EDI & Order Operations Glossary

An Advance Ship Notice (ASN) is an electronic notification a supplier sends before a shipment arrives, detailing its contents, packing structure, and carrier. In EDI it is the 856 transaction. It tells the buyer exactly what is coming, how it is packed, and when, so receiving can be scanned and verified at the dock.

EDI (Electronic Data Interchange) is the computer-to-computer exchange of business documents like purchase orders and invoices in a standard electronic format. It replaces paper, fax, and email so two trading partners' systems can transact directly, without anyone re-keying the data.

An EDI 810 is the electronic invoice a supplier sends to bill a buyer for goods shipped. It mirrors the EDI 850 purchase order and lists items, quantities, prices, and totals. The buyer's system matches it against the PO and receiving record in a three-way match before paying, with no paper invoice.

An EDI 850 is the electronic purchase order a buyer sends to a supplier. It is the document that starts most B2B order flows, listing items, quantities, prices, ship-to, and dates in the standard X12 format. The supplier's system turns the 850 into a sales order automatically, without anyone keying it.

An EDI 997 is a functional acknowledgment, the electronic receipt that confirms one trading partner received another's EDI transmission. It does not say the order was accepted, only that the file arrived and passed structural validation. Missing 997s are a common compliance failure because partners expect them within a set window.

Being EDI capable means a company can send and receive business documents electronically in a standard EDI format that its trading partners accept. A retailer asking if you are EDI capable wants to know whether you can exchange orders, invoices, and ship notices as compliant X12 transactions without manual handling.

EDI and APIs both move business data between systems, but differently. EDI exchanges standardized batch documents like the 850 purchase order and is the entrenched standard in retail supply chains. APIs exchange real-time structured data, usually JSON, and dominate modern software. Most distributors need both, because their partners are split between them.

A value-added network (VAN) is a private, managed network that routes EDI documents between trading partners like a digital post office. The sender drops a file in their VAN mailbox and the VAN delivers it to the receiver's mailbox. VANs charge per document or per character, which is why high-volume traders look at alternatives like AS2.

An ERP (Enterprise Resource Planning) system is the central software a company runs its operations on, tying together finance, inventory, purchasing, sales orders, and fulfillment in one database. When an order arrives, the ERP is where it becomes a sales order, gets picked and shipped, and is invoiced. Examples include NetSuite, SAP, and Microsoft Dynamics.

A bill of lading (BOL) is a legal document a carrier issues to a shipper that lists what is being transported, who ships it, who receives it, and the agreed terms. It serves three roles at once: a receipt for the goods, a contract of carriage, and a document of title.

Cross-docking is a warehouse practice where incoming goods are unloaded and moved directly to outbound trucks with little or no storage in between. Product flows across the dock from receiving to shipping, cutting handling and holding costs. Retailers use it to push supplier shipments straight to stores.

Demand forecasting is the practice of predicting future customer demand to plan inventory, purchasing, and production. Distributors use historical orders, seasonality, and trends to set reorder points and safety stock. Better forecasts mean fewer stockouts and less cash trapped in excess inventory.

Fill rate is the percentage of customer demand met from available stock without backorders or shortages. A 95 percent fill rate means 95 of every 100 ordered units shipped on the first attempt. It measures how well inventory matches demand and feeds directly into OTIF and customer satisfaction.

FOB (Free on Board) is a shipping term that sets the point where ownership and risk pass from seller to buyer. FOB Origin means the buyer takes title and risk when the goods leave the supplier's dock; FOB Destination means the seller keeps risk until delivery. It also decides who pays freight.

Lead time is the total elapsed time between placing an order and receiving it. In distribution it spans order processing, supplier production or picking, and transit. Shorter, more predictable lead times let buyers hold less safety stock. Order-entry delays are a hidden part of lead time that automation can remove.

OTIF (On Time In Full) is a retail compliance metric that measures whether a supplier delivered the complete order, on the agreed date, with nothing short or late. Retailers like Walmart set an OTIF threshold and fine suppliers who fall below it. It rewards reliable, accurate fulfillment.

Safety stock is extra inventory held as a buffer against demand spikes and supply delays, so a stockout does not happen the moment forecasts are wrong. It is sized from demand variability, lead time, and the service level a business wants to hit. More safety stock raises service but ties up cash.

