If you supply a major Australian retailer, it will probably ask you to trade by EDI (electronic data interchange): its purchase orders arrive as electronic messages, and your order confirmations, despatch notices and invoices go back the same way. Most smaller suppliers meet this through an EDI provider. The gap is usually between that provider and your own systems, where orders are retyped into the stock system and invoices recreated in Xero or MYOB.
What EDI covers
EDI replaces paper and email documents with standard electronic messages. Woolworths' published guidelines for suppliers, for example, cover:
- Purchase orders from the retailer.
- Purchase order responses, confirming what you can supply.
- Purchase order changes, when the order is amended.
- Advance shipping notices (despatch advice), telling the retailer what is on the way.
- Invoices, sent electronically rather than on paper.
Each retailer publishes its own rules for message structure, timing and content, and many also have barcode and labelling requirements for cartons and pallets. Your EDI provider handles the message formats; your business still has to supply the right data at the right time.
How smaller suppliers usually connect
There are two common set-ups:
- A web portal. The EDI provider gives you a website where retailer orders appear and where you key in responses, despatch notices and invoices. Quick to start, and fine for a handful of orders. Everything is typed twice: once in the portal, once in your own systems.
- An integrated connection. Orders flow from the EDI provider into your stock or order system, and despatch notices and invoices are produced from the same data and sent back automatically. More set-up, much less typing as volumes grow.
Where it goes wrong
The problems are rarely the EDI messages themselves. They are the hand-offs:
- Orders retyped from the portal into the stock system, with mistakes in quantities or item codes.
- Item codes that don't match: the retailer's codes, your codes and the barcodes on the cartons all need to line up.
- Units and pack sizes: the retailer orders in cartons or inners, your system counts each item.
- Late or wrong despatch notices, because they are keyed after the truck has left.
- Invoices that don't match what was ordered or delivered, leading to queries and delayed payment.
- The same invoice created twice, once in the EDI portal and again in Xero or MYOB.
Connecting EDI to your systems
A clean set-up connects three things:
- Orders in: retailer purchase orders flow from the EDI provider into your order, stock or ERP system, with item codes and pack sizes translated automatically.
- Despatch out: the despatch notice is produced from what was actually picked and packed, not keyed separately.
- Invoices out and into the accounts: the invoice sent to the retailer and the invoice in Xero or MYOB come from the same data, so they always match.
Where the stock and order side has outgrown spreadsheets or a basic stock app, a system such as ERPNext running alongside Xero or MYOB can handle order management and stock, with the accounts staying in Xero or MYOB. See also inventory management consulting and warehouse integration, and our page for wholesale and distribution businesses.
Frequently asked questions
Do I have to use EDI to supply a major retailer?
Many large retailers expect suppliers to trade electronically and publish EDI guidelines for them. The exact requirements differ by retailer and change over time, so check the retailer's supplier information or your account manager.
Does Xero or MYOB do EDI?
Not on their own. Suppliers use an EDI provider to exchange messages with retailers. Some providers connect to Xero or MYOB; the question is whether that connection also covers your orders and stock, not just invoices.
Is a web portal good enough?
For low volumes, often yes. As order numbers grow, retyping orders and invoices takes real time and causes errors. That is usually the point to connect the provider to your own systems.
What data needs to line up?
Item codes, barcodes, pack sizes, prices and the retailer's store or delivery locations. Most EDI problems trace back to one of these being different in the retailer's system, the EDI provider and your own.
Can EDI orders go straight into ERPNext?
Yes. Orders can be brought into ERPNext as sales orders, with despatch and invoicing handled there and the accounts kept in Xero or MYOB.
If retailer orders are being retyped in your business, book a free initial chat. We'll tell you honestly whether your current EDI set-up can be connected, or what it would take.