The definition of VAN (value added network) and its advantages in the context of EDI and supply chain optimization

Not to be confused with a van, a type of road vehicle used for transportation, the value added network, aka VAN, is certainly a term you would often stumble upon in the world of EDI, and it certainly can be defined as a vehicle, of communication that is.

So if you are in the process of setting up EDI or exploring the complex, and often quite daunting, EDI implementation process, it Is highly likely that you have, or will, come across the term VAN- Value Added Network.

This blog will address the concept and definition of an EDI VAN (Value Added Network), or as some may confusingly refer to it as Added Value Network, and will touch upon its use, as well as its benefits and advantages, within the context of EDI. Our objective is to offer constructive information on the subject of EDI VANs that will help guide you in shaping your decision making process when undertaking such a demanding and complex challenge.

What is a value added network (VAN) ?

So let’s start with what is an VAN (Value Added Network)! A simple definition of an VAN is essentially a private network provider whereby EDI (Electronic Data Interchange) documents are transmitted and exchanged. In other words, it is a channel of communication to move data from point A to point B.

With the growth in popularity, in recent years, of web based solutions which allow for the transfer of data over the Internet at a low cost structure, VAN (Value Added Networks) providers began offering additional services such as EDI translation, encryption, management reporting and secure e-mail, as part of their ‘value-add’ packages.

Before we delve further into why VANs Added value Networks remain the most common way to transfer data, let us first discuss the concept of EDI. What is EDI? Electronic Data Interchange (EDI) is a common practice across most retail and grocery industries. Although complex and overwhelming, meeting the different retailers’ EDI supply chain requirements, and securing 100% EDI compliance, are mandatory and unescapable challenges! EDI refers to the electronically transmission of structured data between organizations. The advantages to using EDI may be sensed across all layers of business processes and include efficiency, due to lessened time and payment delays, reduced manual data entry as well as human intervention of data manipulation, improved inventory and data accuracy, increased information accessibility, and as a result, optimized business activity.

How works a value added network ?

The definition of VAN Value Added Networks, or as some may refer to it as Added Value Network, and its advantages in the context of EDI and supply chain optimization.

What are the uses and advantages of a value added network (VAN) ?

Now that you have a better grasp of what EDI is, why use a VAN (Added Value Network) for EDI communications?

An EDI VAN (Value Added Network) offers a B2B (business to business) 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.

Using and EDI VAN allows for seamless and automated communication channels between trading partners, while offering multiple formats for EDI translation.  This, in turn, results in a proficient and effective supply chain management.  Most importantly, EDI VANs (Value Added Networks) are not industry-centric; they work across all industries, in which case scalability is fundamental!

Let’s move on to examine some of the key advantages and benefits to using an EDI VAN (Value Added Network) as the preferred mode of electronic business communication!

  • Data Integrity- EDI VANs typically audit both incoming, as well as outgoing data, to detect errors. There are checks and balances in place and, in some cases, EDI VANs (Value Added Networks) may provide corrections and adjustments services to enable successful transmissions and receipt of data.
  • Improved B2B (business to business) exchanges– VANs (Value Added Networks) allow for the use of multiple protocols to send data and for each trading partner to employ the data format best suited for their organization.
  • Speedy business communication– the exchange of documents through a VAN (Value Added Network) is significantly faster than other means of data transfer as data is exchanged directly from one business software to another. Manual processing is typically eliminated which therefore significantly reduces the risks associated with errors and consequent time delays.
  • Secure and reliable communication channels VANs (Value Added Networks) are highly secure and meet government and HIPAA security standards.
  • Unrestricted accessibility– with a 24/7 accessibility of the VAN (Value Added Network), the exchange of data is secure to anywhere in the world, with no time constraints or disruption to your daily business operations.
  • Simpler EDI compliance EDI testing and compliance are required by most retailers, to be met and complied with by their supply chain vendor community. Furthermore, retailers often require to do so through the use of an EDI VAN (Value Added Network), their preferred EDI method of communication. Consequently, going through a VAN (Value Added Network) will facilitate and simplify, to some degree, the EDI
  • Visibility tools A handful of VAN (Value Added Network) providers, such as EDI Gateway Inc, offer a monitoring web tool and corresponding reports to allow you to track the data you exchange and with your trading partners and its delivery status. Such ‘value add’, multi –user visibility tools have unrestricted and unlimited accessibility- from anywhere, at anytime.

What to remember about value added network (VAN) ?

So to sum it all up, there are clearly essential benefits to using a VAN (Value Added Network); not only would you be able to reduce costs associated with data entry errors and time delay, you will also be able to improve your overall business relationships, as well as optimize your supply chain process with better efficiency and cost effectiveness. Whether you are using older or newer technology, EDI VANs (Value Added Networks) remain a secure and reliable communication channel, with unlimited accessibility and visibility, allowing you to maintain uninterrupted business cycles and supply chain operations around the globe, regardless of time zone.

It is important to note that VAN services are now widely offered by third party EDI providers, such as EDI Gateway Inc, for example, at very competitive price structures, along with a range of managed services to meet the growing needs of the supply chain community, operating in a dynamic environment. They are able to provide VAN (Value Added Network) services whether you are integrating with an ERP system or implementing EDI in-house, as well as various other solutions, customized to fit your organization’s specific needs.

When you begin to explore the market for EDI VAN (Value Added Network) providers, be sure to do your due diligence, analyse and assess all the options available to you, and choose that which best suits your organization’s individual needs and requirements. A proper vetting process would surely render your EDI initiative easier and less overwhelming to take on!

We hope this blog has been informative and insightful in helping you understand the definition of an EDI VAN (Value Added Network), as well as identify the advantages and benefits you may reap through its use. We wish you luck on your endeavour!

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Feel free to comment and open up a dialog or discussion !

Sharon Barr

With over 16 years of experience in the EDI retail industry across both Canada and the U.S, Sharon Barr is part of EDI Gateway’s EDI lead team, where her lead role is primarily in EDI integration.


Migration from another VAN! Chose the plan that works for you!