A purchase order (850) is an EDI transaction that a buying organization sends to a seller to request goods or services at agreed-upon prices and terms. The buyer initiates this transaction independently rather than in response to another document. The core structure uses the BEG (Beginning Segment for Purchase Order) segment to establish the purchase order number, type, and date; the PO1 (Baseline Item Data) segment to specify each line item with quantity and pricing; and the N1 (Name) loop to identify parties involved such as the supplier, bill-to location, and ship-to address. Optional segments allow buyers to communicate detailed requirements including payment terms, shipping instructions, special handling needs, and item-level specifications.

For example, a manufacturing company like Acme Industrial sends an 850 purchase order to Superior Steel Supply requesting 500 units of carbon steel plate (Item #CS-4X8-0.5) at $45 per unit, with delivery to Acme’s warehouse in Ohio by March 15. The order includes FOB shipping terms, specific marking requirements in the packaging segment, and payment terms of net 30 days. Superior Steel Supply receives the order through their EDI system, where it populates their order management system and triggers fulfillment processes. The 850 thus serves as the authoritative electronic replacement for traditional paper purchase orders, enabling faster processing, fewer errors, and tighter supply chain coordination between buyer and seller.