EDI VAN: What Is a Value-Added Network?

In this article we are going to discuss:

For decades, value-added networks (VANs) have served as pivotal bridges in the electronic data interchange (EDI) ecosystem, facilitating seamless and secure communication between businesses. As the digital backbone of countless B2B transactions, understanding the role and evolution of VANs is essential for anyone navigating the complex landscape of electronic commerce.

By strategically incorporating EDI VANs into your business model, you can streamline the flow of information between your organization and its trading partners, elevate productivity, and optimize data security. Most importantly, EDI VANs hold the key to achieving and maintaining supply chain excellence.

Whether your organization is already EDI-capable or contemplating electronic data interchange technologies for the first time, it’s wise to familiarize yourself with VAN EDI.

What is VAN?

what is edi van

VAN in EDI stands for “value-added network.” It’s a type of EDI-deployment strategy that involves exchanging information over a private hosted service. With a VAN, you can send and share data with multiple trade partners over your own secure network.

Think of VAN as the channel your EDI documents flow through. It’s a form of middleware that transfers documents as they’re sent. VANs provide a wide range of services, including message encryption, management reporting capabilities, and secure email.

Within supply chain management, VANs facilitate the exchange of EDI documents over a secure network, promoting efficiency and accuracy. Buyers, sellers, and third-party logistics providers (3PLs) can all leverage VANs to support EDI-based transactions.

How does VAN work?

Large organizations typically use a VAN system to promote supply chain management efficiency. Telecommunications companies and industry consortiums also use VANs. 

Although VANs can be configured in several different ways, they almost always function in a mailbox-style setting. Correspondence flows in and out of the VAN, similar to email. However, email transfers are used to transmit unstructured text, whereas VANs are used to send and receive standardized, structured data, such as EDIs.

Once an EDI VAN provider assigns you a secure mailbox, you and your trading partners can begin exchanging EDI transactions. When you send an EDI document to one of your partners, it will be stored in the VAN. The recipient's technology platform will then “contact” the VAN, retrieve the correspondence, and send its own transaction. 

Why use an EDI VAN?

VAN EDI technology provides a secure, convenient communication channel between trading partners. But, that’s just one of its many functions.

EDI VANs support various tasks, including data validation, authentication, reporting, encryption, and EDI translation. Your EDI VAN may provide numerous additional services, depending on the provider you partner with.

A standardized communication channel can reduce the complexities associated with sending and receiving documents. You and your trading partners will all be on the same page regarding the format of documents and the method in which they’re transmitted. 

EDI VANs also reduce the need for direct vendor-to-vendor connections. Instead, each party can connect to the designated value-added network, reducing the effort required to share information. 

EDI VAN services

EDI VANs vary significantly in terms of sophistication and use cases. The simplest EDI VANs function as a secure mailbox but provide few, if any, additional services. Conversely, leading EDI VAN providers offer myriad add-on services, including:

  • Alerts and notifications
  • Data encryption
  • Automatic routing to recipients
  • Return receipt verifications
  • Compliance documentation
  • Data backup and recovery
  • Identity authentication

When searching for an EDI VAN solution, ensure the scope of the provider’s services aligns with your organization’s needs.

Types of VANs

There are three primary types of VANs: one-to-one, many-to-many, and one-to-many.

  • One-to-one: One-to-one VANs connect two businesses, often a buyer and a seller. This type of VAN is typically custom-built, making it more costly than off-the-shelf options.
  • Many-to-many: When multiple companies need to connect to the same value-added network, they require a many-to-many configuration. In this VAN, any member of the network can exchange information with any other member. Manufacturers, buyers, and other trading partners typically use many-to-many VANs.
  • One-to-many: B2B suppliers often employ a one-to-many VAN protocol, as they must communicate with multiple retailers and distributors, but their various trade partners don’t need to exchange data with each other over the VAN.

When selecting a VAN, consider which type best aligns with your data requirements, industry-specific needs, and transaction volumes. Remain mindful of your trading partners’ needs, as well, so you can implement a solution that seamlessly integrates with their existing workflows.

Benefits of an EDI VAN

van edi benefits

EDI VAN data provides a multitude of benefits, including the following:

Increased supply chain visibility

EDI VANs enable you and your trading partners to achieve better supply chain visibility. When all documents and EDI data are exchanged over a single, secure platform, you’ll find it much easier to complete onboarding, track transactions, share insights, and support one another’s success in the fast-paced world of logistics.  

Enhanced data integrity

EDI VANs reduce the likelihood of data entry errors and breaches. You and your partners will enjoy peace of mind thanks to enhanced data integrity and reduced risk. 

Unrestricted accessibility

Value-added networks are accessible 24/7, allowing international trading partners to operate without time constraints and avoid disruptions to mission-critical operations. Moreover, the VAN owner determines who can and can’t access the network, further promoting security and business continuity.

Streamlined compliance

Most retailers require suppliers and distributors to meet certain EDI compliance standards and conduct rigorous testing. They also frequently mandate that vendor partners use EDI VANs to facilitate communication. You can make compliance a fundamental part of your business model by adopting VAN EDI technology. 

Streamlined communication between trading partners

EDI VANs eliminate friction between you and your trading partners by providing a consolidated communication channel. Consequently, you can decrease the likelihood of miscommunications, more efficiently respond to trading partner requests, and establish your business as a premier trading partner.

Disadvantages of VAN

VAN EDI technology is not the ideal deployment model for every organization’s electronic data interchange communication. EDI VANs, like any deployment model, exhibit a variety of benefits as well as some potential disadvantages.

Some of the most notable disadvantages include:

  • Limited control
  • Vendor dependency
  • Limited scalability
  • Limited integrations
  • High upfront and ongoing costs

Due to these potential drawbacks, it’s vital to consider multiple options before settling on an EDI VAN solution. The costs associated with VANs may prove particularly concerning, as your expenses will increase based on usage, workload, and the number of services the provider delivers via your network. 

Unsure which EDI approach is right for you? Orderful can help

If you’re in the dark about how to configure your EDI network, Orderful and our team of experts can help you identify which EDI standards and configurations will provide the best value for your organization and its network of trading partners.

To learn more, contact us and talk to one of our experts. Let Orderful fuel the evolution of your business.

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