CPG | EDI Transaction Cheat Sheet

CPG EDI Transaction Cheat Sheet

Achieve operational excellence with Walmart, Lowe’s, Kroger and more!
Retailers are looking to you to help effectively manage their supply chain by getting the right
product to the right place at the right time, and most importantly, with the right documentation.

As order volumes grow, manual process and web-form solutions become overwhelming.
So, here are five ways to help drive operational excellence:

1. Automate the order to cash (OTC) process. Improve accuracy and 4. Manage by exception to decrease chargebacks and deductions.
efficiency by automating the processing of transactions between Advance ship notices (ASN) issues or other data errors don’t have to
customers, 3PL warehouses and business partners. be a cost of doing business. Increase revenue by getting more value
out of the supply chain data flowing through
2. Gain control of rapidly onboarding new trading partners. Avoid your system.
risky delays in onboarding or programming in order to support new
trading partners. 5. Gain visibility and control of your operations. Identify a solution
that provides cross-functional users access to critical information in a
3. Reduce days sales outstanding (DSO). Leverage automated alerts meaningful format that’ll improve operations.
and notifications to identify sales invoice issues before they reach
your customer and cause payment delays.

This cheat sheet will explore the common EDI documents exchanged
within the CPG industry, their definitions and related challenges.
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Common CPG EDI Documents

Customer Supplier

850 PURCHASE ORDER

Place an order for goods or services.
855 PURCHASE ORDER ACKNOWLEDGEMENT
Sent in response to the EDI 850 to confirm that you can
meet requirements.
860 PURCHASE ORDER CHANGE REQUEST
Used by buyers to request a change to a purchase
order (EDI 850) previously submitted.
865 PURCHASE ORDER CHANGE ACKNOWLEDGEMENT
Acceptance or rejection of purchase order changes
previously submitted by buyer.

856 ADVANCE SHIP NOTICE | MANIFEST

Contents of each shipment and how items were packed.

810 INVOICE
Replaces traditional paper-based invoice.
864 TEXT MESSAGE
Readable EDI info rather than data for the computer.

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EDI 850: Purchase Order

For placing orders for goods or services, it generally provides the same CHALLENGES TO CONSIDER
information found in a paper purchase order (PO) document, including:
New Item Issues—Does the customer include new item numbers that you’ve never sold
to them and therefore are not already set up in your ERP package? How do you identify
• Item, prices and quantities ordered these situations and do you reject the order to inform the customer service team to set
• Shipping details up the new item?
• Payment terms By including validation checks in the processing of these EDI files, you can identify when
these situations occur. By formalizing the escalation process to handle these instances,
• Discounts you can ensure fulfillment of clients needs by shipping correct product.

This is usually the first document used to kick off a customer transaction Pricing Violations—Does the customer list the same price on an item that you have in
with each subsequent document relating back to the original PO. your systems, or are they citing a different price?
Formalizing how to handle these situations is critical. For instance, do you accept and fill
the order and then handle the pricing discrepancy while collecting on the invoice? Or, do
Simply accepting an EDI 850 from your trading partner is usually not
you choose to request the customer re-submit the PO with the correct price, potentially
sufficient for full EDI compliance. Most trading partners will expect other delaying the delivery of the product?
EDI transactions from you in response to the PO including:
New Shipment Addresses—Does the PO include a new ship to address that is not in your
 EDI 997 Functional Acknowledgement—confirms receipt of EDI 850 ERP package? Are you able to ship to that location? Do you know the correct freight
 EDI 855 Order Acknowledgement—sent in response to the EDI 850 carriers to use in that situation?
to confirm you can meet the requirements of PO Business rule validation in your EDI solution ensures that these types of issues can be
 EDI 856 Advance Ship Notice (ASN)—describes contents of each identified early before they corrupt your ERP’s data and cause fulfillment process issues.
shipment and how items were packed
 EDI 810 Invoice—replaces the traditional paper-based invoice
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EDI 855: PO Acknowledgement

