Increased speed and accuracy
Automating purchase orders reduces the likelihood of errors, such as miscommunications or data entry mistakes.
What is an EDI 850 Purchase Order?
The EDI 850 Purchase Order is an electronic document that buyers use to place orders with their suppliers. This standardized EDI transaction set is widely adopted across industries to streamline the purchasing process, replacing traditional paper-based purchase orders. By using the EDI 850 document, businesses can automate and accelerate the procurement cycle, minimizing errors and manual data entry.
Key Functions of EDI 850 Purchase Order
An EDI 850 is a formal request from a buyer to a seller for goods or services. It typically includes important details such as:
- Item descriptions: What the buyer wants to purchase.
- Quantity: The number of units ordered.
- Price: Agreed upon unit prices for each item.
- Shipping instructions: Preferred delivery methods and locations.
- Payment terms: How and when payment will be made.
This document can also contain additional details like special instructions for handling, product substitutions, or delivery schedules, depending on the nature of the business relationship.
Benefits of Using EDI 850
The use of EDI 850 streamlines the purchase order process by allowing businesses to communicate purchase information electronically in a standardized format. Key benefits include:
EDI 850 Purchase Order Structure
An EDI 850 Purchase Order follows the ANSI X12 standard, which defines how business documents are structured for electronic data interchange. It consists of multiple segments and loops that contain specific information related to the purchase order. Each segment contains specific data elements and qualifiers, making the EDI file both structured and machine-readable.
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EDI 850 Purchase Order Sample File
Below is an example of an EDI 850 Purchase Order file. Keep in mind that this is a basic sample, and actual implementations may vary depending on specific business needs and trading partner requirements.
ISA*00* *00* *ZZ*STORE *12*5042645505 *190510*0728*|*00403*100000018*0*P*}
GS*PO*STORE*5042645505*20200510*0728*1013*X*004030
ST*850*1013
BEG*00*SA*2332233**20200510
REF*IA*66910
PER*BD*Contact Name*TE*123-455-7880
FOB*DF
DTM*010*20200517
DTM*001*20200525
TD5*****Carrier Routing*******CG
N1*ST*Towner Square Schooms*92*006
N3*Williston Towner Square*2100 11th St SW
N4*Williston*ND*58701
PO1*1*4*EA*4.15**UP*066810348563*IT*WACT750SP16-BLK
CTP**RTL*7.99
PID*F*08***Nike Boy Short Black sz M
PO1*2*6*EA*5.00**UP*066810349983*IT*WACT170SP16-AMP
CTP**RTL*7.99
PID*F*08*** Reebok Boy Short Abstract Print sz M
PO1*3*4*EA*5.25**UP*066810349747*IT*WACT790SP16-BLK
CTP**RTL*9.99
PID*F*08*** Puma Boy Short Red sz M
CTT*3
SE*22*1013
GE*1*1013
IEA*1*100000018
Detailed Breakdown of Key Segments in an EDI 850 Purchase Order
ISA (Interchange Control Header)
This segment initiates the interchange of data between partners. It contains control numbers, date, time, and identifiers for the sender and receiver.
- STORE and 5042645505 are the sender and receiver identification codes.
- The date is 200510 (May 10, 2020), and the time is 0728.
- The version is 00403, and the control number is 100000018
GS (Functional Group Header)
Specifies the application type (in this case, “PO” for Purchase Order) and contains control numbers and a time stamp.
- PO identifies this as a Purchase Order transaction.
- STORE is the sender, and 5042645505 is the receiver.
- The date and time correspond to when the document was created. 2020-05-10 (May 10, 2020).
- 0728: This is the Time the purchase order was created, in HHMM (hours and minutes) using a 24-hour clock format. 07:28 AM.
- 1013: This is the Group Control Number. It is a unique identifier assigned to the functional group of related transactions (in this case, purchase orders). It must match the corresponding control number in the GE (Functional Group Trailer)
- X: This represents the Responsible Agency Code. The code X indicates that the transaction set complies with the X12 standard, which is maintained by the ASC X12 committee.
- 004030: This is the Version/Release/Industry Identifier Code, which specifies the version of the X12 standard being used.
ST (Transaction Set Header)
Marks the start of the specific EDI transaction, in this case, the Purchase Order.
- 850 identifies the transaction as a Purchase Order.
- 1013 is the unique control number for this transaction.
BEG (Beginning Segment for Purchase Order)
Provides details about the type of purchase order and its identification number.
- SA (Standard Order).
- 2332233 is the purchase order number.
- 20200510 is the order date.
REF (Reference Identification)
Used to pass any reference or identification numbers associated with the order.
- IA is the identification qualifier, and 66910 is the reference number.
PER (Administrative Communications Contact)
Contact person for communication and administrative messages.
