Finding The Right Purchase Order: EDI 850 Vs. EDI 875

8 min read

Learn About:

  • What is a purchase order?

  • EDI 850 vs  EDI 875

  • Documents that go with each.

  • Knowing which PO to use

Finding the right purchase order for your business transactions is crucial for efficient and accurate supply chain management. Two common types of Electronic Data Interchange (EDI) transactions for purchase orders are EDI 850 and EDI 875. Understanding the difference between these two can help streamline your business processes.

Back to Basics: What is a Purchase Order?

A purchase order is typically the starting point of your supply chain. It is a legally binding agreement between a trading partner and a buyer, detailing items that the buyer would like to order from the trading partner. It contains prices that both parties have agreed to, including discounts, as well as delivery terms. Once a purchase order has been sent to the trading partner, then the whole life cycle of the order begins.

What is an EDI 850? What is an EDI 875?

The EDI 850 transaction is a standard Purchase Order that includes comprehensive details such as product descriptions, unit prices, payment terms, and delivery dates. It's used widely across various retail sectors, encompassing any business that needs to order goods or services.

On the other hand, the EDI 875 is a Grocery Products Purchase Order. It carries all the information you'd find in an EDI 850 but is specifically designed for the grocery sector. The primary distinction lies in the nature of the submitter; while EDI 850 caters to a broad range of retailers, EDI 875 is tailored for grocery stores and wholesalers.

Related Reading: What is EDI (Electronic Data Interchange)?

Common Segments of the 850:

  • BEG -- Purchase Order Number: This marks the beginning of the Purchase Order document and contains the essential identifier for the order. The purchase order number is a unique reference that helps both the buyer and the seller track and manage the order throughout its lifecycle.

  • DTM -- Delivery Date: The Delivery Date specifies the date by which the retailer wishes to receive the ordered products. This date is crucial for the seller to manage production, inventory, and logistics to meet the buyer's requirements.

  • Ship-to and Bill-to DUNS: These segments contain the DUNS (Data Universal Numbering System) numbers for the 'ship-to' and 'bill-to' locations, respectively. A DUNS number is a nine-digit identifier assigned by Dun & Bradstreet, which uniquely identifies each physical location of a company. The 'ship-to' DUNS specifies where the goods should be delivered, while the 'bill-to' DUNS indicates where the invoice should be sent. These identifiers are critical for ensuring accurate delivery and billing processes.

  • PO1 -- Item Details: The PO1 provides detailed information about the items being ordered, including the Universal Product Code (UPC), quantity, retailer item number, and other relevant details such as item description, price, and unit of measure. It allows the seller to understand precisely what products are being ordered, in what quantities, and any specific item attributes that need to be considered.

  • AMT -- Total Amount: The Total Amount segment represents the calculated total price of all units ordered within the purchase order. It includes the sum of the costs of the items, taking into account any agreed-upon discounts or special pricing. This is important for financial planning and analysis, allowing both parties to confirm the financial value of the order and ensuring that billing and payment processes proceed smoothly based on the agreed-upon amounts.

Common Segments of the 875:

  • W05 -- Depositor Order Number: This segment serves a similar purpose as the purchase order number in other EDI transactions. It's primarily used to identify the order uniquely. While it's often synonymous with the purchase order number, in the context of grocery products, it may also carry additional significance related to the depositor's specific order tracking or inventory systems. This unique identifier is crucial for order processing, tracking, and reconciliation.

  • G62 -- Delivery Date: The Delivery Date segment in the EDI 875 specifies the date the buyer wishes to receive the grocery products. Given the perishable nature of many grocery items, this date is especially critical to ensure that products are delivered in a timely manner to maintain freshness and quality. This segment helps in aligning the logistical and supply chain efforts to meet these time-sensitive delivery requirements.

  • Ship-to and Bill-to DUNS: As with the EDI 850, these segments use the DUNS (Data Universal Numbering System) numbers to identify the 'ship-to' and 'bill-to' locations. The accurate identification of these locations is essential for ensuring that products are shipped to the correct place and that invoices are sent to the correct billing department or location, facilitating smooth operational and financial transactions.

