A Value-added network, also known as VAN, is a hosted service offering that acts as an intermediary between business partners sharing standards based or proprietary data via shared business processes. VAN is a private network provider that is hired by a company to facilitate electronic data interchange, or EDI, or other network services, such as message encryption, secure mail, and management reporting. VANs simplify the communication process by reducing the number of parties that a company will have to communicate with. VANs insert themselves between trading partners, acting as an emissary. VANs operate in a mailbox fashion, i.e. companies will send transactions to a VAN while it places the transaction in the receiving companies’ “mailbox.” The receiving companies contact the VAN and pick up the transactions, and proceed to send transactions of their own. VANs are similar to email but rather than being used for unstructured text, VANs focus on standardized structured data.
So what are the advantages of using a Value-Added Network for e-commerce communication? The use of VANs allows for better communication channels among supply chain and trading partners by allowing the transmission of data and translation between formats, which can help a business in more effective e-commerce transactions through the encryption, retransmission, and support of messages. Compared to manual transaction processing, VANs transmit data and complete transaction at a much faster speed, allowing for quicker access to operating information. VANs transmit information similar to that of a cable internet connection; however, its quality is from the audit information added to messages. Data can be modified as it passes through error-detection, correction processes, and during conversion. The efficiency of VANs and how it is able to handle transactions and communications can benefit all businesses involved and lead to stronger relationships between them. VANs decrease the need for paper transfers, and allow paper-based tasks to be handled electronically, which can decrease the chances for error. Today’s VANs can provide a host of Web services and can support Web technology standards, evolved to accommodate the latest e-commerce applications, all based on providing dependable and secure communication across a network.
There are also some aspects of VANs that would cause pause for some businesses to use them, such as the cost; the implementation of a VAN can be expensive as well as a resource-intensive endeavor, especially for a small to medium-sized business. VANs, like most computer technology, require ongoing technical and network support and maintenance. A company would need to hire experienced personnel in order to manage the in-house network, or utilize the services of an independent support provider. Continuous maintenance increases the cost of using the network and complicates day-to-day operations. And since the age of the Internet and its increasing prevalence in society, VANs have become less desirable, largely due to the cost considerations associated with them, and the Internet has been found much more cost-effective to move data than to pay the fees and charges usually found in VAN contracts. However, VANs have still been able to become a major force in certain industries, such as health care, retail, and manufacturing and have expanded the range of services provided to their customers.