For sellers to confirm the receipt of a PO (an EDI 850 Transaction) from a
buyer, eliminating the need to call or fax a confirmation.
CHALLENGES TO CONSIDER
Document Creation—The 855 may be new to an organization that is new to managing
B2B exchanges using EDI. One of the most frequent challenges is that a company’s ERP
The 855 also communicates whether the PO was accepted or rejected, or solution may not be able to create the data necessary for this EDI document.
what changes may have been made to accepted orders by the seller.
You may need to leverage a web-forms solution in conjunction with your automated EDI
 Accepted solution to ensure that you’re able to satisfy customers’ requirements.
 Rejected
 Accepted with Changes Timeliness—You must send an 855 within 24 to 48 hours of receiving the original PO to
– All line items accepted, change freight or cash terms (i.e. header- inform the customer as to whether you’re able to fulfill the order or if it’s necessary to
level changes only) place an order with an alternative supplier.
– Change or reject one or more line items, no header-level changes It’s critical that you know you have received these documents so you can respond in a
– Header-level changes, and one or more line items changed or timely fashion, making alerting capability necessary within your EDI solution.
rejected
– Each of these may be provided with or without an indication of
the product availability

The 855 transaction may also be used to advise a buyer of a pre-arranged

merchandise shipment directly from a vendor.

The seller will typically transmit an 810 invoice once the product ships. In
some cases, an 856 ASN must be provided ahead of the shipment.
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EDI 860: PO Change Request

For buyers to request a change to a PO (EDI 850) previously submitted. CHALLENGES TO CONSIDER
Process Impacts—Ensure that you’re able to adjust order acceptance processes and
It may also be used by buyers to confirm their acceptance of changes to
fulfillment practices when an 860 is received. Change in an accepted PO can impact
POs made by the sellers.
your confirmed production schedule and shipment plans, so understanding how an
order is actually being altered is critical to how support teams must adjust.
The 860 transaction is important for ensuring that the final order is Informing customer service and fulfillment stakeholders that these documents have
accurate providing information initially describing the PO and highlighting been received and then providing the information in a way that they can understand
any changes. will all them to adjust the process ensuring that customers get the right product at the
right time.
PO changes may include:
 Add items
Notification—Some ERP packages do not support the concept of an 860 type
 Change items document, so it’s critical that the right team members are notified when an 860 is
 Change dates received to ensure accurate order fulfillment.
 Change quantity Proactive notification of these documents is critical with customized alerts in your EDI
 Price change solution in the event that your ERP is not able to support this particular scenario.
 Reschedule

After receiving an EDI 860 Purchase Order Change Request from a

customer, the seller can then send an EDI 865 Purchase Order
Acknowledgement with change in response.
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EDI 865: PO Change Request Acknowledgement

Sellers of goods and services transmit 865 documents for two reasons: It typically includes much of the same information that appears in a PO (850
First, to communicate the acceptance or rejection of PO changes previously Purchase Order document) like product description and quantities, shipping
submitted by the buyer, or to communicate changes made by sellers to information, terms and costs. However, it’ll likely also include specific references
previously submitted POs. to what is changed from the original PO, as well as a code to indicate whether
the document is being used as a Request or as an Acknowledgement.
The 865 represents one in a sequence of transactions in a typical business
process involving a buyer (such as a retailer) and a seller (such as a
manufacturer). That process includes the following exchanges:
CHALLENGES TO CONSIDER
Document Creation—The 865 is another document that may be new to an
 Buyers submit 850 Purchase Order transactions to sellers to order
organization that is new to managing B2B exchanges using EDI. One of the most
products
frequent challenges is that a company’s ERP solution may not have the capability
 The sellers respond with EDI 855 Purchase Order Acknowledgment to create the data necessary for this EDI document.
 A buyer wishing to make changes to the original purchase order It may be necessary to leverage a web-forms solution in conjunction with your
communicates those changes with 860 Purchase Order Change Request automated EDI solution to ensure that you are able to satisfy customers’
transaction requirements.
 The seller communicates acceptance or rejection of the buyer’s changes
with an 865 Acknowledgement
Timeliness—You must send an 855 within 24 to 48 hours of receiving the original
 Sellers may also request changes to the original PO using the 865 PO to inform the customer as to whether you’re able to fulfill their order based
Request on the changes or if they need to place an order with an alternative supplier.
Again, it’s critical to have the appropriate alerting within your EDI solution to
Note that an acknowledgement of a buyer’s PO change request may be inform you that you’ve received these documents and acknowledge within the
communicated by the seller either with an 855 Acknowledge or with an 865 established timeframe.
Acknowledgment. This is the choice of the buyer and will likely be indicated
in the buyer’s EDI guidelines.
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EDI 856: Advance Ship Notice