- Contact Name
- Phone 123-455-7880
FOB (Related Instructions)
FOB: This segment stands for “Free On Board” or “F.O.B. Related Instructions,” which specifies the point at which ownership of the goods changes hands from the seller to the buyer, as well as shipping instructions or payment terms for freight.
- DF: This is the code for “Destination, Freight Prepaid” (DF). It means that the seller is responsible for the freight charges, and the goods will be shipped to the destination.
DTM Segment(s)
DTM: This is the “Date/Time Reference” segment, used to provide specific dates related to the order.
- 010: This is the code for “Requested Ship Date.” The buyer is indicating when they would like the seller to ship the goods.
- 20200517: This is the actual date, formatted as YYYYMMDD (in this case, May 17, 2020).
Full Interpretation:
The buyer is requesting that the items be shipped on May 17, 2020.
DTM Segment:
- DTM: Again, this is the “Date/Time Reference” segment.
- 001: This is the code for “Requested Delivery Date.” The buyer is indicating when they would like to receive the goods.
- 20200525: This is the actual requested delivery date (May 25, 2020).
Full Interpretation:
The buyer is requesting that the items be delivered by May 25, 2020.
TD5 Carrier Details (Routing Sequence/Transit Time)
TD5: This segment stands for “Carrier Details (Routing Sequence/Transit Time)” and is used to communicate the preferred shipping carrier or method.
- Carrier Routing: This indicates the routing or shipping instructions, but no specific details are given.
- CG: This is a two-letter code that stands for “Ground Carrier,” indicating that the shipment will be sent via ground transportation.
Full Interpretation:
The buyer is indicating that the goods should be shipped using a ground carrier, but no specific carrier or routing details are provided.
N1-N4 (Name, Address Information, Geographic Location )
Used to identify the ship-to and bill-to parties involved in the transaction.
PO1 (Baseline Item Data)
Technical Definition:
The PO1 segment is referred to as Baseline Item Data. Its primary purpose is to specify the essential and most frequently used line item information in a purchase order.
Practical/Functional Definition:
In more understandable terms, the PO1 segment provides detailed information about each item being ordered, including data like:
- Item numbers (SKUs, UPCs, etc.)
- Quantities (the number of units ordered)
- Unit prices
- Descriptions (optional but often used to describe the item)
It allows both the buyer and supplier to know exactly what is being ordered, how much, and at what price.
Breakdown of a PO1 Segment:
- PO1: This is the segment identifier for “Purchase Order Line Item.”
- 1 (Assigned Identification): This is the line item number, indicating that this is the first item in the purchase order.
- 4 (Quantity Ordered): This specifies the quantity ordered, meaning the buyer is ordering 4 units of this item.
- EA (Unit of Measurement): This is the unit of measurement code, in this case, “EA” stands for “Each,” meaning individual items.
- 4.15 (Unit Price): This represents the price per unit of the item, which is $4.15.
- UP (Product/Service ID Qualifier): “UP” stands for Universal Product Code (UPC). This is a code used to identify the product.
- 066810348563 (Product/Service ID): This is the UPC code for the specific product being ordered. It uniquely identifies the item in the marketplace.
- IT (Product/Service ID Qualifier):
“IT” stands for “Buyer’s Item Number,” which is another way to identify the item, usually specific to the buyer’s internal system. - WACT750SP16-BLK (Product/Service ID – Internal Item Number): This is the buyer’s internal item number or SKU (Stock Keeping Unit), representing a specific version of the product, in this case, something like “Nike Boy Short Black sz M” (as described in the following PID segment).
CTP (Pricing Information)
CTP: This segment stands for “Pricing Information,” and it’s used to provide price-related details for the item being ordered.
- RTL: This code stands for “Retail Price,” meaning the price listed is the retail price for the item.
- 7.99: This is the actual retail price of the item, which is $7.99.
Full Interpretation:
The retail price for the item is $7.99.
PID (Product/Item Description)
PID: This segment stands for “Product/Item Description,” which is used to provide detailed descriptions of the items in the purchase order.
- F: This is the code for “Free-form,” meaning that the description of the item will be provided in free-form text (not using standardized codes).
- 08: This code is used to indicate that the following text is the product description.
- Nike Boy Short Black sz M: This is the free-form text description of the item being ordered. It specifies that the item is a Nike Boy Short, the color is Black, and the size is Medium (M).
Full Interpretation:
The item being ordered is a Nike Boy Short, black in color, and size Medium.
CTT (Transaction Totals)
Contains the total number of line items.
SE (Transaction Set Trailer)
Indicates the end of the transaction and provides the number of included segments.
GE (Functional Group Trailer)
Signals the end of a functional group of related transactions.
IEA (Interchange Control Trailer)
Marks the end of the entire interchange and contains control numbers.
