The modern supply chain relies on rapid, automated communication to move goods efficiently. The Electronic Data Interchange (EDI) 940 transaction set is a standardized digital document that functions as the Warehouse Shipping Order. It serves as the official instruction set an inventory owner sends to a third-party logistics provider or warehouse facility. The 940 streamlines the fulfillment process by replacing slow, manual methods with a reliable electronic command. Its adoption ensures that large volumes of orders are processed quickly and accurately, directly supporting high-volume distribution and e-commerce operations.
Understanding Electronic Data Interchange
Electronic Data Interchange (EDI) is the method for exchanging business documents between computer systems in a standardized, machine-readable format. This technology allows two different organizations, regardless of their internal software, to communicate commercial information without human intervention. EDI transactions are transmitted directly between enterprise resource planning or accounting systems, replacing paper forms, emails, or faxes.
The system relies on universally accepted standards, such as those governed by organizations like ANSI ASC X12 in North America, to define the structure of the data. Each type of business document, such as a purchase order, invoice, or shipping notice, is assigned a unique three-digit transaction set number. This standardization ensures that all trading partners interpret the data segments and elements within the electronic message identically, creating a common language for business-to-business communication.
The EDI 940 Warehouse Shipping Order Defined
The EDI 940 is the formal command message used to instruct a remote warehouse facility to prepare and ship goods from the sender’s inventory to a specified destination. This transaction set is typically generated and transmitted by the inventory owner, such as a manufacturer or distributor, who maintains control over the stock but utilizes a third-party logistics (3PL) provider for storage and fulfillment. It formally notifies the Warehouse Management System (WMS) that a shipping request has been initiated and requires immediate action.
The document’s formal name, Warehouse Shipping Order, emphasizes its instructional function. It acts as the definitive authorization for the warehouse to physically release inventory and commence the picking, packing, and loading processes. Without the confirmed receipt and processing of the 940, the warehouse is generally unauthorized to move the client’s products. This mechanism ensures strict control over inventory movement and financial accountability between the two trading partners.
Essential Data Elements in the EDI 940
To execute the shipping order accurately, the EDI 940 must contain several mandatory data segments structured precisely according to the standard. The document begins by clearly identifying the inventory owner sending the instruction and the warehouse facility designated to perform the fulfillment.
The 940 must include specific instructions regarding the shipment contents and logistics. These essential data elements include:
- Identification of the inventory owner and the designated warehouse facility.
- The complete Ship-To address, including the recipient’s name and location details.
- Precise product identifiers, such as Stock Keeping Units (SKUs) or Universal Product Codes (UPCs).
- The exact quantity of each item requested for shipment.
- The requested delivery date.
- Specific carrier instructions or required service levels.
How the EDI 940 Drives the Fulfillment Workflow
The 940 transaction set is positioned at a crucial juncture in the order-to-cash cycle, acting as the trigger for physical logistics activity. The process typically begins when a customer places an order, often communicated to the seller via an EDI 850 Purchase Order. The seller’s internal system then validates the order details, checks inventory availability, and translates the customer request into the specific instructions needed by the warehouse.
Once validated, the seller’s Enterprise Resource Planning (ERP) system automatically generates the EDI 940 document, packaging all necessary shipping and product information into the standardized format. This document is transmitted securely to the third-party logistics provider’s system, where it is immediately received and ingested by the Warehouse Management System (WMS). The WMS uses the structured data from the 940 as the definitive command to initiate the physical labor necessary for fulfillment.
The WMS automatically converts the 940 data into internal operational documents, such as picking lists and packing slips, guiding warehouse personnel to the correct storage locations. This immediate, system-to-system integration means the physical process of retrieving items from stock begins almost instantly upon receipt of the electronic instruction. The 940 thus acts as the authoritative digital blueprint that transforms a digital sales commitment into tangible outbound freight.
Key Advantages of Using the EDI 940
Adopting the EDI 940 standard provides substantial operational improvements by automating the communication pathway between the inventory owner and the fulfillment partner. Standardization drastically reduces the need for manual data entry, which is a common source of errors such as miskeyed addresses or incorrect product quantities. Eliminating these human touchpoints ensures that instructions are executed exactly as they are sent, improving order accuracy dramatically.
The electronic transmission accelerates the entire order processing timeline, often reducing the time between order placement and shipment initiation from hours to mere minutes. This speed is attained through the seamless integration of the seller’s ERP system with the 3PL’s WMS, allowing for near real-time order flow and confirmation. Furthermore, the mandatory structure of the 940 ensures that all parties operate from a single, unambiguous source of truth, minimizing disputes over shipping instructions and promoting a more agile supply chain partnership. This efficient flow directly contributes to better inventory management.
The Required Follow-Up Document EDI 945 (The Shipping Advice)
The transmission of the EDI 940 initiates a transaction that requires a formal electronic response from the fulfillment facility to complete the cycle. After the warehouse executes the instructions—meaning the goods have been picked, packed, and loaded onto the carrier—they must send back the EDI 945, known as the Warehouse Shipping Advice. This document serves as the official confirmation that the instructions contained in the 940 were completed.
The 945 details the actual contents of the shipment, which may occasionally differ from the original 940 if a product was short-picked due to unexpected inventory variation. It includes specific data points, such as the exact quantities shipped, the carrier used, and the corresponding tracking information for the freight. Receipt of the 945 by the inventory owner’s system is what triggers the generation of subsequent documents, including the EDI 856 Advance Ship Notice to the customer and the EDI 810 Invoice.