API vs EDI: Setting Up Sensors and Data Tracking in the Supply Chain

Several companies specialised in logistics and transportation have been using Electronic Data Interchange (EDI) to accelerate their processes. EDI gained popularity during the 1970s as it enabled businesses to streamline everything they do, including invoicing, ship notices, and more. Many logistic companies preferred utilising EDI for exchanging business documents, since it helped them reduce errors and cost. EDI also paved the way for better supply chain visibility and enhanced storage of information.

As times changed and technology evolved, people started to notice limitations and pitfalls of EDI that impacted their productivity and raised their operational costs. Application Programme Interfaces (APIs) was then introduced in the early 2000s and quickly garnered attention. This allowed data to be transferred between systems much faster and in real time. The implementation of API was found to be relatively inexpensive and easier, compared to EDI. As businesses still use both the systems today, people still couldn’t choose between API vs EDI for supply chain management. So, how do these work and which one is ideal for you? Find out here.

How EDI Works?

EDI has been the go-to communication technology for several companies due to its ability to send high quantities of data electronically between businesses. As it reduced inaccuracies and increased convenience of exchanging important information, businesses were able to improve their supply chain performance by many folds.

EDI is set up in such a way that only authorised users can manage the system and track usage, thus ensuring security. A standardised format has to be maintained by both parties to successfully transfer the information. This has helped in increasing accuracy and efficiency, and also reduce errors caused by poor handwriting or mismanagement of documents.

EDI is seamlessly integrated with several networks of suppliers. With EDI, you can share important information with your suppliers and simplify the process of communication between your partners. By sharing accurate data and business documents with distributors, retailers, suppliers etc, you get to maintain closer business relationships, shorter sales cycles, and transparency in B2B transactions.

How API Works?

Application Programming Interface (API) includes instructions that allow software platforms to interact with each other. Just like how humans use computers, API helps software systems to communicate without manual intervention. For instance, if you are entering payment information on an online store, API will send that information to an application that verifies if the data entered by you is correct.

The ability to establish real time communication between two systems gives API an edge over EDI. Users have been debating on API vs EDI ever since. APIs will help you transfer data in less than a second or almost instantaneously. This is also why so many businesses integrate API into their supply chain management. As information is available in real time, people will get the latest updates from carriers right away. This allows teams to work faster and improve their productivity, while also quickly responding to issues and addressing the same.

API or EDI – Which One’s Better?

API vs EDI – what wins? Even though API sounds awesome and businesses transfer data at lightning speeds, not everyone uses it. It is not easy to recommend either of them alone, as both have their own set of strengths and weaknesses. There are different kinds of supply chain management solutions that enterprises can choose from. Therefore, your choice between API and EDI would depend on your individual requirements.

EDI has been round for a while. It’s been used for decades by several companies that consider it the gold standard when it comes to exchanging information electronically. API is newer and shinier, and it is still not widely adopted in the industry. However, its advanced features that allow easier synchronisation makes it totally worthy. Despite its improved efficiency, flexibility, and instantaneous speed of data transfer, it still hasn’t reached the point where it can completely replace the EDI format.

Smaller businesses that don’t have enough resources for a full scale API roll out still lean onto EDI for data exchange.

EDI & API Complement Each Other:

It’s not really about API vs EDI. Both of them don’t necessarily have to be mutually exclusive to one another. They can essentially be combined to complement each other for better supply chain management. With EDI solutions in place, you can add API as a new communication channel. A system that successfully integrates API and EDI can help you take advantage of the strengths of both these systems, and overcome their limitations too.

APIs are here to stay and only time will tell if and when EDI will be totally replaced by a better technology. Regardless, businesses that adapt to the changes will always thrive in the industry.