EDI 940 T-Set: Structure, Benefits & Use Cases

Electronic Data Interchange (EDI) has long helped businesses achieve greater efficiency and accuracy in their supply chain management and B2B communications across various industries.

Among the diverse transaction sets under the ANSI X12 EDI standard, the EDI 940 (or Warehouse Shipping Order) stands out as critical for managing warehouse operations and shipping processes. 

Today we’ll be explaining the EDI 940 transaction set (T-Set), uncovering its structure, benefits, and strategic applications in modern business environments. By understanding how to leverage EDI 940 effectively, your business can start achieving greater operational efficiencies, reduce errors, and enhance customer satisfaction. 

What is the EDI 940 T-Set?

The EDI 940 T-Set is a standardised electronic document used primarily by businesses to instruct warehouses to ship orders to customers, confirm an order, or modify or cancel a previously transmitted shipping order.

Functioning under the ANSI X12 standard developed by the American National Standards Institute, EDI 940 ensures a uniform communication framework across different systems and parties. The use of EDI 940 streamlines the process of order shipping by automating communications, reducing reliance on manual processes and minimising scope for errors.

Common use cases for the EDI 940 T-Set

The EDI 940 transaction set is versatile and can be employed in several industries that rely heavily on efficient warehouse and shipping operations. Some common use cases include:

  • Retail: Retailers use the EDI 940 to manage the distribution of goods from warehouses to retail outlets or directly to customers. This is particularly useful during peak shopping seasons or promotional events, helping businesses keep turnaround time quick amid high demand.
  • E-commerce: As e-commerce continues to grow, the need for efficient logistics becomes more critical. The EDI 940 enables online sellers to automate their shipping processes, ensuring fast and accurate delivery to consumers, which is a cornerstone of e-commerce success.
  • Manufacturing: Manufacturers use the EDI 940 to coordinate the movement of goods from their production facilities to warehouses and ultimately to customers. This ensures that manufactured goods are promptly distributed without unnecessary delays, maintaining production efficiency.
  • Healthcare: In the healthcare industry, where timely delivery can be critical, the EDI 940 is used to manage the distribution of medical supplies, equipment, and pharmaceuticals. It helps in maintaining the necessary flow of goods to various healthcare facilities, improving service delivery in patient care.

By integrating the EDI 940 into their operations, companies across these sectors can streamline their shipping processes, reduce operational complexities, and ultimately enhance their overall service offering.

Benefits of implementing the EDI 940 T-Set

The efficiency of EDI 940 lies in its ability to provide clear and concise instructions, ensuring that the right products are shipped at the right time, and to the right place. Here are some ways it helps optimise supply chains and improve service levels: 

  • Improved speed and efficiency: By automating the transmission of shipping orders directly to warehouses, the EDI 940 reduces the time needed to process orders. This speed in communication helps in quicker order fulfilment and faster shipping, leading to reduced lead times and more satisfied customers.
  • Reduced errors and enhanced accuracy: Automation minimises the chances of human error in the order fulfilment process. The precise, structured format of EDI 940 ensures that warehouses receive accurate and complete order information, reducing the risks of shipping incorrect items or quantities.
  • Cost reduction: Using EDI 940 reduces administrative overhead and operational costs. It eliminates the need for paper-based documentation and cuts the workload involved in order management, helping businesses save on resources and focus more on core activities.
  • Improved inventory management: With real-time data exchange, companies have better visibility into order processing and shipping status, which helps in effective inventory control. 
  • Enhanced customer satisfaction: Timely and accurate order fulfilment directly contributes to customer satisfaction. The EDI 940 helps ensure that customers receive their orders as expected, which is crucial for building trust and loyalty in competitive markets.

Example of an EDI 940 T-Set

Here’s an example of what an EDI 940 T-Set could look like in life. However, do note that this is a simple iteration and what you may actually receive/send out can vary depending on various additional requirements and information.

N1*ST*Acme Distribution*A1*92*123 Warehouse Ave, City, ST 00000~
G61*IC*John Doe*TE*555-1234~

And here’s a breakdown of what the typical segments of an EDI 940 T-Set message contain, referring to the example above.

STST9401234~Transaction Set Header: Indicates the start of a transaction set (940 for Warehouse Shipping Order), and includes a control number for reference.
W05W05N1234567890**ACME*WH~Shipping Order Identification: Provides essential details such as order type (N for new order), shipment identification number, and warehouse code.
N1N1STAcme DistributionA192*123 Warehouse Ave, City, ST 00000~Name: Identifies a party by role (ST for Ship To), name, identification code, and address, essential for knowing where to ship the order.
G61G61ICJohn DoeTE555-1234~Contact: Lists contact information for a person or department (IC for Information Contact), including communication number, critical for queries or issues.
N9N9PO550e8400-e29b-41d4-a716-446655440000~Reference Identification: Provides extra references like a purchase order number which is crucial for linking the shipment to specific order data.
W66W66PPFDECC010*X~Carrier Details: Specifies transportation method (PP for Prepaid), terms (FDE for FOB Destination), carrier code, and mode of transportation, guiding shipping logistics.
LXLX*1~Assigned Number: Marks the start of a group of line items under a single transaction set, used here to specify the first line item group.
W01W0110CA12345**VNAB123~Line Item Detail: Details items to be shipped, including quantity (10), unit of measure (CA for cases), and item/product number, critical for inventory management.
SESE81234~Transaction Set Trailer: Ends the transaction set, includes the total number of segments included (8) and matches the control number in the ST segment for verification.

