Direct or VAN Based EDI - Which is Best For Your Company?

As a professional who has helped over 1,000 companies implement EDI with Microsoft Dynamics ERP as their back office, I often get asked "What method of EDI communication is best for my company?" Since there are only two main methods of communications, an EDI Value Added Network (VAN) provider or Direct EDI, my response is typically the same. 20 years ago VANs were the only choice; however, most major trading partners support direct communications. Fortunately, the decision for most companies can be straightforward and should be based entirely on business requirements, such as volume of documents, IT support, and services being provided by your EDI provider.

Differentiating Direct vs VAN

Direct EDI establishes a secure line between two business partners. Examples include File Transfer Protocol (FTP) and standards such as AS2. With minimal software and an internet connection, companies can now connect to their trading partner base with no per document fees. Certain industries or partners such as Wal-Mart, Lowes, Cardinal Health, etc. may require or highly suggest this form of communication because it is closer to real time communications, and avoids costly per document fees for both parties.  

An EDI VAN is a secure outsourced network where EDI documents can be exchanged between business partners. Your company is provided with a ‘mailbox' from which EDI documents are sent and received, similar to traditional paper based mail (snail mail). The "value added" part of the network includes services like mail notifications, inspect, authentication, and validating the message. Messages are tracked and recorded for auditing purposes, and there are other services available through VANs, such as backup and recovery, mapping, compliance, and more.

Deciding Which Method is Best for Your Company

A Direct EDI connection may ...