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Understanding the Basics of EDI

EDI 850

Purchase Order

Understanding the Basics of EDI

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What is EDI 850?

An EDI 850 is a type of purchase order. There are a number  of similar EDI document types including the EDI 856 (advance ship notice) and the EDI 810 (invoice). An EDI 850 is exchanged between computers that act on behalf of the companies; in EDI parlance these computers are often referred to as trading partners. The EDI 850, much like the other specialized EDI documents, must be exchanged with the trading partner in the specified format as prescribed by accepted standards.

EDI 850 in the EDI Communication Process

An EDI 850 is the EDI documented format version of a tangible purchase order in a company’s purchasing system. During the EDI communication process, the buyer prepares the order, has it approved and then the translation process begins. The order is then converted into an EDI-compatible document, the EDI 850 purchase order. Next, the EDI 850 must be transmitted to the intended party.

The Buyer’s Computer EDI 850

The buyer’s computer system sends the EDI 850 directly to the trading partner or through a Value Added Network (VAN). A VAN acts as an intermediary between trading partners for the purposes of facilitating communications. The VAN connects with the supplier's VAN and the transmission begins. The VAN is responsible for making sure that the EDI 850 is sent and received; the document is sometimes referred to as a “mailbag”. The final destination computer is responsible for processing the EDI 850 order.

Transmitting the EDI 850

This transmission can be done in a variety of ways. The EDI 850 document can be sent through the Internet, a Bulletin Board System (BBS), a modem, or VAN. Most EDI 850 documents are sent through a VAN. The EDI 850 is kept secure throughout the entire transmission process through a variety of security features, including passwords, user ID and encryption. In addition, the EDI 850 is kept authentic through a series of editing and checking procedures also done as part of the security process. Transmission of an EDI 850 is a critical step where significant mistakes can take place if the improper communications means aren't used.

Translating the EDI 850

Now that the EDI 850 has been received by the recipient, it must be translated into a usable format. EDI 850 translation software can be the interface between the EDI 850 that was received and the computer’s infrastructure and applications. The translating software will take the EDI 850 and translate it into a usable file format for the computer system - usually a file of fixed length, variable length or XML tagged. A mapper is used to change the tagged file (formerly the EDI 850 document) into a format that is compatible with the ERP, a large, enterprise-wide system that coordinates all aspect of a company’s business communication. At this point, the EDI 850 is no longer an Electronic Data Exchange document (written in computer code), but a usable purchase order file that a company can process. This process can be reversed to send other documents that are often associated with the EDI 850 such as an EDI 810 (invoice).

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