How to Do 3PL EDI

How to Do EDI for 3PLs

The first step to getting started in 3PL EDI is figuring out the best solution to use.

Third-party logistics companies can administer EDI through:

  • a managed service
  • custom development
  • on-premise software
  • or software as a service (SaaS)

Or see the transcript of the video

Getting a stellar EDI recommendation from a colleague is fantastic. But beware: You might actually need a little bit more information before pulling the trigger. Have you thought about which EDI management model is the best fit for your 3PL? We’ll highlight and then review the positives and negatives for all four.

EDI can be a real bear to manage, especially if you’ve chosen a solution that doesn’t play to your company’s strengths. These distinct EDI management models can be broken out into two categories:

  • Managed service (external)
  • Self service (internal)

In a managed service model

You contract with an outside provider to handle your company’s EDI. It works well for 3PLs that don’t have the expertise or the headcount required for the self-service models.

On the downside, 3PLs that do EDI as a managed service lose autonomy, which might make it harder to get work done on their timeline or to resolve technical problems that arise with trading partners. This option also tends to be the costliest of the four models.

Custom development

The first EDI self-service model is custom development. Building your own EDI solution often starts out as a great idea when your company has development capacity. After all, using in-house programmers is a soft cost.

What trips most 3PLs up is the amount of maintenance and ongoing dev time required by home-grown EDI solutions. Custom development may look straightforward when you’re dealing with one partner and a few connections, but scaling is a real problem.

On-premise software

The next self-service model, on-premise software, has traditionally been used by 3PLs for decades. By bringing on or contracting with highly specialized EDI experts, third-party logistics companies could build and manage their connections with local installations of EDI software.

Although the acquisition costs for many installed EDI products are lower today, ownership costs could still be relatively high. Usability, for example, is a big deal when you have to train new employees on dense, technical software.


Software as a Service or SaaS, the last self-service model, takes EDI software to the cloud where maintenance and updates are done by the EDI provider. EDI products using a SaaS model can be accessed on the web … from anywhere.

SaaS is generally easier to use and narrower in focus than on-premise solutions. For example, most SaaS EDI products won’t come embedded as a module to your warehouse management system. Critics of the SaaS model often prefer owning the rights to EDI software over renting it — so to speak — through a recurring monthly fee.

Well, there you have it. Now that you know a little bit more about each of the four EDI management models, which do you think is right for your company?

I hope I’ve helped you figure it out!

Uncommon Control

Babelway is a SaaS platform designed for users (not programmers).
It gives 3PLs powerful tools to take control of EDI.

Visual Field Mapping

Cut EDI on-boarding time in half with point-and-click, drag-and-drop building tools

Validation Rules Manager

Avoid unnecessary errors by customizing business rules to meet your requirements

Connection Tester

Confirm partner connections work in minutes before pushing them live

Real-Time Alerts

Know immediately when message errors occur and how to fix them

Customer Case Study – Carroll’s Logistics

No hiring an expert. No opting for managed services. Carroll’s Logistics chose Babelway’s self-service platform. The company wanted a responsive way to engage a customer with a massive, new contract. In fact, Caroll’s met the customer’s need at the right time. And as a result, the IT team has new EDI skills they can apply elsewhere to grow the business.

“Instead of paying a software developer … we use the advantage of our knowledge gain.”

– Daniel Bringans, Accounts & IT Director, Carroll’s Logistics

Most Common 3PL EDI Transaction Codes

Most Common Transaction Codes EDI in 3PL

 Some 3PLs offer advance ship notices (856) directly to buyers if the buyer’s contact data is passed to them through a warehouse shipping order (940).

 Before goods are delivered

 After goods are delivered

Visit Our Learning Hub for Logistics EDI Transaction Codes