How is the EDI 940 T-Set processed?

The processing of an EDI 940 T-Set involves several crucial steps that ensure the accurate and timely shipping of orders from a warehouse. Below is a detailed breakdown of the typical workflow:

  1. Receipt of customer order: The process begins when a business receives a customer order. This triggers the need for a warehouse shipping order to fulfil the request.
  2. Preparation of EDI 940: Based on the customer order, the business prepares an EDI 940 T-Set. This document includes all necessary details such as order numbers, item descriptions, quantities, and shipping instructions.
  3. Transmission to warehouse: Once the EDI 940 is prepared, it is transmitted electronically to the designated warehouse or third-party logistics provider. This transmission uses secure EDI protocols to ensure data integrity and privacy.
  4. Warehouse receipt and processing: The warehouse receives the EDI 940 T-Set and processes the information. Warehouse management systems (WMS) typically automate this step, sorting the order details and planning the picking, packing, and shipping processes.
  5. Order fulfilment: Warehouse staff pick and pack the items listed in the EDI 940. They ensure that the correct items in the specified quantities are ready for shipment.
  6. Shipping: After packing, the order is shipped to the destination specified in the EDI 940. Shipping details, including carrier information and expected delivery dates, are typically managed according to the instructions in the T-Set.
  7. Confirmation of shipment: Once the order is shipped, the warehouse will send an EDI 997 Functional Acknowledgment to confirm the EDI 940 was received, typically followed by an EDI 945 Warehouse Shipping Advice, which includes shipment details and tracking information.
  8. Update internal systems: Upon receipt of the shipping confirmation, the business updates its internal systems, such as inventory management and customer relationship management systems, to reflect the status of the order.
  9. Notification to the customer: Finally, the customer is notified about the shipment. This notification may include tracking information, expected delivery dates, and other relevant shipping details.
  10. Documentation and record-keeping: Both the business and the warehouse keep records of the EDI transactions for future reference, auditing, and compliance purposes, ensuring a clear trace of the communication and agreements made.

What are the equivalents of the EDI 940 T-Set in other standards?

The EDI 940 T-Set has different equivalents across other commonly used EDI standards as well. Here are core ones to keep in mind:

EDI StandardEquivalent of EDI 940
EDIFACTIFTMIN (Instruction Message)
TRADACOMSWarehouse Shipping Note
OdetteDELINS (Delivery Instruction), AVIEXP (Advice of Shipment of Export Material)
VDAVDA 4922 (Dispatch Advice), VDA 4913 (Transport Instruction)

Note: The actual content included in an EDI 940 and any of the above equivalent messages will vary depending on the order as well as other factors like regulatory requirements.

Challenges and solutions in implementing the EDI 940 T-Set

While the EDI 940 T-Set offers significant benefits, your business should take into account the following hurdles that could come with implementing it:

  • Integration complexities: Integrating EDI 940 into existing systems can be complex, particularly if the existing IT infrastructure is outdated or not standardised.
    • Solution: Employ middleware solutions that can translate EDI formats into formats that internal systems can process, or consider upgrading IT systems to better support EDI.
  • Data quality issues: Poor data quality, such as incorrect item codes or outdated addresses, can lead to errors in the shipping process.
    • Solution: Implement data validation checks at the point of data entry and throughout the data lifecycle to ensure accuracy and consistency.
  • Staff training: Employees need to understand how to use EDI systems effectively to maximise the benefits of EDI 940.
    • Solution: Provide comprehensive training and continuous support to ensure that staff are proficient in using EDI tools and understand the process flows.
  • Cost of implementation: Initial setup costs for EDI can be significant, especially for small to medium-sized enterprises.
    • Solution: Consider cloud-based EDI solutions that offer scalability and cost-efficiency without the need for extensive on-site infrastructure.

By addressing these challenges with strategic solutions, your business can address EDI 940 implementation with ease while reaping its benefits, leading to improved operational efficiency and customer satisfaction.

How Data Interchange can help

Main takeaway: the EDI 940 T-Set is an essential tool for streamlining warehouse shipping operations… but best implemented with some extra support.

Our team at Data Interchange have created (and continue to develop) a number of advanced and best-in-class EDI software solutions to guide businesses on better EDI integrations and communications. Plus, we offer expert-led managed support for any company looking for bespoke guidance that’s fully catered to their EDI needs.

Keen to know how we can help your business? Get in touch with one of our experts!

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