What is Value-Added Network (VAN)?
A value-added network (VAN) refers to a private network service that offers facilities like secure email, message encryption, and management reporting to help companies securely share data with their counterparts. VANs form closed network groups and can only be accessed by the members of that network.
Significance of Value-Added Network (VAN) in E-commerce
Value-added network (VAN) presents a secure environment for e-commerce enterprises to share important data. In addition, a VAN has several other benefits making it a significant component of businesses.
- Reduces error: With lesser human involvement, VAN helps in better record tracking and keeping. Furthermore, this service also provides checks at the transaction level, reducing the chances of error.
- Standardized: Since value-added-network (VAN) comes in a standardized form, companies can rely on having the right software to read the data stored in VAN.
- Real-time data exchange: With VAN, it is possible for a company to exchange data in real-time with all its counterparts. Hence, this helps in faster decision-making, implementation, and a smoother workflow.
Prerequisites for Value-Added Network (VAN) and How It Works
Usually, a value-added network (VAN) is created when any regular carrier company, like a telecom company, leases out its communication lines to a network provider. Subsequently, VAN works like e-mail and is used to send standardized structured data from one end to another and vice versa.
The three types of value-added networks and their mode of function are:
- One-to-One: In this system, two entities are connected using VAN.
- One-to-Many: Here, a single entity is connected to its different counterparts.
- Many-to-Many: In this case, different business entities are connected to each other through a common value-added network (VAN).
Use Case With Value-Added Network (VAN)
Suppose, an e-commerce business has set up a value-added network (VAN) to stay connected to all its suppliers. Hence, whenever the business receives any order, it can send the required order details to each of the necessary suppliers simultaneously. Additionally, it gets real-time updates from each supplier about its work progress. Hence, with this VAN service, the company can carry out its supply chain management more efficiently.