EDIFACT ‘ORDCHG’ document or ANSI 860: Advantages of Purchase Order Change Request

by Oct 17, 2017Omnichannel, Retailers

Sometimes changes are needed after a purchase order is sent, but before the order has been shipped. Perhaps you need more or less quantity, or a new color variation has become available and you don’t want to wait until you submit the next order. Maybe you just want to cancel the order altogether. These situations and more are when a purchase order change request comes in handy. A purchase order change request is an important electronic data interchange (EDI) document because it ensures that the final order is correct, and it also helps with transaction reconciliation and proper, accurate payment when the invoice for payment arrives.

What’s a purchase order change request?

The purchase order change request is a type of transaction typically sent from a buyer (retailer) to a seller (vendor, distributor, manufacturer) when a revision to a previously submitted purchase order is required. Known as the ‘ORDCHG’ document in EDIFACT and known as an 860 in the North American ANSI X112 standard, this document provides information describing the original purchase order, as well as the changes needed for the purchase order. Typical changes are items such as:

  • Add items
  • Add quantity
  • Change items
  • Price adjustment
  • Order cancelations
  • Delivery address correction
  • Reschedule delivery date
  • And more…

PO changes can occur at different times within the order cycle. One might be sent after an order is shipped to perhaps correct pricing before billing happens. They can be sent if a portion of the order has been shipped, but the balance of the order needs a quantity adjustment, new ship date or has to be outright canceled.

It’s important to note the some businesses don’t use the ORDCHG document at all; those retailers instead provide an updated purchase order ‘ORDERS’.  Also note that in the North American ANSI X12 standard has a separate slightly different document for the grocery sector; PO change document 860 is used by most companies, and the grocery PO change 876 document is used by grocers.

PO change request for buyers

The PO change ORDCHG document enables the supplier to invoice the retailer for the correct amount, and ensures that the retailer doesn’t overpay for items that weren’t delivered. Here is an example for how a typical order transaction process with an ORDCHG might occur.

  • Retailer sends a purchase order to buy 5,000 units of a product from Seller
  • Seller has 4,000 units available now, and can supply additional 1,000 in 1 week
  • Seller sends a purchase order acknowledgement to the buyer saying that the expected date for 4,000 in 2 days, and 1,000 in 2 weeks
  • Retailer can’t accept this – they require 5,000 now, but have no money open to buy with as it’s all allocated to Seller for the 5,000 units right now
  • Retailer sends ORDCHG purchase order revision to Seller, which automatically updates open to buy and all related supply chain documents
  • Retailer sends a purchase order to an alternative vendor, for 1,000 units

Within an EDI solution, an ORDCHG can be processed automatically, and all order information will be updated and reconciled across the system without the need for manual data entry or human intervention. It may be set up in the Workflow/Approval process so that the POA can be reviewed by human eyes before updating if a decision is needed to be made.

Retailers that practice just-in-time inventory should consider enabling and integrating ORDCHG. It helps buyers with order just as many products as are needed, and helps to ensure they’re ordered when -they’re needed.

Sellers can request PO changes

A purchase order change request can also be sent from a seller to a buyer, though they may use a different document to accomplish this. Most commonly it would be managed via the ORDRSP (purchase order acknowledgement, analogous to the ANSI X12 855) document, however in the ANSI X12 standard there is a document called an 865, for ‘Purchase Order Change Request/Acknowledgement – Seller Initiated.’

If a seller doesn’t have enough of a product on hand, they can send the ORDCHG purchase order change document to the buyer, with the updated quantity of what is available. The buyer can then choose to update the purchase order, or cancel the order altogether if that’s the better choice.

EDI and the ORDCHG document

PO change requests are a vital and fundamental EDI document for better inventory management, a more efficient supply chain and accurate financial transactions. Whether added to an automated workflow process or reviewed individually, they can help to ensure that suppliers invoice the right amount, and retailers don’t overpay for product that wasn’t received.

Want to know more about other vital EDI documents for a more efficient and tight supply chain? Take a look at the advanced ship notification (ASN). After the purchase order is sent, and all necessary changes have been made, the seller sends the ASN, letting the buyer know when, where and how the shipment is being sent, as well as other vital information that can help make unloading the delivery faster and more efficient. The ASN is also known as EDI document 856, Outbound Ship Notice/Manifest or DESADV.

EDI is fundamental for satisfying consumers and competing on the modern retail landscape. If you would like more info about implementing EDI, the 860 purchase order change request or would just like to learn about our cloud-based EDI solution, please visit the SPS Commerce website or contact an EDI expert at SPS Commerce today.

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Scott Bolduc

Director of Supply Chain Strategy at SPS Commerce
Scott Bolduc is a multi-time winner of the Supply & Demand Chain Executive Pros to Know. He has worked with e-commerce retailers on their growth strategies and helped retailers transform their freight spending strategies to maximize efficiencies.
Scott Bolduc