EDI And The Business Cycle

A typical Procure to Pay cycle may be as follows:

1. A buyer has a need for merchandise and creates a Request for Quote (RFQ) document.
     Messages: X12-840    EDIFACT-REQUOTE  IDOC- ORDERS01 to ORDERS04

2. The seller responds with a Quote providing the price and other pertinent information as to how the request would be fulfilled.
     Messages: X12-843    EDIFACT-QUOTES   IDOC- ORDERS01 to ORDERS04

3. Upon acceptance of the quote, the buyer sends a purchase order document to the seller requesting goods at quoted prices.
     Messages: X12-850    EDIFACT-ORDERS   IDOC- ORDERS01 to ORDERS04

4. The seller responds acknowledging that the goods can be delivered at the prices specified and in the time frame indicated. A functional acknowledgment transaction may also be sent indicating successful receipt of any EDI transaction without indicating any conditions or details of the business transaction.
     Messages: X12-855    EDIFACT-ORDRSP   IDOC- ORDERS01 to ORDERS04

5. The seller ships the goods and sends a shipping notice providing details regarding the carrier, product identification,dates, and other information about the shipment.
     Messages: X12-856    EDIFACT-DESADV   IDOC- SHPMNT01 to SHPMNT03

6. The seller sends an invoice document, billing the buyer for the goods. There is also an EDI document that allows a combined shipment and billing notice.
     Messages: X12-810    EDIFACT-INVOIC   IDOC- INVOIC01

7. The buyer notifies his bank that payment is to be made (payment order) and uses another form of the same document (remittance advice) to inform the seller that payment is being made.
     Messages: X12 820 EDIFACT-REMADV   IDOC-  PEXR2001 and PEXR2002

Summarize:

Buyer to seller       840 Request For Quotation

Seller to Buyer       843 Response for Request For Quotation

Buyer to seller        850 Purchase Order

Seller to Buyer       855 Purchase Order Acknowledgement

Seller to Buyer       856 Shipment Notice/Manifest

Seller to Buyer       810 Invoice

Buyer to seller        820 Payment order/Remittance Advice

RosettaNet Example

· Consider, for example, a scenario where a buyer requests the price and availability of some products from a seller (PIP3A2)
· After receiving the response, the buyer initiates a Purchase Order Request (PIP3A4)
· The seller, on the other hand, after acknowledging the Purchase Order Request, sends an invoice notification (PIP3C3) to the buyer
· The seller sends a transportation request (PIP3B1) to the shipper (There is a third party in this scenario, which is a shipper)
· The shipper, after shipment of the goods, sends the status of the shipment (PIP3B3)
· When buyer receives the shipment, it sends a shipment receipt notification (PIP4B2) to the seller.
· Finally, the seller prepares a billing statement and notifies the buyer (PIP3C5)