Different Types of Orders (Business + EDI Perspective)

Purchase Order (PO) – Standard Order

• A formal request to buy goods at an agreed price and quantity.
• It is Used in Retail, Manufacturing, FMCG etc.
• EDI Message Type: X12 - 850, EDIFACT - ORDERS
• Example: Walmart orders 1,000 mugs @ ₹120 each

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Blanket Order / Contract Order

• A long-term agreement with releases over time.
• It is Used in Retail chains, large distributors etc.
• Example: Annual agreement for 50,000 items, shipped monthly

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Release Order / Call-Off Order

• An instruction to release part of a contract order.
• It is Used in Retail, Automotive suppliers etc.
• Example: Ship 5,000 units this week from the annual contract

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Forecast Order 

• A planning signal, not a confirmed order.
• It is Used in Automotive, Electronics and High-volume manufacturing
• EDI Message Type: EDIFACT - DELFOR 
• Example: Next 3 months we may need 10,000 units

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Delivery Schedule / JIT Order

• A time-specific delivery instruction.
• It is Used in Automotive, Just-In-Time (JIT) supply chains etc.
• EDI Message Type: EDIFACT - DELJIT
• Example: Deliver 120 parts at 10:30 AM today

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Rush / Expedite Order

• An urgent order requiring faster delivery.
• It is Used in Retail during peak season, Emergency manufacturing etc.
• Example: Ship today instead of next week

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Drop-Ship Order

• Supplier ships directly to end customer, not retailer.
• It is Used in E-commerce, Marketplaces etc.
• Example: Amazon orders → Supplier ships to customer address

EDI Retail vs Automotive Orders

Retail Orders:

The Purpose is selling finished goods to stores or online customers

How Retail Orders Work:

1. Retailer creates a Purchase Order (PO)
2. Supplier confirms and prepares goods
3. Supplier ships goods and sends ASN
4. Retailer receives goods
5. Supplier sends Invoice

Example:
A Company orders 500 water bottles → ships once → invoice sent

Retail EDI Standards

• ANSI X12 (850, 856, 810)

• EDIFACT (ORDERS, DESADV, INVOIC)

• TRADACOMS

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Automotive Orders:

The purpose is to Supply parts/components for manufacturing company

How Automotive Orders Work:

1. OEM sends Forecast (weekly/monthly demand)
2. OEM sends Delivery Schedule (daily/hourly quantities)
3. Supplier ships exact quantity at exact time
4. Any delay = production line risk

Example:
Car plant needs 200 brake pads every 2 hours → supplier must deliver exactly on time

Automotive EDI Standards

• EDIFACT subsets from:

  • ODETTE

  • VDA

• RosettaNet (electronics/auto suppliers)

EDI is not just file movement

EDI itself is old and stable — but how companies use EDI is changing fast.
The “what’s new” is mostly around automation, visibility, and expectations.

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1. EDI Is Moving from File Exchange to Process Automation

Old thinking:

“EDI = sending and receiving files”

New thinking:

“EDI = automated order-to-cash process”

What’s new:

• EDI tightly integrated with ERP, WMS, TMS

• Business rules embedded into EDI flows

• Touchless processing becoming the goal

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2. Real-Time Expectations Are Rising

EDI was traditionally batch-based.

Now retailers expect:

• ASNs within minutes of shipment

• Near real-time invoices

• Immediate error notifications

What’s new:

• Event-driven EDI (triggered by shipment, pick, pack)

• Faster SLAs

• Less tolerance for delays

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3. Chargeback Prevention Is a Bigger Focus Than Ever

Earlier:

• Companies accepted chargebacks as “cost of doing business”

Now:

• Chargebacks are tracked, analyzed, and challenged

• Automation is designed to prevent violations upfront

What’s new:

• Pre-send validation rules

• Retailer-specific compliance checks

• Chargeback dashboards

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4. EDI Visibility & Monitoring Are Finally Getting Attention

Old reality:

• “No news means EDI is working”

New reality:

• Companies want full visibility:

  • What failed?

  • Why?

