VALUE ADDED NETWORKS

BENIFITS AND APPLICATIONS OF EDI

by vijetha v bhat

Powerpoint Templates
Page 1
 Value added networks(VANs) are third-party
communication network established for exchanging
EDI traffic amongst partners.

Various businesses subscribe to VAN services.

For every subscriber, the VAN maintains

an account, which serves as an electronic post box
for the subscriber, for sending and receiving EDI
messages.

The subscriber's account receives and accumulates

all incoming mail from other partners, which can be
viewed by the account owner as and when they
connect to VAN account.

Powerpoint Templates
Page 2
Value Added Network (VAN)

Powerpoint Templates
Page 3
 Document conversion from one standard to another

Typically required when two trading partners use different

standards for EDI exchanges, i.e., ANSI ASC X12 to
EDIFACT(EDI for Administration, Commerce and Trade) or
TDCC to ANSI ASC X12.

Converting one ANSI ASC X12 document to another ANSI

ASC X12 documents when the documents may need to be
converted to another type within the same system .
For example, a motor carrier details and invoice (210)
document may need to be converted to a generic freight
invoice .

Powerpoint Templates
Page 4
 The sender may follow certain conventions that are different from the
receiver.
VANs can also provide translation from a sender's conventions of a
standard document to the receiver's conventions; i.e.,

translate field separators

discard unwanted characters
format translation from EDI standard to or from flat file, flat file to flat file,
XML, and other formats
data translation among the PDF, XLS, MDB, or other web- based
documents.
The appropriate customer data can be saved in the VAN account and
later appended on messages where required.

Example, the sender's bill of lading (BOL) number can be stored in the
account and upon receipt of the BOL acknowledgment (997), an
acknowledgment message including the BOL number can the created
andtransmitted to the sender.
Powerpoint Templates
Page 5
. The VAN provider's computers also store data such as customer profiles,
repetitive waybill codes, etc. which can be used for filling up the EDI
transaction document with the help of the customer profile code.

. Subscribers can interactively enquire about the status of any EDI

transaction made by them.

. Subscribers can receive "verify acknowledgments" in the mailbox even

when they are not online.

. The VAN can alert the subscriber (receiver) that there is data in their
mailbox to be picked up:

By sending a fax notification

By calling a pager or other alerting devices that signal users about the
waiting mail in the mailbox.

Powerpoint Templates
Page 6
9.The VAN can capture the specified data from transactions which,
in turn, can be used for generating customer-specified reports.

10. The subscriber may specify the editing requirements, which

can be edited by the VAN for completeness and correctness, as
per requirements
Ex. it can verify that the line item charges on an invoice
add up to the total value shown on the EDI invoice.

11. In situations where such missing or mismatching data is found

during the edit process, the VANs usually send messages to
the originator informing it about the
missing/ mismatched data and the request re-transmission of
the same.
Ex. the ASC X12, upon receipt of the shipment
status message (214) with missing data, sends a status inquiry
(213) transaction to the carrier requesting correction and
re-transmission.
Powerpoint Templates
Page 7
. Validate and verify the information stored in customers' databases for
missing data and send messages to appropriate firms requesting
correction of the missing data.

The selection of VAN by a business may depend upon the services

offered, experience, reliability, and availability of other related trading
partners.
There are many third party VAN providers the marketplace.

Some of them are listed here:

GEIS-Operated by General Electric of USA, Cable & Wireless-Highly
reliable, GNS-It is one of the largest value added network, Transpac-A
France based EDI VAN provider.

Powerpoint Templates
Page 8
Benefits of EDI

Powerpoint Templates
Page 9
1. Reduces Lead Time
in the EDI environment, the exchange of documents among trading
partners happens electronically through interconnected computers.

The process of transferring the documents/information is instantaneous ,

offering weeks of time savings compared to the traditional environment
that used postal/ courier based exchange of printed documents.

Also, the direct electronic transfer of documents between inter-

organizational systems eliminates the chances of error due to re-entry of
data printed on paper from one system to another system.

As it streamlines the information flow, the cycle time is reduced drastically.

In the EDI environment, order-processing, shipping of goods, and invoice-
preparation and transmission can all be done within a matter of a few
hours compared to the days/weeks it takes in a non-EDI environment.

Powerpoint Templates
Page 10
2. Improves Coordination with Suppliers

Traditional trading environments are often burdened with the problem of

mismatched invoices, un-matching terms in quotations and purchase
orders, missing invoices even after the bill for payment is received and
many similar inter-business problems.

It will be evident that much of these problems are caused either by

delays in the transmission of printed documents, loss of documents in
transition, or due to errors I the transcriptions of the printed information
in the electronic form.

The instantaneous transfer of business documents over the network in

electronic form and confirmation of the same addresses the first
problem, thereby making nearly impossible for documents to arrive in
wrong sequence.

Powerpoint Templates
Page 11
3. Reduces Redundancy

As all the documents exchanged between trading partner are stored in

an electronic mailbox, documents can be accessed, retrieved, and
examined at any point of time.

Contrast it with the non-EDI system;

it may take hours, or even days, to locate and retrieve a printed

business document from the past.

The EDI environment eliminates the need for multiple copies.

Reduces redundancy without compromising the accessibility and

retrieval of old documents.

Powerpoint Templates
Page 12
4. Expand the Market Reach

Most large manufactures like deal with EDI-enabled

suppliers only.

In the process of streamlining the purchase process they

often institutes a value-added network.

By being a part of their value added network, many

opportunities open up for supplying the material to some
other larger suppliers who are also a part of the network.

Powerpoint Templates
Page 13
 Also, with the growth of electronic commerce and further integration of EDI
with electronic commerce, the creation of an electronic marketplace by
large manufacturers who buy supplies from many large and small
suppliers, has become a reality.

5. Increase Revenue and Sales:

Many large organizations use EDI and trade with other EDI-enabled
suppliers.

The efficiency brought about by EDI reduces the total transaction friction by
eliminating paperwork and related errors that ensure.

It also leads to quicker settlement of accounts.

The reduced transaction friction saves money and the supplier is in a better
position to offer the items at cheaper costs, leading to improved revenue
realizations and sales.

Powerpoint Templates
Page 14
Applications of EDI

Powerpoint Templates
Page 15
 The ability to exchange business documents electronically has been found
to facilitate coordination between the partners, reduce the lead-time and
thus reduce inventory.

Although, large manufacturing and transportation companies were the early

birds who reorganized the advantages, any of the other industry segments
also stand to benefit from electronic document exchange.

The health care, an d financial sectors and cross-border trade facilitated

through electronic document exchanges including customs services have
been some other sectors that adopted a d derived the returns from EDI.

Powerpoint Templates
Page 16
End of presentation

Powerpoint Templates
Page 17