What is an EDI 850 Purchase Order document and how does it work?
- July 12, 2023 / by Infocon Systems
What is an EDI 850 Purchase Order document?
The EDI 850 transaction set is an electronic version of a paper purchase order. Standard EDI formats include X12, EDIFACT, ANSI and its subsets. The EDI 850 is widely used in the retail, manufacturing, and healthcare industries, among others. It enables trading partners to exchange to a supplier the specific items, quantity, and price they want delivered. The 850 document may also include shipping instructions, such as the desired delivery date, preferred carrier, and shipping address.
The EDI 850 transaction set follows a standardized format that allows trading partners to exchange purchase order information electronically. Here is a general overview of how the EDI 850 works.
How Does EDI 850 Purchase Order document Work?
The trading partner (such as a retailer or manufacturer) creates a purchase order in their internal system with the necessary details, such as the items to be purchased, quantities, pricing, and shipping information.
- EDI 850 document is generated: The purchase order information is then mapped into the EDI 850 format, which is a standardized electronic format for purchase orders.
- EDI document is transmitted: The EDI 850 document is then transmitted to the supplier (such as a manufacturer or distributor) using a secure communication protocol, such as AS2 or SFTP.
- EDI document is received and translated: The supplier receives the EDI 850 document and uses EDI translator software to convert the document into a format that can be read by their internal system.
- Purchase order is processed: The supplier's system then processes the purchase order, generates an order confirmation (usually in the form of an EDI 855 document), and prepares the items for shipment.
- Shipment is sent: The supplier then sends the shipment to the trading partner, usually with a packing slip that includes details of the items being shipped.
After the trading partner (buyer) sends an EDI 850 Purchase Order to the supplier, the supplier will typically send a functional acknowledgment back to the buyer to confirm that the Purchase Order was successfully received. The functional acknowledgment is sent in the form of an EDI 997 document, which confirms that the Purchase Order was received and was syntactically correct.
What makes up the EDI 850 Purchase Order document?
The EDI 850 Purchase Order document contains a standardized set of data elements that are used to communicate purchase order information between trading partners. The document includes a header and one or more detail segments, which contain specific information about the items being ordered. Here is a general overview of the key data elements that make up the EDI 850 Purchase Order document:
Header Segment:
- Purchase Order Number: A unique identifier assigned by the buyer to the purchase order.
- Purchase Order Date: The date the purchase order was created.
- Currency Code: The code for the currency used to pay for the purchase order.
- Buyer and Seller Information: Identification and contact information for the buyer and seller.
Detail Segment:
- Item Description: A description of the item being ordered, including the part number, description, and quantity.
- Unit of Measure: The unit of measure used to specify the quantity of the item being ordered.
- Unit Price: The price per unit for the item being ordered.
- Total Price: The total price for the item being ordered (unit price x quantity).
- Shipping Information: The address and method of shipment for the item being ordered.
The EDI 850 purchase order transaction set may also include additional segments for discounts, taxes, and other charges, as well as notes and comments about the purchase order.
How is an EDI 850 Purchase Order processed?
To process EDI documents such as the EDI 850 Purchase Order, an EDI solution is typically required to translate the electronic data into a format that can be read and processed by the supplier's ERP or accounting system, or into a readable format for manual entry. The EDI solution includes an EDI translator, which is a software program that converts the EDI data into a format that can be understood by the supplier's business systems. The translator maps the data elements in the EDI document to the appropriate fields in the supplier's system, based on the EDI implementation guide provided by the trading partner. The implementation guide outlines the specific segments, data elements, values accepted, and applicable business rules for the particular EDI transaction being used.
Once the EDI data is translated and mapped, it can be automatically imported into the supplier's business system or presented to the user in a readable format for manual entry. The EDI solution also includes tools for validating the EDI data, reconciling it with other business data, and generating appropriate EDI acknowledgments and other transactions
To learn more about how Infocon Systems can take care of your EDI needs for your business, please don’t hesitate to give us a call at +1 888-339-0722 or email sales@infoconn.com. We’d love to hear from you.