When a purchase order is sent from a buyer to a seller, it is the first step in the ordering process. In the electronic data interchange world, this document is known as the EDI 850.
The EDI 850 is an electronic version of the paper purchase order shown in Figure 1.
But an EDI 850 looks nothing like the image above. Instead, the particulars of an order request are sent in a format that resembles a secret code. Figure 2 shows a fictious EDI 850 to give you an idea of what one might look like.
As you can see, the data is organized in a specific format and order. Following the specifications is critical because the document is intended to be interpreted by computer software and not a person.
THE EDI 850 INCLUDES:
- Date of order
- Purchase order number
- Requested shipping and/or delivery date
- Vendor name, address, phone number
- Buyer’s billing information
- Delivery address
- Product SKU or UPC
- Quantity and unit of measure of products ordered
- Price per unit
- Total order price
- Preferred shipping method/carrier
- Proposed payment terms
- Allowances and charges
When an EDI 850 is sent to a trading partner, the recipient’s software translates the raw data into a readable format. The beauty of EDI is the rules are predetermined, so computers can take the data and run with it.
WHAT HAPPENS NEXT?
Many trading partners have requirements stating which documents must be exchanged and when. For example, when an EDI 850 is initiated, the buyer may require that an 855 Purchase Order Acknowledgement comes back from the vendor within a predetermined time frame. (I think of this as the little “Read” text that shows up when someone has viewed a message I sent. We all like to know our message was received, don’t we?)
The buyer may also require an EDI 856 Advance Ship Notice — this contains the shipment details and is critical in warehouse dock management.
WHY DO I NEED AN EDI 850?
Well, for starters the transmission of a PO via electronic data interchange is encrypted and therefore extremely safe. Sensitive information like customer contact details is exchanged without a worry.
Second, it’s pretty darn fast. No joke, the PO is sent in a matter of seconds. The vendor’s EDI software reads it and the wheels are in motion. Purchase orders sent any other way will never be as fast as the EDI 850.
In addition, you’ll notice less order errors once you convert to EDI. The computers do the majority of the work, so you don’t have to fret about a person accidentally keying in the wrong item number, selecting an incorrect shipping address, or transposing quantity numbers.
These mistakes might not happen very often, but they can be costly. You won’t have to put out the fire when a huge order ends up at the wrong location.
EDI doesn’t have to be daunting; let us show you the ropes. We can help determine which of our EDI services is best for your situation. Contact us to learn more: call 844-265-3777 or email email@example.com.