Friday, February 18, 2005

Do I need an EDI VAN?

Yes, an EDI VAN is needed for EDI with most business partners to send and receive EDI.

A VAN is a Value Added Network. A VAN is responsible for the secure and reliable communication of EDI documents.

Your business partner probably already has one. However, you do not need to use the same VAN that your business partners uses because most VANs interconnect with other VANs.

The interconnects allows VANs to easily exchange EDI transactions on behalf of their clients with other VANs. This enables customers to choose the VAN that best fits their needs. It also ensures that VANs compete to keep down the cost of EDI.

Some business partners do not use an EDI VAN and instead use the internet for the transmission of EDI documents via AS/2. Wal-Mart is an example of a major retailer that uses AS/2 instead of a VAN for EDI transportation.

AS/2 is a set of standards for the transportation of EDI documents between two parties. AS/2 requires special software to encrypt and decrypt EDI. If your business partner requires AS/2, then you will either need to buy special software or arrange to outsource it to a third party provider.

Why does my business partner require EDI?

The exchange of business information through EDI solutions is much less expensive than the manual handling of paper documents such as purchase orders and invoices.

The results of many studies have revealed that on average the processing of a paper-based order can easily cost $70 while processing of an EDI based order costs a dollar or less. Much less labor time is required when using EDI software and EDI solutions. And fewer errors occur because computer systems process the electronic order documents instead of manual processing of the documents by hand.

EDI transactions between companies flow more reliably and faster than paper business documents. Paper purchase orders may take up to 10 days from the time the buyer prepares the order to when the supplier ships it. Order processing and fulfillment using web-based EDI solutions can take as little as one day. This is one of the main reasons your business partner may require you to use a web-based EDI solution.

Faster business transactions support reductions in inventory levels, better use of warehouse space, fewer out-of-stock occurrences, and lower shipping costs through fewer last minute, expensive shipments.

A web-based EDI solution is a way for small and mid-sized businesses to meet the EDI requirements of their business partners without having to buy and maintain expensive EDI software. All you will need is a fast Internet connection, email and a web EDI service. No EDI software is required at all.

With web-based EDI, notifications of new EDI transactions are sent via email. The EDI documents are translated by a third party provider into easy-to-read web forms on a secure internet site. User name and password are required to access and process EDI documents.

Web EDI solutions enable users to see EDI documents at their office or at home or anywhere they have internet access.