  • Who owns it?

What’s new:

• Proactive alerts

• Exception queues

• KPI-driven EDI monitoring

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5. Business Teams Are Getting Involved in EDI

EDI is no longer just IT’s problem.

What’s new:

• Finance tracks invoice deductions

• Operations track ASN accuracy

• Supply chain teams care about routing compliance

EDI is becoming cross-functional.

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6. Hybrid EDI Models Are Growing

Companies now run:

• Traditional EDI (X12 / EDIFACT)

• APIs with modern partners

• Portals for small vendors

What’s new:

• EDI + API coexistence

• Same business rules applied across formats

• Unified visibility across channels

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7. Self-Service & Configuration Over Custom Code

Earlier:

• Heavy custom mappings

• Dependency on vendors or consultants

Now:

• Configuration-driven rules

• Partner onboarding templates

• Faster changes with less risk

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8. EDI Talent Expectations Are Changing

What’s new for professionals:

• Less “just mapping”

• More business + process knowledge

• Understanding chargebacks, SLAs, KPIs

Modern EDI professionals are becoming integration consultants, not translators.

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What Has NOT Changed:

• EDI formats are still the same

• Retailer rules are still strict

• Poor data still breaks everything

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Summary

Companies now see EDI as:

• Revenue protection

• Compliance enforcement

• Operational backbone

EDI Chargeback Transactions

What Is an EDI Chargeback Transaction?

An EDI chargeback transaction is not a standard EDI document like a PO or Invoice.

It is a financial penalty imposed by a retailer on a supplier when EDI or logistics rules are violated.

Retailers usually deduct this amount directly from the supplier’s payment and communicate it through EDI documents or retailer portals.

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Why Do EDI Chargebacks Happen?

Chargebacks happen when a supplier fails to meet retailer EDI compliance requirements, such as:

• Late or missing ASN

• Incorrect ASN quantity or carton data

• Invalid item numbers (SKU, GTIN, FNSKU)

• Late or incorrect invoice

• Incorrect ship-to / GLN / store number

• Labeling or packaging mismatch

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There is no universal EDI “Chargeback” document, but retailers communicate chargebacks using different EDI transactions.

Common EDI Documents Used for Chargebacks

1. EDI 810 – Invoice Deduction

• Retailer deducts chargeback amount from invoice payment

• Seen as a short-paid invoice

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2. EDI 812 – Credit/Debit Adjustment

• Explicit document showing:

  • Chargeback reason

  • Deducted amount

Example reasons:

• Late ASN

• Routing non-compliance

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3. EDI 864 – Text Message

• Used to explain the chargeback in detail

• Often includes free-text reason codes

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4. EDI 824 – Application Advice

• Sent when an EDI document is rejected

• Not a chargeback itself, but often leads to one

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5. EDI 997 / 999 – Functional Acknowledgment

• Confirms whether a document was accepted or rejected

• Rejection and no fix = chargeback later

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Chargeback Flow (Example)

1. Supplier sends ASN (856)
2. Retailer detects ASN quantity mismatch
3. Shipment accepted, but violation logged
4. Retailer issues chargeback
5. Deduction appears in 810 payment or 812 debit memo

EDI Mistakes That Cost Companies Money

EDI is meant to save time and money, but when implemented or managed poorly, it can silently drain revenue through penalties, rework, and lost business. Many companies don’t even realize how much money they lose due to avoidable EDI mistakes.

Here are the most common EDI mistakes that directly impact costs,

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1. Missing or Late ASNs (EDI 856)

The Mistake:
Advance Ship Notices are not sent, sent late, or sent with incorrect data.

Why It Costs Money:

• Retailers impose chargebacks

• Shipments are delayed at warehouses

• Goods may be rejected at receiving docks

Real Impact:
A single missed ASN can result in penalties per shipment, quickly adding up to lakhs or thousands of dollars.

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2. Incorrect Invoice Data (EDI 810)

The Mistake:
Mismatch in price, quantity, tax, or freight charges.

