What is an 850 Purchase Order?

An 850 Purchase Order is a business-to-business electronic document widely used in the retail industry, typically as a part of Electronic Data Interchange (EDI). It is an electronic purchase order by a buyer to a seller for goods or services under agreed terms. The document specifies the products the buyer wishes to buy and their quantities. The 850 Purchase Order is especially significant in enabling procurement activities, improving communication among trading partners, and safeguarding order detail accuracy.

An EDI 850 Purchase Order typically contains the following details:

• Purchase order date: The date the purchase order is placed by the buyer.

• Purchase order number: This is a unique number to track status and handle payments electronically by buyer and seller

• Product: Names and codes (such as SKUs) of the items to be purchased.

• Requested ship and/or delivery date: The requested date the buyer wants the products to be shipped or delivered.

• Location(s): Where the services or product are expected to be delivered, either one location or multiple locations.

• Other information: Other product identifiers, product descriptions, and prices may also be included.

Why is the 850 Purchase Order Important?

• Standardization & Automation

  The 850 Purchase Order adheres to a well-established industry-standard format, facilitating communication between trading partners, enabling automation and reducing errors.

• Procurement Efficiency

  Automating the ordering process helps companies optimize their procurement process, enhancing accuracy and speeding up order delivery.

• Minimizing Errors

  As the data is being generated and shared electronically, it reduces the chances of human errors such as wrong price or quantities or items description.

• Enhanced Order Tracking

  The EDI 850 allows both the buyer and supplier to track orders in real-time, resulting in improved visibility and coordination within the supply chain.

• Partner Requirements

  Many large retailers, manufacturers and suppliers expect EDI-compliance for purchase orders so that business can run smoothly and contractual requirements are met.

• Cost Savings

  By automating purchase orders, there is less for paper, photocopying, and postage as well as administration so the savings will be significant over time.

• Pre-integration with ERP systems

  The 850 Purchase Order can integrate into ERP (Enterprise Resource Planning) systems helping businesses to streamline procurement, inventory management, and financial processes.

How Does the 850 Purchase Order Work?

The EDI 850 Purchase Order follows a structured process that ensures smooth and efficient order placement between buyers and suppliers. Here’s how it works:

1. Buyer Creates the Purchase Order

   The buyer generates an EDI 850 Purchase Order within their ERP or procurement system, specifying:

   • The products or services being ordered

   • Quantities and expected pricing

   • Shipping and delivery details

   • Payment terms and any additional instructions

2. Transmission via EDI Network

   Once created, the 850 Purchase Order is transmitted electronically through an EDI VAN (Value-Added Network) or a direct EDI connection (such as AS2, FTP, or API-based exchange).

3. Supplier Receives and Processes the Order

   The supplier’s system receives the EDI 850 and automatically imports it into their ERP or order management system. This eliminates the need for manual data entry and reduces errors.

4. Order Acknowledgment (EDI 997 or 855)

   The supplier may send back an acknowledgment, such as:

   • EDI 997 Functional Acknowledgment – Confirms receipt of the order.

   • EDI 855 Purchase Order Acknowledgment – Confirms whether the order can be fulfilled as requested.

5. Order Fulfillment & Shipping (EDI 856 & EDI 810)

   Once the order is processed, the supplier ships the products and sends an EDI 856 Advance Ship Notice (ASN) with shipping details.

   After the shipment, the supplier sends an EDI 810 Invoice for payment processing.

6. Buyer Reconciles & Completes the Transaction

   The buyer cross-checks the EDI 850 Purchase Order, EDI 856 ASN, and EDI 810 Invoice to ensure accuracy before making payment.

   This automated process reduces manual errors, speeds up order fulfillment, and enhances supply chain efficiency.

Most organizations struggle with ongoing EDI tasks, which can be time consuming and complex. EDI Generator by Aayu Technologies handles EDI 850s and other electronic documents. As a cloud based solution, it requires no installation or maintenance, offering hassle-free onboarding and scalability.

Interested in learning more about our EDI solution? Sign up today for a free 30-day trial and evaluate EDI Generator.

Rusiri Samarakoon

Rusiri is a Digital Marketing Manager at Aayu Technologies with over 10 years of experience in the digital marketing industry. She is skilled in planning, managing, and scaling various performance-based digital activities. She loves to learn new things and has a passion for creativity.