EDI 101

Learn how EDI works, explore the benefits of EDI or browse types of EDI documents.

What’s an 850?

An EDI 850 document is also known as a purchase order. Browse our comprehensive list of EDI transactions to learn about the different types of EDI documents, what they are used for, and why it matters for your business.

What is EDI?

EDI is an abbreviation for Electronic Data Interchange. Using EDI, companies send information from one business system to another, using a standardized format. EDI allows companies to exchange data electronically rather than by paper.

How does EDI work?

By adhering to the same standards/formats, EDI-capable companies electronically exchange documents, such as purchase orders, invoices, shipping notices, etc., without human intervention. How EDI Works: Graphic of EDI documents being transmitted between business systems

Benefits of EDI:

EDI has many benefits. EDI is proven to streamline and improve workflow while enhancing supply chain predictability.

EDI is cheaper and faster than traditional paper methods

A paper-based order can cost $70 or more per transaction, while the more efficient electronic transactions are processed for less than a dollar. Online EDI solutions eliminate hidden costs when compared to packaged EDI software. Cloud-based EDI solutions save an average of 25–75% in upfront costs, plus 50–75% in long-term expenses like software updates and hardware upgrades.

Respond quickly to disruptions

Make more-accurate documents and forecasts

Reduce inventory

Reduce manual data entry, as well as the errors

Free up valuable office resources to focus on more important business functions

“SPS Commerce knows of future changes to a retailer’s transactions well in advance. It is not uncommon for them to proactively change a map to suit a retailer’s new requirement before we are even aware that changes are needed.”

Gregg Tines

Vice President of Sales, John Louis Inc.

Getting started with EDI?

Here are some questions to consider before you invest in your EDI solution.


Who are my trading partners?

Trading partners may include suppliers, third-party warehouses, carriers, sourcing offices, banks and many others. Any business that needs the data to fulfill an order or provide a service should be included.

Why invest in my supply chain?

Though often overlooked, the supply chain is an increasingly important strategic asset that can predict the health of an organization’s bottom line and growth opportunities. The supply chain’s contribution to revenue increased from 4% in 2011 to 8.5% in 2012.[*] *2012 CSC Global Survey

What business documents do I want to exchange?

The standard messages support a variety of business processes from POs to payments as well as capturing the status of a shipment and gaining visibility into your suppliers’ inventory.

In-house or outsourced EDI?

If you’re new to EDI, you can either outsource to an EDI provider or invest in your own on-premise EDI system.


  • Requires software
  • Requires hardware
  • Requires knowledgeable resources in-house
  • Requires ongoing support within the organization to preserve EDI capabilities
  • Must develop and maintain maps and requirements for each trading partner connection

Outsourced EDI:

  • Outsourcing takes most of the IT work off your shoulders.
  • An online EDI solution requires no hardware.
  • An online EDI solution requires no software.
  • If a retail partner changes an EDI map or specification, your EDI provider will manage the change so there’s no disruption to your EDI document flow.

Want more info on in-house EDI vs outsourced EDI?

Learn more about options, costs, resources and what you need to know before you invest in an EDI solution.

In-house EDI vs outsourced EDI >>

Why trading partners trust SPS Commerce:


Unmatched expertise

As the leading retail-focused supply chain management network in the business, we are the trusted authority for thousands of EDI trading partners

Pre-wired connections

Our team of experts can help you achieve EDI capability and 100% compliance with trading partner transaction requirements.

The largest retail network

We’re the retail industry’s largest trading community with more than 60,000 customers in over 60 countries.

Expert support staff

Available when and where you need them, via self-paced online tutorials or in-person training sessions.

“We’re fortunate to have found a technology partner in SPS who has played a big part in helping us compete in digital retailing.”

Marc Kermisch

Chief Information Officer, Red Wing Shoes

Fulfillment EDI products:

Our Fulfillment solutions enable you to seamlessly manage orders, shipments, payments and returns.


EDI Testing

Achieve compliance quickly to begin trading data electronically


Cloud-based EDI, quick implementation, best option for small businesses

Integrated Fulfillment

Integrate with more than 100 accounting, ERP, WMS and TMS systems to automate transactions, including drop ship

Questions? Our supply chain experts can help.

If you have questions about products, implementation, integration or anything else, please let us know. Our supply chain experts are standing by, ready to help.

Contact us