EDI 850
What is EDI 850?
EDI 850 is the electronic data interchange standard for purchase orders - basically how businesses send orders to each other without drowning in emails and PDFs. It's supposed to eliminate manual order entry, reduce errors, and speed up the whole ordering process. In reality? Most companies are still stuck somewhere between "fully automated" and "printing EDIs to manually enter them into another system" (yes, really).
How Does EDI 850 Actually Work in Most Companies?
Here's what's supposed to happen: Your customer's system generates an EDI 850 purchase order. It flows directly into your order management system. Orders process automatically. Everyone's happy.
Here's what actually happens: The EDI comes in through your VAN (Sterling Commerce, OpenText, or Kleinschmidt - whoever's charging you by the kilocharacter this month). Someone still reviews it manually because "we've always done it that way." Your system can't handle their custom fields, so someone copies and pastes into Excel. Three days later, you finally send back an acknowledgment. Your customer calls asking where their order confirmation is.
Look, EDI 850 has been around since the 1970s. You'd think we'd have this figured out by now. But walk into most distribution centers and you'll find people manually entering EDI orders because their ERP "doesn't map that field" or "we need to check pricing first."
The technical side isn't even that complex. An EDI 850 contains all your standard purchase order information - item numbers, quantities, prices, ship-to addresses, requested delivery dates. It uses specific segments for different data - like BEG for beginning the purchase order, N1 for addresses, PO1 for line items. But the real challenge isn't the technology. It's that every major retailer has their own special requirements.
Target wants their department number in REF*DP. Walmart needs their specific routing guide codes. Amazon requires precise window delivery appointments in DTM segments. And if you mess up any of these requirements? Chargebacks. Lots of them.
Why Does EDI 850 Drive Everyone Crazy?
Let's be honest about what makes EDI 850 painful. First, there's the setup cost. Getting EDI running with a new trading partner typically takes 6-12 weeks and costs $5,000-25,000, depending on complexity and your existing systems. That's before you've processed a single order. Small suppliers basically get told "you need EDI or we can't work with you." Great.
Then there's the VAN charges. Oh, the VAN charges. Sterling Commerce (now IBM), OpenText, Kleinschmidt, and Cleo are charging you $0.10-0.25 per kilocharacter. Yes, you're literally paying by the character to send orders in 2025. Your monthly VAN bill looks like a phone bill from 1987. Processing high-volume orders? That VAN bill can hit five figures monthly. For what? Moving text files around.
The mapping nightmare is even worse. Your customer sends item number "ABC-123" but you call it "WIDGET-BLUE-LARGE" in your system. Someone has to maintain that cross-reference table. Forever. For thousands of items. Across dozens of customers. When someone forgets to update the mapping? Orders fail.
And don't even get me started on the different transmission methods. AS2? SFTP? VAN-to-VAN? Each customer wants something different. You end up supporting three different methods just to receive the same 850 document.
How Does Modern Order Automation Handle EDI 850?
Here's where order automation changes everything. Modern order automation platforms don't just receive EDI 850s - they actually understand them. They handle the mapping automatically, validate orders against your business rules, and only flag real exceptions.
Instead of manually checking every order, automation validates prices against your contracts, inventory against available stock, and delivery dates against your capacity. Orders that pass all checks? Straight through to fulfillment. No human touch needed.
The game-changer is how these platforms handle variants. When Target sends their EDI 850 with seventeen custom fields, the system already knows what to do. When Walmart wants their specific acknowledgment format, it's automatic. You're not maintaining separate processes for every customer.
Some platforms even translate between EDI and API in real-time. Your customer sends EDI 850? You receive it however you want - API call, CSV, direct ERP integration. SPS Commerce and TrueCommerce specialize in this translation layer. You don't care about their format preferences anymore.
And about those VAN charges? Modern platforms like Orderful are disrupting the old VAN model with flat-rate pricing. No more per-character charges. Some platforms even bypass VANs entirely with direct AS2 connections.
How Can You Make EDI 850 Work Without Losing Your Mind?
If you're stuck with EDI 850 (and let's face it, you probably are), here's what actually helps:
Stop treating every EDI like it's special. Set up your validation rules once. If an order passes, let it flow. The orders that need attention will fail validation anyway.
Automate the acknowledgments immediately. Nothing makes customers angrier than sending an EDI and waiting days for confirmation. Modern systems send back 855 acknowledgments in seconds, not days.
Use a platform that handles variants. Unless you want a full-time person just managing EDI mappings, get something that handles different customer formats automatically. SPS Commerce handles this well for retail-focused companies.
Track your EDI performance. How many orders process straight through? Where do they get stuck? Fix those bottlenecks instead of checking every order "just in case."
Challenge the VAN monopoly. If you're spending thousands monthly on VAN charges, look at alternatives. Direct AS2 connections, modern platforms with flat pricing, or API alternatives might save you serious money.
Frequently Asked Questions About EDI 850
Do we really need EDI if we're a small company?
If you want to sell to any major retailer or distributor, yes. They won't work with you otherwise. But you don't need a massive EDI implementation - cloud-based solutions from SPS Commerce or TrueCommerce can get you running for under $500/month.
Can't we just use email or web portals instead?
Sure, if you like manually entering orders. Once you're processing more than 10-20 orders daily, the manual work kills you. EDI 850 processes in seconds what takes humans hours.
What's the difference between EDI 850 and APIs?
EDI 850 is like sending a formal letter - structured, standardized, but rigid. APIs are like having a conversation - more flexible, real-time, but everyone speaks different languages. Most companies end up supporting both.
How much does EDI really save?
When it's working properly? Manual order entry costs $5-15 per order in labor. EDI cuts that to pennies. But that's only if you actually automate it, not if you're printing and re-entering. Plus you avoid the errors that come with manual entry.
Not all customers willing to use EDI? See how order automation platforms like Crew Capable work for all customers - whether they send orders via EDI, email, portal, or PDF - eliminating manual entry and those painful VAN charges while orders flow straight through to fulfillment.