The EDI 850 Purchase Order (PO) is just a normal purchase order that is sent electronically instead of in a physical paper format. The electronic file format the document is sent in is called EDI – which stands for Electronic Data Interchange. The purpose of EDI is to cut down on the cost and errors associated with manual keying of data. For example, your customer needs some of your products so they send you an EDI 850 PO which says “this is what I need and where I want it shipped”. You receive the PO and send back a 997 Acknowledgement saying “I got the PO”. You then fulfill the order and send a 810 Invoice saying “we shipped these items and here is the final price – please pay us within 10 days”. If you are fully integrated with EDI, all of this happens electronically with only one or two checks by a human (and no keying of data).
EDI 850 Specification
This X12 Transaction Set contains the format and establishes the data contents of the Purchase Order Transaction Set (850) for use within the context of an Electronic Data Interchange (EDI) environment. The transaction set can be used to provide for customary and established business and industry practice relative to the placement of purchase orders for goods and services. This transaction set should not be used to convey purchase order changes or purchase order acknowledgment information.