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Advance Ship Notices

March 17, 2011


The term “Advance Ship Notice” (ASN) is a bit of a misnomer since it implies that the document is sent in advance of a shipment — it’s not. Generally, however, it does arrive ahead of a shipment en route. The ASN is also referred to as the 856 Electronic Data Interchange (EDI) document or 856 Ship Notice/Manifest. According to Wikipedia:

“An Advance Ship Notice or Advance Shipping Notice (ASN) is a notification of pending deliveries, similar to a packing list. It is usually sent in an electronic format and is a common EDI document. In the EDI X12 system, it is known as the EDI 856 document. … The ASN can be used to list the contents of a shipment of goods as well as additional information relating to the shipment, such as order information, product description, physical characteristics, type of packaging, markings, carrier information, and configuration of goods within the transportation equipment. The ASN enables the sender to describe the contents and configuration of a shipment in various levels of detail and provides an ordered flexibility to convey information. The ASN is noteworthy in that it is a new concept in logistics, enabled by the advance of modern communication methods. Although it provides information similar to the Bill of Lading, its function is very different. While the Bill of Lading is meant to accompany a load on its path, the goal of the ASN is to provide information to the destination’s receiving operations well in advance of delivery. This tends impacts the logistics stream in three areas: cost, accuracy, and flexibility.”

According to the EDI Center:

“The ship notice/manifest is in use by most major retailers.  For retailers with distribution centers, the document is received at the DC, typically while the physical shipment is still in route. The ship notice gives the retailer advance warning so that they can schedule the receipt at the distribution center and also so that they are alerted to any shortages in the shipment. Once the shipment arrives, the ship notice is then a tool for automatically checking in the cartons by scanning the attached UCC-128 label. This verifies the receipt of the cartons and provides information of any cartons lost in shipping. The ship notice will often contain store information as well (if the retailer transmitted it on the original purchase order) and from this information, the DC’s use automated systems to route the carton to the correct truck for delivery to the store.”

One can easily see from those two descriptions why ASNs are useful. In fact, Dan Gilmore asserts, “The ASN is one of the definitive ‘best practices’ of an integrated supply chain. It is what links the flow of goods between supplier and customer.” [“ASNs and the Supply Chain,” Supply Chain Digest, 17 September 2010] He continues:

“While really a B2B concept, in a sense even we as consumers demand and now receive an ASN when shopping on-line, getting detailed emails about order status from the retailer and detailed delivery status from UPS or FedEx. I have been following ASNs for years, in part because my early career in the supply chain and for some time thereafter was heavily involved in the first years of the retail initiatives around electronic ASNs tied UCC-128 serialized shipping labels. As I have noted before, I would have guessed then, circa 1992, that we would have near ubiquitous use of ASNs by 2010. Alas, it wasn’t to be, though we are making progress.”

Gilmore goes on to write that “the practice and opportunities of ASNs vary by industry sector, but there are several consistent themes” surrounding why ASNs are used. The first “theme” (or reason for using ASNs) Gilmore writes, is the ability of the ASN “to dramatically reduce receiving costs (generally thought by about 40% or so).” For that reason alone, one would think that the use of ASNs would be ubiquitous. The second reason that ASNs are a best practice is that they help a customer “understand if there is a discrepancy between what is expected and what has been shipped.” Gilmore notes that this is important because discrepancies may require the receiver to change production scheduling. The third reason that ASNs are a best practice, according to Gilmore, is that it provides retailers “the opportunity to re-allocate the goods that will be shipped to stores based on knowledge of actual fill rates against the PO.” Finally, Gilmore asserts that ASNs improve the “ability to cross dock.” He continues:

“The ASN should be and often is a key element of the ‘perfect order.’ To be a true perfect order, the ASN should exactly match what is received and also perfectly match the invoice. I would add that the ASN should also beat the physical delivery, which can sometimes be a problem. All that, as we will discuss in just a second, is still not at all easy to achieve by suppliers.”

