# How do you Communicate? Direct or VAN based EDI—which is best for your company? - URL: https://dynamicaccounting.net/how-do-you-communicate-direct-or-van-based-edi-which-is-best-for-your-company/ - Date: 2015-08-26 - Topics: Sales, Purchasing & Inventory, Microsoft & the GP Ecosystem, Payables & Receivables - Type: original article *Data Masons has been a big supporter of this site, of MVP’s and the GP community in general. When working with client and EDI I’ve definitely had the best experience with Data Masons.  Today we’ve got a great guest post Brian Lynch to help you understand different types of EDI.* How do you Communicate? Direct or VAN based EDI—which is best for your company? By Brian Lynch 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 be best if: - You are trading a higher volume of EDI documents, frequently (typically more than 500 per month) - Your trading partners have varying requirements, particularly with communications protocols (AS2, FTPS, SFTPS, etc.). - You have an internal IT resources to setup and maintain the direct connections OR your EDI provider offers assistance in this setup and support. A VAN may be better if: - Your business partners do not support a direct EDI communications and/or you anticipate having a lower count of trading partners. - You are trading a low volume of EDI documents (typically less than 500 documents per month). - You want to outsource communications. - You have limited IT resources. When selecting the option that would make the most sense for you, there are a few questions you need to ask: - Does my trading partner support direct EDI? - What type of EDI traffic do I anticipate? - What IT resources will be required? - What support/assistance will my EDI provider give me related to communications? One of the biggest factors in communication choice, in addition to what options your partners support, is your anticipated volume. You want to keep in mind that certain transactions will equal other transactions. So if you receive in 100 POs per month, and now need to send out PO Acknowledgments, shipment notifications, Invoices—those 100 POs often result in 400+ documents per month, when you factor in at least a one to one relationship (and don’t forget about resends, or partial shipments!). There may also be supporting transactions such as PO changes, Inventory Levels, payment remittance advises that need to be counted as well. **Monthly Cost of VANs** | | | | | | | --- | --- | --- | --- | --- | | | \*\*\*\*Cost Per Document \*\*\*\*\* | | | | | \*\*Doc Count\*\* | 0.25 | 0.50 | 0.75 | 1.00 | | 100 | $        25.00 | $        50.00 | $        75.00 | $        100.00 | | 500 | $     125.00 | $     250.00 | $     375.00 | $        500.00 | | 1,000 | $     250.00 | $     500.00 | $     750.00 | $    1,000.00 | | 5,000 | $  1,250.00 | $  2,500.00 | $  3,750.00 | $    5,000.00 | | 10,000 | $  2,500.00 | $  5,000.00 | $  7,500.00 | $  10,000.00 | | NOTE–Does not include mailbox fee or other services. | | | | | You also want to factor in how your volume will change over time.  For instance, do you expect to add new customers? Will you increase your volume of orders? Will you change your shipping patterns? For example, shipping to a distribution center tends to be low PO count but high product count, whereas ship to stores is middle volume, and ship to consumer is often many small orders. The decision to go with a VAN provider instead of (or in addition to) Direct EDI is an important discussion based on budget, resources, and trading partner requirements. When selecting an EDI provider, it’s important to make sure they can support multiple methods and provide choice in communication. That flexibility should be factored into your decision in addition to critical considerations like quality of technical support, deep knowledge of your ERP, and integration of the documents you need to process. **About the author** Brian Lynch – EDI Specialist, Data Masons Software With over 18 years in ERP and Integrated EDI/XML solutions, Brian has experience in a variety of industries including consumer packaged goods, process manufacturing, automotive, industrial equipment, pharmaceutical, and food distribution. He has been working with the Microsoft Dynamics ERP suites for 17 years in pre-sales support, direct sales, sales management, channel marketing, service, and customer support helping more than 1,000 organizations. He has a passion for listening to customers and partners and helping them solve their EDI and ERP business problems. Brian is a graduate of DeVry Universe with a B.S. In Computer Information Systems (CIS). To learn more about which EDI solution is right for you, and how we can support your EDI efforts with [EDI Made Simple®](http://www.datamasons.com/whitepaper-edimadesimple-newapproach), visit us at [www.datamasons.com](http://www.datamasons.com).