What are EDI transaction codes?

EDI transaction codes (or EDI transaction sets) refer to the set of data exchanged between parties to deliver the requested information via electronic data interchange. The data interchanged are often business documents like invoices or POs (purchase orders). These business documents are broken down into the following parts:

• Transaction set header – the first segment of the document
• Element: elements refer to the lines of information.
• Segment (each document has at least one data segment): Segments are a group of elements. Segments represent specific parts of a document.
• Transaction set trailer: also known as EDI transactions or an EDI message. When the segments come together in the final pre-determined format, a completed EDI transaction code is formed.

The EDI transaction codes help make the process easier. Different types of EDI transaction sets are specific to the industry’s document formats. Often, these data sets can be used to exchange between trading partners or third-party vendors through EDI. 

What role do EDI transaction codes play?

One of the EDI transaction sets’ most crucial roles is to maintain a uniform format for the information transaction between the different parties. This matters because there are numerous EDI transaction types for inter-industry communication. Following the predetermined EDI formats allow both parties to understand one another and carry out the business smoothly without any complications in communication. It also eliminates unnecessary steps and fines (also referred to as chargebacks).

List of common transaction codes in logistics

There are a variety of different types of EDI transactions based on the industry and partners’ specifications. This article will go through some of the most common EDI transaction codes.

But first, we need to take a look at one of EDI’s most popular communication standards in the supply chain industry – the ANSI ASC X12.

The ANSI ASC X12 standard

This standard was developed in 1979 and is sometimes referred to as the ANSI X12 Standard or simply as X12. ANSI stands for American National Standards. ASC stands for Accredited Standards Committee. 

This is one of the most commonly used standards across the globe even though it originated in North America. The standard is used for B2B (business-to-business) transactions, covering nearly every aspect of a business operation, which include documents like purchase orders, invoices, and shipment notices. 

Although the ANSI X12 standard is used across a variety of industries, it plays a crucial role in the healthcare industry because in 1996, the Health Insurance Portability and Accountability Act (HIPPA) regulations were enacted. HIPPA transaction sets are built on the ANSI X12 standard, requiring a national standard for electronic communication in the health industry.

With the standard’s widespread use across the different industries (over 320 transaction types), the X12 consists of five sub-sets:

• Supply Chain
• Transportation
• Communications & Controls
• Finance
• Insurance

The sub-sets all fall into the category of

• Order and Financial Series
• Warehousing Series (WAR)
• Transportation Air and Motor Series (TAM)
• Transportation Rail Series (TRS)
• Transportation Ocean Series (TOS)

It is worth noting that based on the X12 standard, there are sub-sets based on X12 for each specific industry. Some industry-specific sub-sets include:

• AIAG – Automotive Industry Action Group
• CIDX – Chemical Industry Data Exchange
• EIDX – Electronics Industry Data Exchange Group (CompTIA)
• HIPAA – Health Insurance Portability and Accountability Act
• PIDX – American Petroleum Institute
• UCS – Uniform Communication Standard
• VICS – Voluntary Interindustry Commerce Standards

Common transaction sets in the supply chain

Below are the transaction sets often used during the order management process. They are all common ANSI X12 transaction codes. 

EDI 850 – Purchase order

The EDI 850 is an electronic data interchange set that includes information about a purchase order sent from the buyer to the seller.  Instead of using emails, fax or calls, the user can place orders using this electronic purchase order. This document can be used for recurring purchases, a single purchase, or even fixing the details or deleting the order details. 

An EDI 850 document often consists of the information of

1. Purchase order date
2. Delivery date
3. Where the products should be delivered, could be several different locations
4. The name and the codes of the purchased products
5. The quantity of the purchased products
6. The pricing
7. Payment terms
8. Purchase order number

EDI 855 – Purchase order acknowledgment 

While EDI 850 is a document sent from the buyer to the seller, EDI 855 is sent from the seller to the buyer as a response. This response may be confirming with the buyer that:

• The order has been accepted and is currently being processed
• The order has been accepted, but there are going to be some changes
• The order has been rejected.

