Internet EDI vs. VAN EDI

Early on, VANs served as an "electronic post office" for buyers and suppliers that needed to exchange data. For example, Company A could send an electronic purchase order to the VAN and Company B could go to the VAN to pick it up. If Company B claimed it did not receive the PO, the VAN would serve as a third-party intermediary and would validate whether the PO had in fact been picked up or not. That is the type of "value-add" these networks provided.

Despite the benefits, VAN EDI had limited adoption because it was cost-prohibitive for most companies to deploy. Before Internet EDI became available, approximately 80% of the suppliers in any given supply chain were communicating with their customers manually via fax, telephone and snail mail because they could not afford the investment required for VAN EDI. This resulted in inefficiencies throughout the supply chain including: lost or mis-keyed POs, late invoices, out-of-stocks, etc.

With the advent of secure Internet EDI, companies of every size are now able to transact electronically with their trading partners. And VAN services such as "Message Disposition Notifications" (MDNs) are built right into the software products.

EDI transactions cost less than 10% of the cost of paper transactions.

Here is a quick summary of Internet EDI Benefits:

• High transaction speed
• Decreased costs/errors
• One-time data entry
• Reduced time and paperwork
• 100% secure electronic data transmission

Next: How Internet EDI works? »