What is Value Added Networks (VAN) and advantages and disadvantages

The below section explains gives the Value-Added Network (VAN) Definition and its features. EDI via VAN.  What is VAN ( Value Added N... thumbnail 1 summary
The below section explains gives the Value-Added Network (VAN) Definition and its features. EDI via VAN. 

Value Added Networks (VAN) and advantages and disadvantages

What is VAN ( Value Added Network ):

A Value added networks are third party networks that provide services to execute authorized transactions with valid trading partners using EDI. 

Each VAN has a centralized computer system that maintains two files for each user, that is, 

Postbox: where outgoing messages are placed, and 
Mailbox: where incoming messages can be picked up

Value Added Network

  • Above, Nice Store needs to place orders for bread, meat and vegetables. It establishes a link to Value added networks through the dial up line, and sends EDI-based order messages for the three suppliers which are temporarily stored in its Post Box.
  • VAN computer system inspects Post Box, unpacks interchanges (electronic envelopes), repackages them as new interchanges and moves them to the mailbox of the intended recipients. 
  • The three recipients check their mailboxes for new interchanges,pick them up and cause them to be transmitted to their respective processing systems. They can also send acknowledgement messages and cause them to be stored in their respective postboxes. 
  • VAN checks them and put them in the mailbox of Nice Food.
  • Value Added Networks are the go-between in EDI communications. 
  • The VAN is responsible for routing, storing and delivering EDI messages. They also provide delivery reports.
  • Depending on the VAN type, messages may need extra envelopes or may be routed using intelligent VANs which are able to read the EDI message itself.
  • VANs may be operated by various entities       
              Telecom companies
              Industry group consortium's
              A large company interacting with its suppliers/vendors

Value Added Networks and EDI:

VAN Diagram

The above diagram illustrates the general path of EDI transactions and allows us to visualize how we can evaluate and "track" the flow of EDI transmissions. The Mailbag Report, as seen in the chart, is sent information from a Value Added Network (VAN) to identify which envelopes were received. In another measure taken for transaction tracking, the Envelope Report identifies the sender and receiver qualifier ID's as well as the Interchange Control Number for each document that is transmitted. Both the Mailbag and Envelope Reports are given information by your own VAN, and the involved trading partner likely has access to their own Mailbag and Envelope Reports from their own VAN as well. These measures give us the ability to track EDI transmissions from one server to another.

Transmission flow of an 850 Purchase Order from a trading partner's server to our and 810 Invoice from your server to a trading partner's server. In order for the file to be properly routed, the sender and receiver qualifier ID's (located in the ISA segment) are identified throughout each of the steps. Furthermore, each transmission is assigned an Interchange Control Number by the sending party to uniquely identify a transmission for a given sender and receiver qualifier ID pair. Control numbers within the Interchange Control Number, Functional Group Trailer, and Transaction Set Trailer segments also provide the means for each step to verify that the complete transmission was received.


VAN-A places one or more Interchanges in an Interconnect Envelope, which includes a unique Control Number and a count of the number of interchanges included. This Mailbag is then sent to VAN-B over the reestablished communications channel.

VAN-B then evaluates the Mailbag to confirm that there is the indicated number of “valid” interchanges in the mailbag. The interpretation of “valid” varies from VAN to VAN, but generally means confirming a valid Interchange envelope without regards to full transaction syntax (this is left for the end-user processing). 

If the envelope is intact and the count of interchanges match, then VAN-B generates a Mailbag back to VAN-A with an IA segment positively acknowledging the receipt of the VAN-A mailbag. If there is a problem with VAN-A’s mailbag, VAN-B generates a Mailbag back to VAN-A with an IA segment indicating the nature of the problem.

Advantages and disadvantages of VAN:

Two big advantages of using a VAN in EDI are time independence and protocol independence. 

Time independence means that the sending and receipt of the interchange or messages can be carried out at the convenience of the users involved. 

Thus, they are not required to be connected with each other at the same time. 
Protocol independence means that interchanges are re-enveloped with the transmission protocol appropriate to the recipient when they are retrieved from the Post Box by the VAN. 

A Value added networks VAN can provide protocol compatibility between the sender and the recipient, wherever that is missing.