Why It Costs Money:

• Invoices get rejected

• Payments are delayed

• Manual corrections increase effort

Real Impact:
Delayed cash flow and increased accounts receivable workload.

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3. Duplicate EDI Transactions

The Mistake:
Same EDI file is sent multiple times due to retries or reprocessing.

Why It Costs Money:

• Duplicate shipments or invoices

• Confusion at the trading partner’s end

• Time wasted investigating issues

Real Impact:
Overbilling, disputes, and loss of partner trust.

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4. Ignoring Functional Acknowledgments (997 / CONTRL)

The Mistake:
997 rejections are not monitored or acted upon.

Why It Costs Money:

• Orders or invoices never reach the partner’s ERP

• Business assumes processing is successful

Real Impact:
Missed orders, delayed payments, and emergency firefighting later.

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5. Poor Trading Partner Onboarding

The Mistake:
Skipping proper testing and rushing go live.

Why It Costs Money:

• High rejection rates

• Frequent production failures

• Continuous rework

Real Impact:
Support teams spend more time fixing issues than adding value.

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6. No Partner-Specific Validation Rules

The Mistake:
Using one generic EDI format for all partners.

Why It Costs Money:

• Retailers enforce strict compliance

• Non-compliant files trigger penalties

Real Impact:
Recurring chargebacks despite “technically correct” EDI files.

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7. Expired AS2 Certificates or Connectivity Failures

The Mistake:
Certificates expire or SFTP credentials change unnoticed.

Why It Costs Money:

• Files stop flowing

• Orders pile up

• Emergency fixes required

Real Impact:
Missed SLAs, delayed shipments, and unhappy customers.

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8. Lack of Monitoring & Alerts

The Mistake:
No real-time monitoring or alerts for failures.

Why It Costs Money:

• Issues detected too late

• Business impact already occurred

Real Impact:
What could have been a 10-minute fix becomes a full-day outage.

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9. Weak Master Data Management (MDM)

The Mistake:
Incorrect SKU, GLN, UOM, or customer codes.

Why It Costs Money:

• Orders fail in ERP

• ASNs or invoices rejected

Real Impact:
Manual corrections and operational delays.

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10. Treating EDI as “Set and Forget”

The Mistake:
Assuming EDI will run forever without maintenance.

Why It Costs Money:

• Partner changes go unnoticed

• New compliance rules missed

Real Impact:
Sudden failures during peak business periods.

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How to Prevent These Costly EDI Mistakes

• Monitor EDI transactions daily

• Validate files before sending

• Track acknowledgments and MDNs

• Keep partner specs updated

• Schedule periodic EDI audits

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Summary

EDI mistakes don’t always show up as system errors—they often show up as lost money, penalties, and damaged relationships.
Companies that treat EDI as a business-critical system, not just IT plumbing, protect revenue and build stronger partnerships.

How to Onboard a Trading Partner in 7 Steps

Trading partner onboarding is a critical part of EDI integration. 

It ensures your business can exchange documents like purchase orders, invoices, and shipping notices smoothly and reliably. 

A well-planned onboarding process reduces errors, delays, and partner frustration.

Here are the steps to onboard a new trading partner.

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Step 1: Collect Partner Requirements

Before you start, gather all trading partner specifications:

• Supported EDI standards (X12, EDIFACT, TRADACOMS)

• Communication method (AS2, SFTP, VAN, API)

• Document types and versions (850, 855, 856, 810)

• Business rules (mandatory fields, code lists, file naming conventions)

Note: Ask for a partner Implementation Guide (IG)—it contains all details needed for setup.

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Step 2: Set Up Communication Channels

Configure the secure method to send and receive EDI files:

• AS2: Secure, real-time protocol with MDN

• SFTP/FTPS: Batch transfer method

• VAN: Value Added Network for managed routing

• API: Real-time JSON/XML exchange (if supported)

Note: Test connectivity before moving to production.

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Step 3: Map Your ERP Data to EDI Documents

• Identify which ERP fields map to which EDI segments

• Apply partner-specific rules for:

  • SKU/Item codes

  • UOM (Units of Measure)

  • tax codes

  • Freight charges

• Use an EDI mapping tool like Cleo Studio, OpenText/GXS Application Integrator, IBM Sterling Map Editor etc.