The response eliminates any need for faxing, calling, or email sending. The components of an EDI 855 are

1. Information from the EDI 850
2. The changes that are going to be made
3. The seller’s number

EDI 856 – Advanced shipping notice 

Also known as the Advanced shipping notice, or ASN, EDI 856 is used frequently among retailers, manufacturers, suppliers, and distributors. Just as the name of this transaction set suggests, the document is used to let the receiver know about the coming shipment and in many cases required a certain amount of time before the order arrives. ASN contains the details regarding the coming order: the order number, the items, the shipping date, the estimated delivery date, and the carrier.

The ASN benefits both ends of the transaction.

As for the supplier, ASN allows them to solidify the relationship with partners by reducing any errors, understocking, or missed deliveries; tracking shipments more easily, and replenishing products more efficiently. As for the retailers, ASN helps them create more efficient schedules for staff and equipment, gain real-time visibility into inbound goods; make timely adjustments in the warehouse, etc. 

The important information about EDI 856 includes

1. PO number
2. Shipping tracking information
3. Expected delivery date
4. Information about the supplier
5. Product code/ identifer
6. Packaging information

EDI 810 – Invoice

Also referred to as EDI Billing, EDI 810 is typically sent from the seller to the buyer. It is an electronic invoice to request payment for the delivered items. EDI 810 is not limited to any particular type of transaction but can be used for a variety of order types.

The key information of EDI 810 includes

1. Invoice date
2. Invoice number
3. Order details
4. The details about the buyer and seller
5. Total amount
6. Payment methods
7. Payment details
8. Discounts or additional charges
9. Tax details

EDI 940 – Ship-from-warehouse 

EDI 940, also known as ship-from-warehouse order or warehouse shipping order, is a document sent by suppliers or sellers to 3PLs (third-party logistics providers) to formally request to make a shipment to the location of the retailer, distributor, or grocer. EDI 940 may be a request to ship the item to a single location or multiple locations. Warehouse shipping order reduces plenty of paperwork, errors, and the time to process orders the traditional way.

EDI 940 consists of the following information:

1. Purchase order number
2. Order details
3. Product identifiers
4. Quantity
5. Requested shipment date
6. Ship-to information
7. Contact information of the receiver
8. Any additional requirements

EDI 754 – Request for Routing Instruction

Typically, EDI 754 is a response to EDI 753. It is known to provide the routing instructions to authorize the shipment and includes important information. This document is used during the fulfillment process. Organizations requiring this kind of document often closely monitor their inbound inventory transportation process and wish to better monitor their inventory levels.

As this document is generally used to provide instructions for the shipment, it often needs to encompass shipment information:

1. Shipment authorization
2. Carrier information
3. Pick up date and time
4. Trailers arranged for the shipments.
5. The locations (ship to/ ship from)

The benefits of EDI transaction sets

As the benefits have been mentioned here and there in the previous parts, the benefits of EDI transaction set’s all share these common qualities:

• They save time due to eliminating the manual processes that involve a lot of paperwork 
• The improved accuracy saves money, minimizing any back-and-forth correction
• Providing both the buyer and seller better visibility
• Boosts efficiency
• Strengthen the relationship between the trading partners

Therefore if you are struggling with the tedious and repetitive tasks of processing mountains of paperwork, an EDI solution with clear, standardized EDI transaction sets might be just what you need.

Final note

Standardized EDI transaction sets are one of the key reasons you should consider starting your EDI journey. Not only are they widely used in a range of different industries across the globe, but they also bring about enormous advantages and give you a competitive edge in today’s ever-changing market. If you still have difficulties figuring out where to begin and what you need to prepare for your business’ EDI journey, fear not. Let SCS Solutions help you with it. Contact SCS Solutions via our website https://www.scssolutions.io/, Linkedin, or Facebook!