This transaction is more commonly called the Advance Ship

Notice or ASN and is used to electronically communicate the
CHALLENGES TO CONSIDER
contents of a shipment to another trading partner and is sent in Bar Coding | Receiver Processing—ASN documents are used to provide an electronic bill
advance of a shipment arriving at a trading partner’s facility. of lading for the receiver. The use of bar codes on package labels allows the receiver to
scan the packages and know what’s in them based upon the relationship to the electronic
The 856 transaction is commonly used by the retail, ASN. Issues with the bar code labels, discrepancies between the bar codes, and the ASNs
manufacturing and automotive industries in response to EDI often result in the manual sorting of packages leading to increased labor costs for the
850 transaction. receiver and often charge-backs or penalties for the supplier.
Building business rules into your ERP or EDI solution to validate the accuracy of the ASN
In addition to detailing the contents of a shipment, the EDI 856 data will eliminate the many potential issues that can cause significant friction to your
includes order information, descriptions of products, types of customer relationship.
packaging used, carrier information and more. Completeness—Each trading partner has different requirements putting the burden on
the supplier to support various formats. The ASN also becomes a data collection issue,
An ASN may also provide information at a variety of levels, i.e. each carton in a shipment may be assigned a unique barcode identifier that must be
including: transmitted back to the trading partner.
Additional business rules to validate the completeness and accuracy of the ASN data is
 Shipment level information such as tracking numbers and incredibly important to avoid confusion and subsequent penalties and fines.
carrier information Timeliness—Trading partners typically require an ASN to arrive prior to the shipment.
 Order level information such as purchase order numbers Understanding when the ASN is required supported by alerting within your ERP or EDI
 Item level information including items and quantities solution will ensure you don’t miss this document and get slapped with missing ASN
charge backs.
 Pack level information including such as barcodes printed
on each carton
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EDI 810: Invoice

This electronic version of the paper-based invoice is typically sent in response to

an EDI 850 PO as a request for payment once the goods have shipped or
CHALLENGES TO CONSIDER
Discounts—Discounts are reflected differently within the EDI 810 data structure and
services are provided.
often issues can be traced to inaccurate calculations or representations of discounts.
Validating the actual EDI data sent to your trading partners to verify the accuracy of
This is often the final document in your transaction workflow and must adhere
your discount method when first implemented will eliminate the common scenario
to all previously transmitted data from the EDI 850 PO and EDI 856 ASN.
of over discounting a customer due to a data mapping issue.
The 850 Purchase Order commonly contains:
Pricing Issues—If an EDI 850 PO with incorrect pricing is submitted and your ERP
 Invoice details such as invoice number and date
system attempts to use your own pricing, the invoice may not meet customer pricing
 Shipping details expectations resulting in a short payment, or worse, no payment.
 Payment terms Validating the item pricing on the actual EDI Invoice sent to a customer against the
 Item information including prices and quantities EDI PO they sent you is the only way to ensure that the two are in synch and that
 Discounts you’re not overcharging (resulting in a short payment) or undercharging (leaving
money on the table).
Once transmitted, additional EDI documents may be sent in response:
 EDI 997 Functional Acknowledgement—confirm receipt of EDI 810 Invoices Out of Balance—If invoice line items don’t add up to the total on the
 EDI 864 Text Message—report business violations detected in invoice invoice, the customer is likely to pay the lesser of the two resulting in further
 EDI 820 Remittance Advice—detail payment of the invoice short payments.
Validating the invoice is balanced on the actual EDI message will ensure that
Issues with an EDI 810 may result in delayed or short payments by customers, no data mapping or rounding errors are being presented to customers.
so it’s important to understand the common pitfalls for this document and
ensure that your systems and processes are complete and accurate.
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EDI 864: Text Message

Designed for the transmission of various communications in a easy-to-read

format rather than for computer processing only.
CHALLENGE TO CONSIDER
Awareness—The most challenging aspect of the 864 is awareness that you’ve
received one and then identify the associated transaction. Getting the 856
Information transmitted via the 864 may include simple messages, information to the right people in your organization is critical to ensuring
contracts, explanations, etc. correct B2B exchanges with your most important trading partners.

An 864 document includes: Building alerts into your EDI solution to identify when these documents occur
 Message date and time is the first step. When applicable, associating these documents with the EDI
 Recipient identifying information (to ensure the message is POs that they are associated to will provide incredibly valuable information to
delivered properly) eliminate errors before they snowball and result in short payments, penalties,
 Free-form message text fines or worse yet, put your business relationships at risk.

Because of the free-form text format, the 864 is a very flexible transaction
allowing companies to use it for a variety of purposes like sending
notifications to vendors, suppliers or other trading partners.

Although the 864 was designed for only one-time communications,

many companies have adopted it for when no other specific transaction
set exists, like providing updated store or distribution center
location information.
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