A backorder is an order, or part of an order, that cannot be filled now because the item is out of stock, but the buyer still wants it shipped when inventory returns. It is recorded against the original order and fulfilled later. High backorder rates signal demand outrunning supply or forecasting gaps.

A blanket purchase order is a single PO that commits a buyer to purchase a quantity of goods over a period, released in scheduled or as-needed shipments rather than all at once. It locks in pricing and terms while spreading delivery, common for recurring or high-volume items in distribution.

Consignment inventory is stock a supplier places at a buyer's location but still owns until it is sold or used. The buyer pays only as it consumes the goods. It lowers the buyer's carrying risk and gives the supplier shelf presence, but it requires careful tracking of what has actually sold.

Drop shipping is a fulfillment model where a seller takes an order but a supplier ships the goods directly to the end customer, so the seller never holds the inventory. In B2B distribution it appears as direct-ship, where a manufacturer ships on a distributor's behalf and the order data must flow between all three parties.

A minimum order quantity (MOQ) is the smallest amount a supplier will accept on an order, set per item or per order value. It protects the supplier's margin on small orders and shapes how buyers plan purchases. Orders below the MOQ are rejected or adjusted, a common source of order exceptions.

A purchase order (PO) is a buyer's official offer to purchase goods, listing items, quantities, prices, delivery dates, and ship-to location. It becomes a binding contract once the seller accepts it. In EDI it is the 850 transaction, the document that starts most B2B order flows.

A retail chargeback is a financial deduction a retailer takes from a supplier's payment for failing to meet a compliance rule, such as a late shipment, a missing or wrong ASN, a bad label, or an inaccurate invoice. Chargebacks erode margin and are usually preventable with accurate, on-time EDI.

A sales order is the seller's internal record of a confirmed customer order, created from the buyer's purchase order. It drives picking, packing, shipping, and invoicing. When a retailer's EDI 850 purchase order lands, it becomes a sales order in the supplier's ERP, ideally with no manual re-keying.

A SKU (Stock Keeping Unit) is a seller's internal code for a distinct product variant, used to track inventory and fulfill orders. Unlike a GTIN, which is globally unique, a SKU is defined by each company, so the same item can have different SKUs at the buyer and the supplier. Mapping between them is essential.

A three-way match is an accounts-payable control that compares three documents before an invoice is paid: the purchase order, the receiving record, and the supplier invoice. The quantities, prices, and terms must agree across all three. If they match, payment is approved. If they do not, the invoice is held for review.

A unit of measure (UOM) defines how a product is counted and sold, such as each, case, pallet, pound, or gallon. Orders, catalogs, and inventory must agree on UOM or quantities go wrong. A buyer ordering cases while the supplier reads eaches is a classic source of over- and under-shipments.

AS2 (Applicability Statement 2) is a secure internet protocol for sending EDI and other business documents directly between trading partners. It wraps the payload in encryption and a digital signature and returns a signed receipt called an MDN. AS2 is the most common direct connection method in retail EDI, avoiding per-document VAN fees.

GS1-128 is a barcode standard used on shipping labels to carry structured data like the SSCC, GTIN, quantity, and lot number. Application Identifiers tell the scanner what each field means. It is the barcode that pairs with the EDI 856 advance ship notice for scan-based receiving at retail.

A GTIN (Global Trade Item Number) is the globally unique number that identifies a product so any trading partner can scan and reference it the same way. It is the number encoded in a UPC or EAN barcode. Common formats are GTIN-12 (UPC), GTIN-13 (EAN), and GTIN-14 for case quantities.

A SCAC (Standard Carrier Alpha Code) is a unique two-to-four-letter code that identifies a transportation carrier. It appears on bills of lading, EDI shipment documents, and ASNs so every party references the same carrier. The NMFTA assigns and maintains SCACs.

An SSCC (Serial Shipping Container Code) is an 18-digit GS1 number that uniquely identifies a logistics unit such as a pallet or carton. It is encoded in the GS1-128 shipping label and referenced in the EDI 856 advance ship notice, so a receiver can scan one label and know every item inside.