Purpose
An electronic purchase order document is a digital document that initiates a transaction, defining prices, quantities and delivery dates in accordance with pre-negotiated contractual conditions, between a buyer and a seller. It is used by a buyer to request goods, items or services from a supplier.
Sender
The buyer of goods and services
Receiver
The seller of goods and services
Legal framework
In the context of electronic invoicing, as per the European Union (EU) directive, the purchase order can serve as one of the business controls that confirm the authenticity of an invoice.
In the public sector, particularly for tender-related matters, the purchase order must be publicly disclosed. In Italy, specifically within public healthcare procurement, the electronic order is obligatory and is processed through a public platform known as NSO (Nodo Smistamento Ordini).
Furthermore, the purchase order can hold legal significance akin to a contractual agreement.
Usage
Nearly 200,000 companies worldwide utilise GS1 EANCOM and XML standards. However, the adoption of these standards, particularly in e-Invoicing, is likely below 50%, primarily due to challenges faced by small and medium-sized enterprises (SMEs), despite the benefits being more pronounced for suppliers.
Key standards
UN/CEFACT (United Nations Centre for Trade Facilitation and Electronic Business):
UN/CEFACT has been at the forefront of developing international data standards and business processes for supply chain facilitation from paper trade documents (United Nations Layout Key—UNLK) to UN/EDIFACT (United Nations Electronic Data Interchange for Administrations, Commerce, and Transport). UN/CEFACT also introduced Reference Data Models (RDM) based on the UN/CEFACT Core Component Library (UN/CCL). These standards cover various facets of international trade, including procurement, transport, border clearance, and more.
UBL Format (Universal Business Language):
ISO/IEC 19845:2015 specifies the Universal Business Language (UBL), offering a generic XML interchange format for business documents. UBL provides a suite of structured business objects and associated semantics expressed as reusable data components and common business documents.
GS1 EDI (Electronic Data Interchange):
GS1 EDI provides global standards for electronic business messaging which encompasses master data alignment, order processing, delivery, financial settlement, transport, and warehouse management. Key business partners covered include retailers, manufacturers, healthcare operators, and logistic service providers.
ANSI X.12 850:
The American National Standard Institute (ANSI) oversees standards and conformity assessment in the United States. ANSI X.12 is the EDI standard, with “850” representing the Order message.
Major differences between standards
Various standards in the market utilise different technical representations such as XML or EDIFACT. However, the primary focus should be on achieving semantic interoperability, where a consistent understanding and meaning of a term are maintained, irrespective of its technical representation. Interoperable web vocabularies could help simplify the inherent complexities of trade by providing a universal language for data exchange to ensure that data is understood and processed consistently across different systems.
Platforms
The exchange primarily depends on service providers and value-added networks. Additionally, private web portals and marketplaces are widely used.
Adoption
Digital ordering adoption is driven by several key factors. Knowledge dissemination and targeted training on existing Purchase Order standards play a vital role. Additionally, sharing best practices among business groups and locations enhances awareness.
Other
Master data alignment, facilitated through platforms like GS1 Global Data Synchronisation Network (GDSN), plays a pivotal role in ensuring the accuracy and effectiveness of procurement processes.