  • G68 -- Item Details: This segment provides comprehensive details about each item in the order, including the Universal Product Code (UPC), quantity, retailer item number, and additional information that might be relevant for grocery products. This could include specific details about product variants, sizes, weights, or packaging that are important for the precise fulfillment of the order. 

  • G76 -- Total Weight: Unique to the EDI 875 and particularly relevant for grocery orders, the Total Weight segment indicates the total weight of the products ordered. This is especially important for items sold by weight (such as produce, meat, and bulk items) and impacts shipping logistics, including planning, costs, and regulatory compliance for transportation.

How Do I Know Which Purchase Order to Use?

As you can see, many of the segments have different names, but they contain similar data. Functionally, there is very little difference between the two transactions. The main difference is who is sending the files. The EDI 850 can be used by all retailers wishing to purchase goods. However, the EDI 875 is specifically for grocery stores and wholesalers. Here is an example:

Your company makes organic gummy bears that have fun flavors, such as lemon-lime or strawberry-kiwi. You want to reach a wide array of customers, so you sell your product to many buyers, such as Stater Bros. Markets, TJ Maxx, and UNFI. When setting up your EDI, you will have to contact these buyers to begin the process of your integration. Stater Bros. is a grocery chain, so they have decided to only create the EDI 875 documents. However, TJ Maxx is not a grocery store, but they do sell snacks. They would not be able to create an EDI 875, so they would go with the EDI 850 instead. UNFI is a distributor of natural foods to all sorts of stores, so they will typically use an EDI 850 as well.

Related Reading: B2B Integrations, Demystified: EDI vs API

What About Invoicing?

Purchase orders and invoices are typically the beginning and end of an order's supply chain. Once the order has been created, boxed, shipped, and received, then an invoice can go out. There are EDI documents for invoicing as well, and they couple with the type of purchase order used. The standard is an EDI 810 that is simply called an Invoice. This document is used with the EDI 850 as its payment transaction. However, the EDI 875 does not use the EDI 810 as its correspondent. Instead, it uses the EDI 880, called a Grocery Products Invoice. Again, the data sent is very similar. 

Other Documents That Go With Both the EDI 850 and EDI 875:

  • 855 -- Purchase Order Acknowledgment: This document is used by the seller to confirm that they can meet the requirements outlined in the purchase order. It may confirm the entire order, reject it, or accept it with changes (such as adjusted delivery dates or quantities).

  • 860 -- Purchase Order Change Request (Buyer Initiated): Should the buyer need to make changes to the original purchase order after it has been sent, the EDI 860 document facilitates this communication. This could include changes in order quantities, delivery dates, or specific item details.

  • 940 -- Warehouse Shipping Order: This document is used to authorize the shipment of items from a warehouse. It communicates the buyer's order to the warehouse or fulfillment center, detailing what items need to be shipped, in what quantities, and where they should be sent. This document is key to initiating the physical movement of goods from the supplier's inventory to the buyer.

  • 945 -- Warehouse Shipping Advice: Following the 940 Warehouse Shipping Order, the 945 document is sent by the warehouse to the seller (and, in some cases, directly to the buyer) to confirm that the shipment of goods has taken place. It provides details about the shipment, including the items shipped, quantities, and the shipping method.

  • 997 -- Functional Acknowledgment: This document is used to confirm the receipt of EDI documents, including but not limited to the 856, which is the Advance Ship Notice. The 997 serves as a receipt that an EDI document was successfully received and could be properly interpreted by the receiving system. It's a critical component of EDI communications, providing confirmation of document exchange and ensuring that messages are not lost or overlooked.

Further Reading about EDI at SupplierWiki 

For more free educational content on EDI, download our 'EDI for Retail Supply Chains' cheat sheet. This simple guide offers a clear explanation of key EDI documents for retail suppliers and provides over 200 retail and supply chain EDI codes, all explained.

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Written by The SupplyPike Team

About The SupplyPike Team

SupplyPike builds software to help retail suppliers fight deductions, meet compliance standards, and dig down to root cause issues in their supply chain.

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