Definition: A VAN (value added network) is a private network provider that focuses on offering network services such as secure email, message encryption and management reporting. Their goal is to facilitate EDI (electronic data interchange) among online companies, providing a convenient way for ecommerce businesses to securely communicate and share data.

How a VAN is created

When a common carrier such as a telecom company leases communication lines to a network provider and that provider then enhances those lines by adding additional services, it has created a Value Added Network. While EDI is the primary focus of VANs, the improvements or enhancements a network chooses to add is what differentiates networks.

What VANs do for online businesses

When it comes to sharing standard based or proprietary data, VANs make it easier for online businesses to share by becoming the one point of contact for them. They then ensure all of the necessary information is shared with the intended receivers, reducing the number of direct contacts the business has to make on their own.

Value-added networks act as the middle man between business entities and work in a system very similar to email. However, unlike email that transmits unstructured text, VANs are used to transfer structured, standardized data. They are most often operated by larger companies such as telecom conglomerates but can also be operated by smaller firms. Companies are typically charged either a monthly fee or a per-character charge for VAN contracts.

Value Added Networks solidify the supply chain

Whether an ecommerce enterprise is a new start-up or has a well established online presence, they undoubtedly have a variety of daily tasks that require communication between teams and companies. Sharing information and facilitating communication between companies, retailers and suppliers in real time is key for efficient supply chain management.

A value added network helps to simplify the process by securely facilitating communication and the sharing of data between trading partners. Reducing the number of parties a company needs to communicate with frees up time for managers, executives and online business owners to focus on other important details.

A secure, real-time value-added network can help online businesses achieve:

  • Increased automation - such as receipt notifications when an order is placed
  • Closer business relationships - frees time to focus on building closer relationships
  • Shorter sales cycle leading to more sales - automation allows for faster order processing times

Value-Added Networks Today

With the proliferation of online commerce, businesses are presented with cost-effective supply chain management options. VANs have had to adapt to maintain a place in the ever-growing online business arena; they have done so by focusing on specific industries and expanding their range of services. From humble beginnings, VANs now offer translation, document mapping and a wide range of customized packages to suit any business or industry.


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