Changing a Purchase Order (PO) is an undesirable business practice because it could lead to delays in delivery. Therefore, the use of EDI 855 becomes key to efficiently managing the ordering process.
EDI 855 Definition
The EDI 855 Purchase Order Acknowledgment is an EDI document that sellers send to a buyer as a response to an order 850, to confirm or reject the delivery of products.
Like all EDI (Electronic Data Interchange) transactions, EDI 855 is used in business-to-business (B2B) communication. Namely, when two business partners exchange electronically the business information in a pre-defined standardized format over a secure connection (VAN, AS2, sFTP).
EDI 855 is the answer to EDI 850 Purchase Order. In the retail business, these two EDI transaction sets (EDI 850 and EDI 855) are usually implemented together to provide high efficiency in the ordering process and provide more efficient logistics.
EDI ANSI ASC X12 855 Purchase Order Acknowledgment Transaction Set
You may have seen the various names and acronyms of EDI 855 transaction such as: X12 855, 855 EDI, EDI 855 document, 855 acknowledgment, EDI acknowledgment 855, EDI 855 message, EDI 855 transaction, EDI PO Acknowledgment, EDI 855 Ack, 855 PO Ack, Order Acknowledgment and so on… but this should not confuse you, all this means one thing: an EDI transaction formally known as EDI ANSI ASC X12 855 Purchase Order Acknowledgment Transaction Set.
The abbreviations in the formal name of this document mean the following:
- ASC X12 – Accredited Standards Committee X12 (is a standards organization chartered by the American National Standards Institute, it develops and maintains the X12 standard).
- ANSI -American National Standards Institute
- X12 – EDI standard
- Transaction Set – EDI document
- 855 – code of the transaction
In EDIFACT (Electronic Data Interchange For Administration, Commerce and Transport) standard which is widely used in Europe, and in international trade, the EDI 855 is referred to as ORDRSP (Order Response) message.
What is EDI 855 used for?
Using Purchase Order Acknowledgment the seller informs the buyer whether the purchase order was:
- rejected, or
- accepted with changes (it means that changes were made to the accepted EDI 850 Order)
EDI 855 is based on the Purchase Order (EDI 850) and has various functions:
- Confirms receipt of a Purchase Order (EDI 850).
- Informs about the seller’s intention to fulfill the entire order without changes.
- Informs about the refusal to fulfill the order.
- Inform about errors and inaccuracies for example wrong prices, incorrect product numbers, etc.
- Informs about change in the PO such as:
– article cancellation
– schedule change
– replace items on the order
– changes item quantity
– price change
Components of EDI 855 Purchase Order Acknowledgment:
What is 855 made of? EDI 855 is paired with EDI 850 and is formed on its basis. PO Acknowledgment contains the following information:
- Information from PO 850 (Order numbers, date, product details, etc.)
- buyer and seller information
- order confirmation numbers
- Dates of the planned delivery of goods
- Scheduled time
- Delivery address
- Information about ordered products (barcodes, names, quantities, etc.)
855 Purchase Order Acknowledgment Structure
Typically, the EDI 855 structure consists of the following elements:
- ISA Interchange Control Header. (Mandatory)
- GS Functional Group Header. (Mandatory)
- ST Transaction Set Header. (Mandatory)
- BAK Beginning Segment for Purchase Order Acknowledgment. (Mandatory)
- REF Reference Identification. (Optional)
- PO1 Baseline Item Data. (Optional)
- ACK Line Item Acknowledgment. (Optional)
- DTM Date/Time Reference. (Optional)
- CTT Transaction Totals. (Mandatory)
- SE Transaction Set Trailer. (Mandatory)
- GE Functional Group Trailer. (Mandatory)
- IEA Interchange Control Trailer. (Mandatory)
However, it must be remembered that depending on the requirements of the business, optional elements may arise or be removed from the EDI 855 document.
Difference between EDI 855 and EDI 997
It is sometimes mistakenly believed that EDI 997 (Functional Acknowledgment) can replace EDI 855. These two EDI messages should not be confused, as they have completely different functions.
EDI 997 is just a notification that Purchase Order (EDI 850) has been delivered and does not contain any validation to the Order. The EDI 855 transaction has many functions and informs the buyer whether his order will be fulfilled, and under which basis.
