provider required an expensive long-term contract and they preferred a month-to-month service.

Clients switch to CovalentWorks for all of the above reasons. They stay with us because they get the service and solution they need at an affordable cost. Contact us anytime to find out more.

10 Must-Read EDI Topics for Small Businesses

CovalentWorks has recently added new EDI white papers that cover important topics of interest to small businesses who sell to large customers.

The 10 white papers are pdf downloads that are available for free.

Go to EDI white papers for links to all 10 of them.

  1. 3PL Basics for Small Business
    Learn about the benefits of a third party logistics provider (3PL) and how EDI works efficiently with a small business, a 3PL, and the small business’s customers.
  2. Chargebacks and EDI Guide
    The possibility of chargebacks from large customers can be intimidating for small businesses. Learn the common causes of chargebacks, why your customer has them, and best practices for avoiding them.
  3. Common Terms Related to EDI
    This white paper takes the mystery out of EDI jargon. The most common business and technical terms related to EDI are explained. Common acronyms are included.
  4. Electronic Data Interchange Training Basics Guide
    This guide is written for small businesses that are new EDI. It includes an overview, a review of how EDI works for orders, an explanation of why you need EDI, and frequently asked questions.
  5. History of EDI
    EDI is surprisingly long-lived and has been around since the 1960’s. This whitepaper has a time line of major EDI developments from then until today. Why EDI will continue to matter is explained.
  6. How to Evaluate Outsourcing Your EDI Requirements
    If you are contemplating whether to build your own EDI capability or outsource your EDI needs, this white paper is a must-read. Key questions to ask and benefits to consider are covered.
  7. How XML and EDI Helps Improve Supplier Efficiency
    Many small business systems have the ability to interface with XML files. Learn about XML and how it helps increase supplier efficiency.
  8. Overview of EDI in Drop Shipping
    Drop shipping direct to consumers and retail stores is on the rise. Learn how the drop ship process works with EDI and with branded packing slips.
  9. Retailer Buzzwords
    Understanding your customer and the retailer buzzwords they use is covered in this enlightening white paper for suppliers who are new to the retail industry.
  10. Tips for Selling Your Product to Major Accounts
    Discover tips for selling your product to large customers based on experience gleaned from conversations with thousands of successful small businesses.

What Suppliers Need to Know About Cross Docking

Cross docking increases the efficiency of the order to store process. Products are moved at a lower cost from suppliers to end consumers.

A cross dock distribution center has multiple doors, or “docks,” for unloading and loading trucks. Large distribution centers may have hundreds of docks. Cartons from suppliers arrive at docks on one side of the distribution building, are batched by outgoing truck load with other cartons, and then are loaded onto outgoing trucks from docks on the other side of the building.

Here is how a shipment from a small business supplier to a retailer is typically moved through the cross docking process:

  • The supplier ships cartons to the distribution center
  • The supplier’s cartons are unloaded at an in-coming dock and onto a sophisticated system of conveyer belts
  • The cartons are sorted based on final store destination
  • The sorted cartons are moved across the distribution center building and grouped by final store destination with cartons from other suppliers
  • Truck-size lots of cartons are directed to an outgoing loading dock area
  • The truck-size lots are loaded onto an out-going truck bound for a specific destination store.


The supplier benefits directly from cross docking by getting product into stores faster and indirectly by lowering costs for the retailer which helps reduce the final price for the end consumer and consequently increases the number of units sold.

The retailer reduces labor, inventory, and shipping costs because:

  • Product is handled less
  • Inventory is held for shorter periods reducing inventory carrying costs
  • Warehouse costs are saved because product is not stored
  • Fewer but larger shipments are sent to stores saving on transportation costs
  • Expensive small-volume shipments to stores are eliminated.

Mark for Store

Mark for Store is frequently a requirement for suppliers who ship to a cross dock distribution center.

Mark for Store cartons have to have a UCC bar code shipping label that includes the final destination store identification. The store identification specification varies by retailer. In addition to be being human readable, the store identifier number is usually, but not always, encoded as one of the bar codes on the label.

Mark for Store labeling is not always required for various reasons. For example, some categories of product are kept in inventory at the distribution center and then sent to stores as stock is depleted at the stores. Another example is an order that is only for one store. The distribution center will know the store destination from the order and the UCC bar code label so additional Mark for Store labeling is not needed.