EDI X12 850 Transaction Set: Additional Technical Details
An EDI 850 Purchase Order file typically includes:
- Mandatory and Optional Segments: Certain segments, such as ST and BEG, are mandatory, while others like REF and NTE (Notes) are optional depending on the trading partner agreement.
- Customizations: Depending on the industry and specific requirements, different companies may include additional segments or tailor the document to their needs, such as adding delivery schedules or handling special instructions.
- Integration with ERP Systems: The structured nature of EDI 850 makes it ideal for seamless integration into ERP and CRM systems. Once an EDI 850 file is received, it can automatically generate a sales order in the supplier’s system, update inventory, and trigger the fulfillment process.
How Does the EDI 850 Process Work?
The EDI 850 Purchase Order process typically follows these steps, facilitating the seamless exchange of order information between trading partners such as retailers and suppliers. Here’s a breakdown of how it works:
1. Purchase Order Creation
The buyer (e.g., a retailer, distributor, or manufacturer) creates a purchase order in their ERP or procurement system. This document includes details like:
- Item information (product description, quantities, pricing)
- Shipping and delivery instructions
- Payment terms
2. Translation into EDI 850 Format and Transmission
Once the purchase order is created, it is translated into the standard EDI 850 format using EDI translation software. This process converts the internal format of the buyer’s ERP or system into the standardized EDI format.
The translated EDI 850 document is transmitted electronically to the supplier’s EDI system via a secure communication channel. This can be done using various methods, such as:
- VAN (Value-Added Network)
- AS2 (Applicability Statement 2)
- FTP/SFTP (Secure File Transfer Protocol)
3. Supplier’s EDI System Receives and Processes the EDI 850
- The supplier’s EDI system receives the EDI 850 Purchase Order and processes the document. The system validates the data, ensuring it meets the agreed-upon EDI standards and protocols.
- The purchase order is then converted into a format that can be used by the supplier’s ERP or order management system.
NOTE: In many cases, companies use an EDI Service Provider as an intermediary to exchange EDI documents with their trading partners. The EDI provider receives the EDI 850 Purchase Order, validates the data, and ensures it meets the agreed-upon EDI standards and protocols. The provider then converts the document into a format compatible with the supplier’s ERP or order management system before forwarding it to the supplier.
Similarly, when the supplier sends documents back to the buyer, the EDI provider handles the conversion and transmission of those files, ensuring seamless communication between both parties.
4. Supplier Acknowledges the EDI 850
After receiving the purchase order, the supplier typically sends an EDI 997 Functional Acknowledgment back to the buyer, confirming the receipt of the EDI 850.
Additionally, the supplier may send an EDI 855 Purchase Order Acknowledgment to confirm acceptance or provide updates on the order (e.g., changes in availability or pricing).
5. Order Fulfillment
The supplier then processes the order internally, fulfilling the items requested. This involves:
- Picking, packing, and shipping the items.
- Updating the inventory in their system to reflect the new order.
6. Shipping Notification and Invoicing
Once the order is shipped, the supplier sends an EDI 856 Advance Ship Notice (ASN) to inform the buyer of the shipment’s contents, tracking information, and estimated delivery date.
After the order is fulfilled, the supplier also sends an EDI 810 Invoice, requesting payment for the goods shipped.
7. Integration into the ERP System
Throughout the process, the buyer’s and supplier’s systems can integrate the data directly into their ERP, CRM, or inventory management systems, ensuring:
- Accurate tracking of orders.
- Real-time inventory updates.
- Automated payment processing.
EDI 850 and ERP/CRM System Integration
At EDI2XML, we specialize in the integration of EDI 850 Purchase Orders with your existing ERP or CRM systems. This ensures that purchase orders are automatically received and processed, reducing manual input and providing real-time updates on inventory and order status.
By integrating EDI 850 into your systems, you can automate the creation of sales orders, updates to inventory, and track order fulfillment without any manual effort. This reduces the risk of errors, speeds up the order-to-delivery process, and gives your team more time to focus on strategic activities.
EDI 850 Integration with EDI2XML Services
At EDI2XML, we offer two flexible services to help you manage your EDI 850 Purchase Orders:
- EDI Fully Managed Services: We handle the entire EDI process for you, from setup to ongoing monitoring and support, ensuring that your purchase orders flow smoothly with no disruptions.
- EDI Web Services (REST API): For companies looking for a more flexible approach, our EDI Web Services allow you to connect directly to your trading partners and manage purchase orders via a simple API. No need for in-house EDI expertise — we take care of everything for you.
Whether you choose our fully managed solution or our web services, EDI2XML guarantees efficient, accurate, and automated processing of all your EDI 850 Purchase Orders, saving you time and reducing operational costs.
The following is a list of additional helpful information:
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