Why EDI 855 is an important link between EDI 850 and EDI 856
Purchase Order Acknowledgment represents an important part of the order fulfillment. When a retailer receives confirmation of order quantities from EDI 856, restocking issues may occur.
Since the supplier sends the EDI 856 immediately after shipment, the retailer can realize that the order is not fully completed too late, when the goods are in transit.
Thus, he does not have time to order a similar product from the same or other suppliers to replenish the necessary stock on time.
EDI 855 for Retail Suppliers
EDI 855 is not implemented by all companies, although practice shows that this EDI document is one of the most important in retail B2B relationships between seller and buyer.
Here is a typical business flow using EDI:
There are many scenarios of EDI workflow in the business relationship between the trading partners, thus many different types of EDI transactions may be involved in this process. All depending on the specifics of the company’s activities or the requirements of the business partner.
Below we will look at the simplest and most common business process in which the 855 is used.
- Step 1: The buyer sends the Purchase Order (EDI 850) to the supplier.
- Step 2: To confirm readiness to fulfill the order, the supplier sends the buyer a Purchase Order Acknowledgment (EDI 855).
- Step 3: As soon as the merchandise is shipped, the vendor sends an EDI 856 Ship Notice (ASN) to the buyer.
- Step 4: An invoice 810 will follow so to get paid by the buyer.
What are the benefits of EDI 855?
Summarizing the benefits of using EDI 855 for both trading partners that have already been described in this article, the following points can be highlighted:
- Simplifies interaction with suppliers and increases work efficiency by reducing routine and inefficient operations (making control calls or writing e-mails to confirm or adjust a Purchase order).
- Using EDI 855, the supplier can promptly notify the buyer if any of the ordered products are not available.
- When generating EDI 855, the supplier can automatically book the goods for delivery at his warehouse.
- The buyer, having quickly received information about the unavailability of some ordered product, can promptly place an order from another supplier.
- Based on EDI 855, the buyer can predict the state of the inventory.
- Use PO Acknowledgment can significantly improve Advanced Ship Notice (EDI 856) accuracy.
The most widely-used EDI document in Retail.
As you can see from the above business flow, other important EDI documents are involved in the retails ordering process. The most common EDI Transaction sets are:
How to exchange EDI 855
There are several ways to exchange EDI messages with your business partner. During our more than 20 years of EDI integration practice, we have many clients who use our fully managed EDI services. So, let’s take a look at how does Fully Managed EDI Service works?
Fully Managed EDI Service to exchange EDI 855
Our Fully managed EDI Solution allows you to create, send, receive, of EDI documents, as well as automatically integrate them into a company’s software system (ERP, CRM…). Following is a description of incoming and outgoing EDI flows, based on our EDI2XML fully Managed EDI Service
For Incoming EDI documents:
We connect to:
– the Trading Partner’s mailbox, OR
– a mailbox on our clients’ platform, OR
– a mailbox on our EDI2XML platform we provide
- We collect the incoming EDI message (i.e. 850) from the mailbox
- We turn the received EDI document(s), into a format agreed upon with the client IT team (i.e. XML, TXT…)
- We drop the final file into the mailbox, waiting for the client IT team to pick up and automatically process into their own software system, OR,
- We integrate directly into the client’s ERP system, be it on-premises or in another cloud, using certified connectors of Magic xpi.
For Outgoing EDI documents:
- We receive necessary files from our client, based on a format agreed upon with his IT team
- We build the outgoing X12 EDI document (i.e. 855) based on the Trading Partner’s provided X12 format and specifications.
- We connect to the destination’s mailbox & drop the X12 file(s)
EDI web Services to exchange EDI 855
However, not all companies can benefit from Fully Managed EDI Services due to implementation fees and monthly services fees. For small companies that need to use EDI with their business partners, we recommend EDI Web Services. It is a cost-effective solution that allows you to start exchange EDI messages in less than an hour and best of all, you don’t need to have any special EDI knowledge.
This is a much more profitable EDI solution for small companies, with no contract, and pay as you go concept. Moreover, you can get started with a free 15 days trial period! If you want to know more about the EDI web service click here.
Contact us for more information and a free consultation.
Looking for more Info? Download our free informative EDI Guides and Whitepaper here