What is an EDI VAN (Value Added Network)?

Define Value Added Network

A value-added network (VAN) is a third-party service provider that facilitates the exchange of electronic data between trading partners. It acts as an intermediary between two parties, providing secure and reliable communication and data transfer services.

A VAN can offer a range of services such as,

  1. Data encryption
  2. Message Validation
  3. Transmission routing

It can also provide value-added services such as

  1. Message
  2. Archiving,
  3. Audit tracking
  4. Reporting.

VANs are commonly used in business-to-business transactions, especially in industries with high-volume or complex data requirements. By partnering with a VAN, businesses can simplify their electronic data exchange processes and ensure secure and reliable communication with their trading partners.

An EDI VAN (Value Added Network) offers a business-to-business (B2B) network of electronic communications, a network which includes an array of ‘value added’ services, as well as facilitated communication protocols that otherwise would not be available when going through the Internet or regular phone lines.

The main goal of a VAN is to facilitate electronic data interchange (EDI) between businesses. The VAN sits on top of an existing common carrier. The carrier provides additional services on top of the infrastructure called value-added services. Hence, the name value-added network.

The majority of EDI still occurs through EDI VANs. As long as two organizations are using the same EDI VAN, communication is possible regardless of which EDI protocol is used to transfer information.

When a company starts their EDI journey they may choose to set up direct EDI or point-to-point connections to other EDI enabled businesses, which can very quickly turn into an integration mess. While this scenario provides great flexibility, a major problem is the cost scale is the size of the trading community which can quickly become expensive and complex,

A single connection to an EDI VAN simplifies the complexity of managing multiple EDI direct connections. The EDI VAN is simply a secure network where EDI documents are exchanged between a network of business partners. An organization will be provided with a mailbox by the EDI VAN provider. Documents are sent and received from the mailboxes on each organizations network.

Benefits of an EDI Value Added Network 

Optimize your supply chain while reducing manual processing costs and improve customer relationships

Not only is using a VAN more efficient and more accurate, but it also saves the cost of hiring human data-entry professionals for the exchange of information. In addition to the many EDI benefits companies who enlist the services of an EDI VAN provider can expect,

1. Secure

Electronic data transfers can be made securely using encryption

2. Standardized 

VANs transfer data using standard formats, such as XML and CSV. They allow the data to be read by the various ERP software used by companies. 

3. Expanded Network Connections

By connecting with a network of companies, a business can quickly onboard and begin trading with new EDI-enabled partners.

4. Inspection and Authentication  

The EDI VAN will verify the identity of the business partner and validity of the message. 

5. Mailboxing

Messages are automatically routed to the correct mailbox. Business partners connect to the VAN to retrieve their messages

6. Full Audit Trail 

All EDI messages are tracked and recorded

How Does an EDI VAN Work?

An EDI VAN receives a mail from a sender, sorts and delivers it to the recipient’s mailbox. A trading partner retrieves messages by connecting to the VAN, which validates the message and verifies the recipient’s identity. It then provides a full audit trail, and all messages are tracked and accurately recorded.

Most VANs also provide visibility tools that show the delivery status of data and some corresponding workflows, allowing companies to better coordinate dependent activities through the system rather than exchanging phone calls and emails. 

Why Use an EDI Value Added Network?

A VAN original function was to be the main communication channel that delivered data securely from one mailbox to another, but there are additional services that a VAN can provide. That is why it is one of the most common EDI solutions today.

With the rise of new EDI standards and communication protocols, VANs have evolved to support many different requirements. VAN capabilities have expanded to include EDI translation, data validation, re-processing, authentication, encryption, and reporting. VANs also include a wide range of other services that aim to simplify document exchange with many partners via EDI networks. 

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