EDI Plays an Essential Role

Efficient cross docking requires EDI Purchase Orders and Advance Ship Notices (ASN’s) as well as bar code labeled cartons.

ASN’s sent via EDI are essentially electronic packing slips. ASN’s from suppliers support distribution center visibility into inbound shipments and supports planning of receiving staff, allocation of receiving docks, and arrangement for out-bound trailers. You can read more about ASN’s by clicking on this link: Read about ASN’s.

ASN’s in conjunction with UCC bar code labels enable automated scanning, sorting, and movement of cartons from receipt at the unloading dock, through the distribution center’s system of conveyer belts to the outgoing loading dock. The ASN’s and UCC carton labels will be used again by the receiving dock at the final destination store.

Contact us anytime to find out more about how we can assist your small business.

RFID Tags Are Back

Radio Frequency Identification (RFID) tags are back. You may recall from ten years ago that Walmart announced they would require all suppliers to apply electronic RFID tags to all of their products. But the initiative for the entire supplier base fizzled because of cost. News about the electronic tags faded from the spotlight.

The situation is different in 2014. Not only have costs for RFID tags have been reduced, but today’s competitive omnichannel environment requires that retailers have accurate inventory information about exactly what is available in each store.

Consumers who consult their smart phone while in a store expect to find the item in the store that the web site says is in the store. Retailers who want to support online orders by either shipping from the store or by providing pick up in the store have to know precise inventory information at the store level.

The primary advantage that has emerged for RFID tags is speed and accuracy of in-store inventory.

  • Speed – RFID tags on individual products support scanning of up to 15,000 items in an hour compared to about 300 items per hour with UPC bar codes. Complete inventory counts can be done for an entire store several times a month instead of the traditional practice of counting inventory once per year.
  • Accuracy – Better inventory accuracy increases sales by having the right product in the correct place on the selling floor or available for shipment.

A second advantage is that loss prevention is enhanced by the ability to track individual items as they move through the retailer’s distribution system. Stores lose millions of dollars a year due to theft, both internal and external. For example, American Apparel estimates that it experiences up to 60 percent of their inventory shrinkage from internal theft and process issues.

A third advantage of RFID technology is that it enables retailers to closely monitor planagram compliance so that store displays are continuously marketing products as intended. For some products, such as shoes, this is especially important. If a shoe style is not displayed, the consumer won’t buy it because they don’t know it is available.

A fourth advantage is that the tags enable new ways of interacting with customers. Burberry’s is testing a smart mirror that automatically makes suggestions to the customer for accessories based on the RFID tag in the garment being worn in front of the mirror.

What are RFID tags and How Do They Work?

The RFID tag on individual items in retail is a tiny electronic chip and antenna. The particular kind of RFID tag being used is an Ultra High Frequency (UHF) Gen 2 V1.

The tags are about the size of two grains of rice. RFID tags are small enough to be embedded into the UPC bar code label or they may contained in a separate label altogether.

Current requirements are for the chip to contain the same information as a UPC bar code (i.e. the supplier’s GS1 Prefix and Item Reference Number) and also a serialized number that uniquely identifies a particular item called a Serialized Global Trade item Number (SGTIN). These three numbers are collectively called the Electronic Product Code (EPC) serialized number.

The tags do not have a battery. An RFID reader can pick up the information in the tag through the reflection of radio waves emitted from the reader.

Unlike a printed UPC bar code label, RFID tags can be scanned from a greater distance, scanned much faster, and do not require line of sight to be read. The tags can even be read through cardboard cartons and through racks of clothing.


Cost has been reduced. According an Accenture study of 116 retailers and their suppliers, an RFID tag costs about 10 cents and the labor to attach it costs about 20 cents. TrueCount sells RFID tags for between seven and 12 cents each depending on the quantity ordered.

Wide-Spread Use

An Accenture survey revealed 48 percent of retailers have plans in place to deploy RFID technology. Just over 75% of retailers who have implemented RFID plan to expand it into additional product categories. 80% of suppliers who use RFID technology are doing so because their customers require it.

Currently adoption is highest for the categories of apparel and footwear. ChainLink Research reported that last year over one billion apparel items were RFID tagged.