Note: Maintain a mapping specification document for future reference.

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Step 4: Validate and Test EDI Files

• Generate sample EDI files from ERP or test system

• Validate against:

  • Partner format rules

  • Mandatory segments

  • Control numbers and hierarchies

• Send test files to the partner and get feedback

Note: Include both positive and negative test cases (valid and invalid scenarios).

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Step 5: Coordinate Testing with Trading Partner

• Partner performs system-to-system testing

• Verify:

  • Receipt of documents (997 for X12)

  • Data correctness (PO acceptance, ASN details, Invoices)

  • Communication reliability (timeouts, retries)

• Resolve errors collaboratively

Note: Document all changes for audit purposes.

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Step 6: Production Cutover

• Schedule go-live with both internal and partner teams

• Send first production EDI files under monitoring

• Monitor:

  • Acknowledgments

  • File delivery and parsing

  • ERP posting success

• Validate all the documents which is generated first

Note: Have a rollback plan if something fails.

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Step 7: Post-Go-Live Support & Continuous Monitoring

• Monitor EDI dashboards daily

• Resolve rejections, duplicates, or control errors quickly

• Update mappings if the partner changes requirements

• Keep communication lines open for smooth collaboration

Note: Periodic audits ensure compliance and reduce chargebacks.

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Summary

Trading partner onboarding is more than just sending files—it’s about building a reliable, automated, and compliant business connection. Following these 7 steps ensures your EDI integration is smooth, reduces errors, and strengthens your partner relationship.

Common EDI Interview Questions

 1. A trading partner says they did not receive your EDI 850. What will you do?

Answer:

• Check outbound EDI logs

• Verify AS2/SFTP transmission status

• Look for 997 or MDN

• Re-send only if no acknowledgment received

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2. You received a 997 with AK3/AK4 errors. What does that mean?

Answer:

• Structural or segment-level error

• Check which segment and element failed

• Correct mapping or data and resend

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3. An ASN (856) is rejected but invoice (810) is accepted. Why?

Answer:

• ASN has stricter hierarchy rules

• Pack, item, or shipment loops missing

• Partner validates 856 more strictly

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4. Control numbers are duplicated. What will happen?

Answer:

• Partner rejects the file

• Risk of duplicate processing

• Must reset or sync control numbers

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5. A customer says invoice amount is wrong. How do you troubleshoot?

Answer:

• Compare ERP vs EDI

• Check price, quantity, tax, freight

• Validate mapping and rounding rules

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6. What do you do if AS2 MDN is not received?

Answer:

• Check outbound status

• Verify partner server

• Retry or switch to async MDN

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7. How do you onboard a new trading partner?

Answer:

• Collect partner specifications

• Setup communication

• Build mapping

• Test documents

• Get go-live approval

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8. How do you handle a failed cutover?

Answer:

• Stop production flow

• Roll back to old system

• Fix issues

• Re-test and re-deploy

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9. What causes duplicate EDI documents?

Answer:

• File resubmission

• Network failure

• Missing duplicate check

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10. What is the difference between 997 and 855?

Answer:

• 997 = technical receipt

• 855 = business acceptance

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11. A partner changes their EDI version. What must you do?

Answer:

• Update mapping

• Test all documents

• Validate backward compatibility

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12. Why does EDI succeed but ERP posting fails?

Answer:

• Master data mismatch

• Invalid SKU, GLN, or customer code

• ERP validation errors

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13. How do you prevent EDI chargebacks?

Answer:

• Validate ASN, invoice, ship dates

• Monitor rejections

• Follow partner rules

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14. What Middleware tools and protocols you know?

Typical answer:

• Cleo, OpenText, IBM Sterling, SAP PI/PO, CPI

• AS2, SFTP, VAN, FTP

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15. How do you monitor production EDI?

Expected answer:

• Dashboards

• Error alerts

• Acknowledgment tracking