(Editor’s note: EDI is just one of the basics a supplier needs to grasp when working with Walmart. Have questions about this and other areas? Contact an 8th & Walton adviser before your next meeting!)
Walmart has a long history of welcoming small and mid-sized companies to sell products in its stores. However, no matter what size your company, the same compliance guidelines apply to all businesses selling through the world’s largest retailer.
One of those details new suppliers learn about immediately after inking an agreement is becoming EDI compliant.
If you’re not partnering with Walmart already, it helps to do your homework on this topic before meeting with the buying team. You don’t have to know the system inside and out, but the information provided here will help you hit the ground running.
What Is Electronic Data Interchange (EDI)?
Electronic Data Interchange (EDI) is simply the electronic exchange of documents between suppliers and retailers. The EDI process is broken down into two parts: translation and communication:
- In the translation part of EDI, your business document is changed and formatted into a standard EDI format.
- In the communication part of EDI, the newly formatted document is electronically sent to the intended recipient.
Business partnerships (as in Walmart and its suppliers) rely on EDI for smoother transactions. The advantage is that the EDI process is one computer communicating with another rather than two humans communicating.
Was that last sentence confusing? If you’re new to EDI, here’s how it breaks down: imagine a simple email. When you have a task that needs to be done and you send it to someone via email, it requires human intervention. The receiver has to open their email, read your message, finish the task, and email you back. EDI takes that out of the equation!
Here’s what makes the business transaction so smooth: your EDI message can be immediately processed by a receiving computer once it hits. It does not require a human on the receiving end to take any action: no interpretation, no re-keying, no human error to fear from the recipient.
You don’t even have to question whether your message made it to the intended computer. EDI acknowledges that your message was received. The confirmation that all systems are a go will be electronically transmitted back to you.
What Is the EDI Document?
There’s nothing very complex about an EDI document. Yours will have much of the same information you would normally list on a paper document used for the same business direction.
When shipping product from a warehouse to a retailer, your EDI form may contain:
- Shipping address
- Billing address
- Product numbers or UPCs
- Quantities of products
EDI can also be used for other communication between some suppliers and retailers. For example, requests for quotes, purchase orders, purchase order acknowledgment, shipping notices, etc.
EDI for Walmart Suppliers
Seasoned suppliers will know there are many forms of EDI available. To do business with Walmart, you must use EDIINT AS2.
EDIINT (meaning EDI over the Internet) uses specific communication protocols to keep your information safe and secure while being transmitted over the internet. AS2 (Applicability Statement 2) supports EDI transmission over the internet. It further specifies the means to receive and send data securely.
Do All Walmart Suppliers Have to Use EDI?
Walmart understands the constraints of smaller suppliers and has looked carefully at the EDI process. Depending on your volume of invoices, you may be able to keep your costs down in this area.
- Per Walmart guidelines, if your business plans to do over 5,500 invoices in a year, you will be required to use EDI through the AS2 protocol.
- Smaller businesses have an option! If your business can safely do under 5,500 in a year, you can still use EDI through the AS2 protocol. However, you do have the choice to use EDI through WebEDI.
WebEDI is available to suppliers at no cost. It is a web-based solution that allows your business to send invoices and receive purchase orders without having to incur the cost of an EDI package.
One thing to note: If your company elects to use WebEDI, you are required to remain on this system for at least one year. WebEDI can not be used as a temporary EDI solution.
EDI can be daunting if you haven’t dealt with it before! Have questions or want to talk with one of our advisers? Talk with an expert today.