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EDI VAN Networks: How They Work & Why They Matter

If you’re in retail, manufacturing, healthcare, logistics, or finance, you’ve probably heard of EDI VANs (Electronic Data Interchange Value-Added Networks). These networks quietly power the supply chain, ensuring that orders, invoices, and shipping details flow smoothly between businesses. But how do they actually work? And how are newer technologies like APIs and iPaaS solutions changing the game? Let’s break it down.

What is an EDI VAN?

Think of an EDI VAN as a secure digital post office that connects businesses, translating and delivering messages between trading partners. Instead of emails or PDFs, these messages are structured EDI transactions, ensuring that computers (not just people) can process them automatically.

Industries That Rely on EDI VANs

EDI VANs are the backbone of industries where accuracy, security, and speed matter. This includes:

  • Retail & Consumer Goods – Connecting suppliers, distributors, and retailers for inventory management.
  • Manufacturing – Keeping production lines running with real-time supply chain updates.
  • Healthcare – Managing insurance claims and patient data securely.
  • Logistics & Transportation – Coordinating shipments, tracking, and customs clearance.
  • Finance & Banking – Processing payments, invoices, and compliance documents.

How EDI VAN Transactions Flow

Most businesses exchange documents using standardized EDI formats, such as:

  • 850 (Purchase Order) – A buyer places an order.
  • 810 (Invoice) – A seller requests payment.
  • 856 (Advance Ship Notice) – A supplier tells a retailer what’s shipping.
  • 940/945 (Warehouse Shipping Order/Advice) – A logistics provider updates stock movements.
  • 997 (Functional Acknowledgment) – A simple “Hey, I got your message!” confirmation.

These transactions follow a structured conversational choreography:

  1. A retailer sends an 850 (Purchase Order) to a supplier.
  2. The supplier responds with a 997 (Acknowledgment) and processes the order.
  3. The supplier sends an 856 (Shipping Notice) when the goods are on their way.
  4. The retailer receives the shipment and later gets an 810 (Invoice) for payment.
  5. The retailer processes the invoice and pays electronically via an 820 (Payment Order).

This back-and-forth keeps supply chains moving efficiently.

AS2 & AS3: The Old-School “Secure Email” for EDI

Before APIs, businesses needed a direct, secure way to exchange EDI documents over the internet. That’s where AS2 and AS3 protocols came in:

  • AS2 (Applicability Statement 2) – Used for real-time, encrypted document exchange. Most common in retail and supply chain.
  • AS3 – More like secure FTP, commonly used in financial services.

AS2 remains widely used, especially among large retailers and suppliers who demand encrypted point-to-point connections.

EDI-to-API: The Future of EDI Transactions

Traditional EDI VANs are great for structured, large-scale transactions, but many businesses today want real-time data exchange and faster onboarding. That’s where APIs (Application Programming Interfaces) come in.

How iPaaS Connects EDI & APIs

Integration Platforms as a Service (iPaaS) act like digital translators between EDI-based systems and modern API-driven apps. Instead of forcing suppliers and customers to choose one format, iPaaS allows:

✅ EDI documents to be converted into API calls for cloud applications.
✅ Real-time integrations with platforms like Shopify, NetSuite, or SAP.
✅ Faster partner onboarding since APIs eliminate some of EDI’s rigid setup.

Popular API Integrations in Supply Chain

Companies are now using API integrations for:

  • ERP Systems (SAP, NetSuite, Microsoft Dynamics) – Syncing purchase orders, invoices, and payments.
  • E-commerce Platforms (Shopify, Magento, BigCommerce) – Connecting online orders with supply chains.
  • Logistics & Carrier Tracking (FedEx, UPS, DHL APIs) – Automating shipment updates.
  • CRM Tools (Salesforce, HubSpot) – Linking sales data with order fulfillment.

So, Do You Still Need an EDI VAN?

For now, yes—especially in industries with strict compliance requirements (like retail, healthcare, and manufacturing). But the trend is clear: more businesses are adopting hybrid EDI + API approaches, using iPaaS solutions to bridge the gap.

Final Takeaway

EDI VANs aren’t going anywhere—but they’re evolving. Businesses are shifting from rigid, batch-based document exchanges to real-time, API-driven processes. Whether you’re sticking with AS2, transitioning to APIs, or using an iPaaS connector to blend both, the goal is the same: faster, more reliable supply chain communication.

Looking to integrate EDI with modern API-driven workflows? RetailEDI can help. Let’s talk about making your supply chain smarter, faster, and more connected. 🚀

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