Imagine you're a retailer placing a large order for your store, and after hitting "submit," you realize you forgot to add one of your biggest sellers. You're left wishing there was a way to modify your order instead of having to place a whole new one.
For businesses using electronic data interchange (EDI), there is: the EDI 860.
In this guide, we’ll explain how buyers use the EDI 860 to request a purchase order change.
What Is an EDI 860?
The EDI 860 document is a purchase order change request that allows buyers to modify the details of an existing purchase order (EDI 850). Logistics businesses, such as 3PLs and trucking companies, frequently use the EDI 860 to adjust orders, add new items, or adjust quantities on slow-moving stock instead of creating new transactions, further streamlining supply chain workflows.
The EDI 860 ensures that the buyer and seller are aligned on updated order terms, reducing the chance of disputes. It also leaves a clear record of the transaction, making it easy to track any changes made.
How Is an EDI 860 Transaction Used?
The EDI purchase order change request follows three specific steps. Here’s how the process works:
Initiate the Change Request
The buyer begins by identifying the changes needed in the purchase order — whether it’s inventory adjustments, new items, or other factors. The buyer’s EDI system generates the EDI 860, referencing the original EDI 850, and sends it to the supplier, notifying them of the necessary changes.
Specify Modification Details
The buyer details the necessary corrections to the original purchase order. For example, if an item was missed, the EDI 860 will include the updated product and quantity. This ensures the supplier understands exactly what needs to be changed while still adhering to standardized EDI segments.
Provide Justification
The buyer includes a justification for the change request, helping the supplier understand the reason behind the modification. This could be due to inventory shortages, production delays, or errors in the original order.
EDI 860 Transaction Specifications and Components
The EDI 860 follows a specific structure under the ANSI X12 standard, with each segment serving as a building block that holds data on specific order changes. These segments are separated by delimiters, allowing for clear, structured communication.
To ensure compliance, the EDI 860 adheres to the specific EDI standards of each trading partner, whether EDIFACT or ANSIX12. All segments in the document must align with the agreed-upon implementation guidelines. Documents should also include control numbers like EDI 997 (Functional Acknowledgement) to track order adjustment acknowledgments and ensure accurate processing.
Key Elements of EDI 860
The purchase order change request must align with the original EDI 850, highlighting the changes the buyer wants to make and why. Below are the key elements found in the EDI 860:
Purchase Order Number
This number links the original purchase order to the EDI 860, ensuring both parties can accurately identify and track the changes.
Buyer Information
Identifying the party requesting the change, this section enables the seller to verify and authenticate the buyer's request.
Seller Information
This section identifies the seller receiving the change request, ensuring that the correct seller processes the necessary modifications.
Addition/Deletion of Products
Typically labeled with a tag like LIN, this segment specifies any product additions, removals, or modifications. It helps eliminate confusion regarding product specifications and ensures clarity in the transaction.
EDI 860 Document Format Example
Here’s a basic ANSI X12 EDI 860 example that businesses use to modify existing purchase orders, along with a breakdown of its segments:
ISA*00* *00* *ZZ*SENDERID *ZZ*RECEIVERID *210315*1234*U*00401*000000001*0*P*>
GS*PO*SENDERID*RECEIVERID*20210315*1234*1*X*004010
ST*860*0001
BEG*00*NE*123456789**20210315
REF*IA*987654
DTM*002*20210320
N1*ST*BUYER NAME*92*12345
N3*123 BUYER STREET
N4*BUYER CITY*CA*90001
N1*BT*SELLER NAME*92*67890
N3*456 SELLER STREET
N4*SELLER CITY*NY*10001
PO1*1*100*EA*10.00**VP*123456*UP*0123456789012
CTT*1
SE*12*0001
GE*1*1
IEA*1*000000001
ISA (interchange control header): This contains metadata such as sender and receiver IDs as well as the date and time of transmission.
GS (functional group header): This groups related transaction sets (in this case, purchase order change requests) and defines the sender and receiver IDs.
ST (transaction set header): This marks the beginning of the EDI 860 transaction.
BEG (beginning segment for purchase order change request): This contains the purchase order type and number.
REF (reference Identification): This could be a reference for a contract number or another relevant internal tracking number.
DTM (date/time reference): This specifies important dates, such as when the buyer requested the change.
N1, N3, N4 (name, address, and city information): These provide details about the buyer and seller, including names and addresses.
PO1 (purchase order line item): This contains details of the specific items being ordered, including quantities, prices, and item numbers.
CTT (transaction totals): This provides the total number of line items in the order
SE (transaction set trailer): This marks the end of the transaction set.
GE (functional group trailer): This marks the end of the group of related transactions.
IEA (interchange control trailer): This denotes the end of the interchange.
3 Benefits of the EDI 860 Document File
Among the many advantages the EDI 860 offers trading partners, here are three of the most significant:
Increased Efficiency
EDI streamlines data exchange in real time, cutting down on the delays caused by back-and-forth communication. This leads to faster order processing, quicker fulfillment, and shorter cycle times across the entire supply chain.
Better Communication and Collaboration
EDI simplifies communication between trading partners worldwide, ensuring smooth, real-time data relay. This enables faster transactions and more accurate exchanges, improving collaboration and trust between businesses.
Improved Data Accuracy
Automation reduces manual errors, data mismatches, and other inaccuracies. By automating routine tasks and standardizing data formats, EDI ensures that information is accurately exchanged between systems, making the entire process more reliable.
Simplify Your Supply Chain Operations
Integrating a well-structured purchasing process into your enterprise resource planning (ERP) system streamlines your operations to give you a competitive edge. With EDI in place, you'll be set to take your system to the next level, further accelerating transactions, optimizing workflows, and strengthening collaboration across your supply chain.
Connect with an EDI expert today to discover all that a cloud-based EDI solution can do for you.