  • American Apparel is rolling out RFID to all stores.
  • Fred Meyer is currently surveying apparel suppliers to determine their RFID tagging capabilities.
  • J.C. Penney said in 2013 it would tag all merchandise with RFID tags, but then backed off and currently only requires tags on footwear, bras, fashion jewelry and denim.
  • Macy’s is using RFID tags in the shoe department in every one of its 850 stores. Additionally, all “size-intensive” replenishment items are being tagged, which represents about 30% of revenue. By the end of this summer, Macy’s plans to have half of all replenishment vendors sending merchandise with RFID tags affixed.
  • Saks Fifth Avenue and Lord & Taylor, both of which are owned by Hudson’s Bay Company, are using RFID tags on footwear to ensure that the correct shoes are always exhibited according to the planagram. The displays are audited every day for compliance with the planned presentation. After two years of experience with pilot projects, the tag requirement is being rolled out for most merchandise categories through the first quarter of 2015.
  • Walmart is using RFID tags on apparel items.

What This Means to Your Small Business

If you sell apparel or footwear, you may already be tagging your products. If not, you can probably expect larger retail customers to require it in the near future.

Retailers will continue to add more product categories for which they require RFID tags as benefits accrue for apparel and footwear. Rollout priorities will probably be initially driven by products with many sku’s for sizes and colors, followed by products with high turnover and products with higher loss rates such as jewelry.

There is a good chance that further RFID cost reductions and continuing omnichannel pressure for accurate in-store inventory will eventually drive retailers to require RFID tags on almost all products.

In the past retailers checked new suppliers and audited many cartons of existing suppliers to verify that carton contents matched the associated EDI Advance Ship Notice (ASN). Now retailers using RFID can quickly verify every single carton’s contents at the receiving dock without opening the cartons. Suppliers will have to ensure packing of cartons is accurate 100 percent of the time and always matches the EDI advance ship notice document. Of course this is the requirement even now, but in the future packing mistakes will very rarely, if ever, be missed by the retailer.

Online Retail Trends You May Have Missed

The retail industry is showing strong growth with the addition of 230,800 jobs in the 12 months through June. Although the majority of retail sales are still made in stores, online sales are the biggest growth area. Online retail sales increased by 17 percent in the past year based on a 2013 U.S. Department of Commerce report.

Amazon vs. the World

According to the National Retail Federation, for the first time, Amazon has joined the ranks of the top 10 retailers after growing a whopping 27 percent last year to almost $43 billion in sales.

In stark contrast, the top 25 retailers’ online revenue added together is not as great as Amazon’s. One of the fastest growing in online sales was Walmart with online sales growth of 30 percent last year. But Walmart’s total online sales just barely match Amazon’s growth in sales of $10 billion.

Delivery Competition

To counter Amazon prime delivery time of 2 days for most orders, brick and mortar retailers are building on their wide-spread physical presence for delivery of online orders and to increase shopping convenience. Shopping center vacancy rates continue to be low and rents are gradually rising in part due to new national brand retail outlets.

Walmart has the most aggressive store expansion. Walmart will open about 300 new Neighborhood Market and Walmart Express stores this year, adding more online delivery coverage. In addition to more stores, Walmart opened three new online fulfillment centers in 2013 to support its goal of being able to deliver online orders anywhere in the country within 2 days.

Grocers have lagged other retailers in online sales growth, but the order online and pick up at a store delivery method is starting to grow. Publix is having notable success.

Whole Foods and Trader Joe’s are quickly adding stores to progress towards a national foot print. Whole Foods is beginning to experiment with online ordering and pick up in stores. Trader Joe’s sells their products on Amazon but not does not have an online store.

A just completed study by PriceWaterHouseCoopers found that only about 1 percent of U.S. consumers purchase most of their groceries online, but the study goes on to say that the technology landscape and changing demographics will drive more growth in the future. The U.S. is playing catch up with England where 5 percent of groceries are bought online.

Kroger, the largest U.S. supermarket chain and second largest U.S. retailer, recently announced the purchase of online vitamin retailer Vitacost. Vitacost had surprisingly large revenue last year of $383 million from the sale of vitamins, herbs, health foods, and nutrition products.

Not All Retailers

Some retailers are proceeding more cautiously. Target has started testing a small-store urban initiative called Target Express. Costco is intentionally staying away from smaller stores for now.

In the small-format value category, Dollar General supports online orders but not delivery in stores despite having over 11,000 retail locations. Family Dollar with almost 8,000 stores has no online order offering at this time.

Any Order Method

EDI transactions for online orders frequently have unique requirements. CovalentWorks supports EDI capability with your retail customers for online orders or any order method that is needed. Contact us anytime to find out more.