Gilmore implies that perfection is sought but seldom achieved. One reason that perfection is seldom achieved is because ASNs are not always accurate. In a subsequent Supply Chain Digest article, the editorial staff asks, “How accurate are Advanced Ship Notices (ASNs) sent from consumer goods manufacturers to retailers?” [“Supply Chain Graphic of the Week – Advanced Ship Notice Accuracy,” 9 December 2010]. To get answer to that question, the staff turned to Dr. Brian Gibson of Auburn University, who analyzed more than four years of actual retail transaction data. The staff writes, “It turns out answering that question is not easy for a number of reasons, including issues over how to define ASN accuracy and differences in various retail segments in terms of handling units and ASN practices.” They continue:

“There has … been very little research on this topic to date, it seems to us. That situation has changed a bit of late, as Dr. Brian Gibson of Auburn University has recently done quite a bit of research on this subect. Gibson presented much of that research on a recent Videocast on the Supply Chain Television Channel. … The retailers involved were primarily from the soft goods retail sector, which has long been the most aggressive in terms of ASN requirements, for a variety of reasons. The raw transactional data was made available by Compliance Networks, a provider of compliance optimizaton and supply chian visibility solutions, with approval of the specific retailers whose data was analyzed. The graphic below shows both the trends in ASN accuracy from the retailers as a group over time, as well as recent ASN accuracy levels by type of retail order.”



It is encouraging to note that accuracy isn’t bad and it’s getting better. As the editorial staff writes, “The rise in ASN accuracy from 2006 to 2010 from the group is impressive.” The biggest surprise to the folks at Supply Chain Digest was “the fact that ‘replenishment’ orders actually showed higher rates of ASN accuracy than ‘normal’ orders. This is surprising because normal orders are more often full cases, while replenishment orders usually involve ‘piece pick’ operations where the chances for picking errors would seem higher.” Returning to Gilmore’s article, he writes: “There are in fact all kinds of questions/issues around perfecting the ASN.” He goes on to provide a couple of examples:

  • “At what level is the ASN built? For instance, some companies only get an ASN at the truckload/shipment level, not at the pallet level, or the pallet level but not at the carton level. The greatest potential benefits are from the most detailed ASNs, naturally.
  • “Do companies really understand the quality (ASN = Shipment = Invoice + received prior to delivery) on either the shipper or the receive sides of the equation? “

Gilmore indicates that “new evidence raises concern about that last question.” That evidence comes from Drs. Brian Gibson and Brent Williams and was discussed above. Gilmore writes, “One finding is that there is still a significant discrepancy between what is on the ASN from the consumer goods manufacturer and what shows up on the retail dock.” Gilmore indicates that some discrepancies are “easily visible to the human eye.” In the information age, we should be able to do better. Gilmore asks, “How big a problem is that?” His answer:

“I am not exactly sure, but the analogy I would use is reject cartons in a distribution sortation system (i.e., cartons that don’t scan or get sorted right, going down the dreaded “jackpot line” for manual handling); even a fairly small number of such cartons can cause real operational headaches; I think it is likely the same for receipts that don’t match the ASN. So what are the factors that go in to how accurate a company’s ASNs are versus what is actually received (including timing issues)? I have been pondering this, and come up with these factors (from the receivers point of view):

  • Focus/attention/measurement: Where does this issue rank in supply chain priorities, and what measures are used to track it? Are specific goals set, and does some individual own that number?
  • Receiving unit profile (pallets, cartons, split case, etc.): Clearly, it is harder to pick and pack mixed-SKU pallets or split case cartons than it is to load full pallets, leading to picking/packing errors which in turn lead to bad ASNs. Full pallet receipts should much more likely match the ASN than thousands of split case cartons simply due to human picking errors.
  • Vendor profile: I will say, perhaps wrongly, that larger suppliers with more sophisticated systems are more likely to get ASNs right than smaller companies; offshore suppliers add a whole other dynamic.
  • Level of ASN audits and other internal processes: Highly related to point 1, audits of receipts at some level and using that insight (see next point) to understand the true state of affairs and drive improvement has to be a key factor.
  • Remedial action/closed loop processes: ASN accuracy will vary by vendor, type of handling unit, even by supplier DC making the shipment. It may vary over time for shipments from the same vendor. What processes the receiver uses to create a closed loop system (chargebacks, inclusion in vendor scorecards, direct discussions, vendor training, etc.) should have a big impact on ASN accuracy over time.”

In other words, Gilmore is optimistic that ASNs will be accurate in the future and should therefore become more ubiquitous than they are today. He admits that there are some networking issues that remain unresolved, but those, too, are likely to be worked out over time. ASNs should make better friends out of suppliers and retailers and relieve some of the natural tension that exists between supply chain partners. Gilmore concludes, “I will still maintain that getting ASNs right is essential to getting to the next level of supply chain excellence.” I agree with him.

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