The low-down on purchase order acknowledgements ‘ORDRSP’

by | May 27, 2016

When doing business with your trading partners, you will come across what is called the ‘Purchase Order Acknowledgment’. This EDI document may be new to your business, which is why SPS Commerce is here to help. The ‘Purchase Order Acknowledgements’ is ideally processed through an EDI solution adapted directly to the company’s ERP system. SPS customers have found that using the SPS Commerce ‘retail network’ method, retailers and consumer product companies can connect easily to an entire ecosystem of trading partners proactively crated and maintained by SPS. SPS Commerce can make your EDI transition smooth with no concerns of affecting your trading partner relationships. To get 100% compliant EDI set up fast, SPS Commerce is the right choice for your business.  

What is a Purchase Order Acknowledgment in EDI?
The EDI document ‘ORDRSP’ is an electronic version of a ‘Purchase Order Acknowledgement.’  ORDRSP is a document in the EDIFACT standard, rather than ANSI X12 EDI system used in North America.  The ORDRSP is issues by consumer product companies (AKA brands, suppliers), to to let the buyer (generally a retailer in our industry) that their purchase order (PO) will be filled as requested – or that there will be deviations from that PO.  Specific elements such as SKU or item number, unit price, quantity to be delivered, and delivery date will be represented in the document. The buyer is thereby informed as to whether their supplier will fill the order and ship as requested, by the date requested – or that they will be unable to do so for some reason (such as being out of stock, or not agreeing to the terms of the purchase order).

What data is on the Purchase Order Acknowledgment document?
A Purchase Order Acknowledgment EDI document is organised into segment and data elements.  A segment can contain at least one data element, and each data element contains a data field. Data elements include examples such as vendor number, purchase order number, vendor address information (street, city, state etc), and an acknowledge/reject indication, identical to a paper/PDF Purchase Order Acknowledgement. There are unlimited fields available for configuration on a POA, depending on the retailer’s requirements.

How is the PO Acknowledgment used?
A PO acknowledgement is sent by the supplier after receiving retailer’s Purchase Order.  By telling the retail buyer how much of the PO is being filled, and therefore how much the buyer has open-to-buy (how much money they have to buy new merchandise).  After the PO Acknowledgement is received by the buyer, an automated Functional Acknowledgment document is sent back from the buyer indicating that the PO Acknowledgement was successfully received.  In this way, transparency between buyer and brand is created.

How is the PO Acknowledgment processed?
The PO Acknowledgement is ideally processed through an EDI solution adapted directly to the company’s ERP or accounting system.  Alternatively, it is received through an online webform portal and manually entered to the accounting system.  Using the SPS Commerce ‘retail network’ method, retailers and consumer product companies can connect easily to an entire ecosystem of trading partners proactively crated and maintained by SPS (alternatively, traditional EDI companies use 1-to-1 connections, with each individually configured and managed by the company’s in-house EDI team).

Where are PO Acknowledgements found in Australia and New Zealand?
Pure-play digital retailers reaching a certain size ($20 – 50 million annual revenue) quickly adopt supply chain automation.  The grocery sector has also shown strong use of the POA.  Retailers including Petbarn, THE ICONIC, Kmart, Symbion, Dan Murphy’s, The Good Guys, Officeworks, Harvey Norman, and Coles – and in New Zealand, Progressive Enterprises and Foodstuffs, and Farmers – require that an ORDRSP PO Acknowledgement be sent as a condition of trade. Specific retailers and their document needs are listed on the ANZ SPS Commerce network – SPS Commerce proactively builds out EDI connections and maintains MIGs or EDI maps with retailers.

The Purchase Order Acknowledgement document is becoming more common however, as more traditional retailers, consumer products companies, and pure-plays move focus on digital retail.  Major hardware retailer Bunnings began trialling more sophisticated documents this year, which will support ecommerce and digital sales, where the hardware industry has been considered relatively conservative in outlook.  Australian retail is generally moving in the direction of more EDI and sophisticated supply chains.

SPS Australia Blog Team

The Australian SPS blog team combines the experience and insights from dozens of colleagues to deliver news, how-to guides, reports, and more.
SPS Australia Blog Team