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Manufacturing: Your guide to EDI

May 24, 2022


Why do manufacturers need EDI?

In today’s global economy, language or distance often separates your business from its suppliers and customers.

Electronic data transmission eliminates those disadvantages by ensuring automatic, accurate transmission of detailed data such as purchase orders, invoices, and remittances.

How does EDI help manufacturers?

Electronic data interchange gives manufacturers end-to-end visibility through the entire supply chain—you can monitor all your transactions and identify issues and deal with them before they turn into problems. Six additional advantages:

  1. Increases supply chain efficiencies
  2. Improves document cycle time—which translates to a competitive advantage
  3. Guarantees more responsive customer service
  4. Requires less manual entry (saving team-hours and eliminating human error)
  5. Reduces overhead
  6. Enhances encryption and security

What are the most common EDI documents in manufacturing?

EDI 850 — This is the standard purchase order, and usually contains the same information as a paper purchase order (item, quantity, price, discount, shipping), with the added benefits of electronic data interchange, such:

  • Faster order processing
  • Reduced time lags
  • Fewer data entry errors
  • Elimination of duplicates

EDI 997 — A functional confirmation that the purchase order was received or rejected for technical reasons, allowing you to quickly resubmit.

EDI 855 — This is an official acceptance or rejection of the purchase order and its terms. The EDI 855 allows automatic updates and requires no follow-up.

EDI 856 — Because an EDI 856 contains all the details concerning the shipment—contents, packaging, quantity of items, tracking numbers, delivery dates—it makes scheduling easier for shipping and receiving departments and increases billing accuracy. (However, some manufacturers prefer an EDI 857, which is a combination of an advance shipping notice and an invoice.)

EDI 857 — An EDI 857 combines all the shipping information contained in an EDI 856 together with an invoice.

EDI 810 — An electronic version of the traditional invoice, the EDI 810 contains payment terms and shipping information—eliminating the printing and mailing costs of a paper invoice.

EDI 820 — Customers send this payment order/remittance advice when they pay manufacturers for an order. Because the EDI 820 matches the payment to an invoice and details billed and paid amounts, it usually ends the order’s trading cycle.

EDI 830 — Manufacturers send an EDI 830 as a planning schedule with release capability to the manufacturers to indicate expected needs. Suppliers send an EDI 830 to meet manufacturers’ needs—which is particularly useful for just-in-time deliveries.

Other frequently used EDI transaction sets:

  • EDI 196 – Contractor cost data reporting
  • EDI 832 – Price/sales catalog
  • EDI 844 – Product transfer account adjustment
  • EDI 846 – Inventory inquiry/advice
  • EDI 849 – Response to product transfer account adjustment
  • EDI 852 – Product activity data