The Battle has Ended: API vs EDI

Infrastructures don’t last forever. Roads are repaved, sewers are replaced and bridges are repaired. And over time, restoration isn’t enough. Replacement is inevitable.

With all this inevitable change, a big question remains. In the battle of EDI vs API, why hasn’t EDI surrendered? The old infrastructure can’t meet today’s demands.

The functionality gap between EDI and API parallels landlines and modern cellular networks. Yes, you can make a call on either. But landline severely limits where you can make or take that call. And, of course, texting or Internet access are out of the question.

Landlines were a crucial first step in connecting the world. And now they’ve given way to a superior technology that delivers more value. Our analysis shows that, like landline, it’s time for EDI to bow out of freight tech and make room for APIs.

The Structure of EDI

Transportation Visibility for Dummies categorizes EDI as a “semi-manual approach to moving large supply chain datasets directly and securely from one system to another, usually across company lines.” It goes on that “Although the data is transmitted system to system, it is often sent in batches, which aren’t timely and require human intervention or processing.”

The semi-manual nature of EDI dates back to its debut in the 1940s and revisions in the 1970s. (Both eras when few processes were fully automated.)

EDI transmits data from one system to another by running data transmission over timers. The information is stored and then forwarded without confirmation, creating delays that can run between 30 minutes to two hours.

The delays and lack of integration with today’s technology means human intervention is needed to manage processes that could otherwise be automated. Times have changed, and EDI can’t catch up.

EDI’s High Costs and Customization Efforts

Although EDI adopted several standards that are in use today, each has many different versions. If two supply chain partners want to exchange data, documents, or information, they must agree on the specific standard and version.

Agreeing on these EDI standards is just the beginning. An internal EDI system, at a minimum, involves:

  • EDI software
  • communications software
  • agreed-upon transmission methods
  • mapping and translation software

Base costs don’t include software developers and specialists to program EDI systems or ongoing maintenance. The investment in time and costs adds up quickly.

A company with an EDI internal system should plan on assisting — or even building — the system for a supply chain partner.

Third-party EDI providers do offer expertise many organizations lack. Their cost is determined by the:

  • volume of data transmitted over the EDI network
  • number of partners already on the network
  • range of geographic coverage
  • level of support and training for the trading network

Large shippers and 3PLs will pay a hefty price for outside assistance.

Efforts to Customize EDI Produce Little Reward

Even after the investment and customization, EDI leaves significant gaps in shipment info communications between shippers, 3PLs and carriers.

Enhancements to an EDI implementation can never fix its underlying batch delivery method and inability to adapt to today’s technology standards.

As supply chains have become globalized, progressive leaders seek new ways to gain visibility without EDI. Bobby Harris, CEO of BlueGrace Logistics, is one of those leaders. In an interview discussing EDI vs. API, Bobby offered a candid assessment: “It’s popular to say what’s outdated is the technology of EDI, but it’s because it’s true. It’s a dying technology that doesn’t serve any more purpose as soon as we can replace it with an API.”

The Modern, Digital Infrastructure of APIs

APIs reflects today’s technology standards and capabilities. Unlike EDI, data is transmitted in real-time in individual increments, not batches.

In its most basic form, an API is a software intermediary that allows two applications to talk to each other. APIs runs on a standard protocol, meaning connections to new partners don’t require agreed-upon transmission methods like EDI. APIs transmission methods are universal.

With APIs, freight transactions such as requesting rates, dispatching or tracking shipments are automated. As this communication is all machine to machine, an incredible amount of shipment data can be processed, analyzed and acted upon without manual processes — all in real-time. Cloud-based APIs offer reliable, up-to-date and dynamic data.

By relying on common digital building blocks, an API can make repeated, complex processes highly reusable with minimal code. Shippers and 3PLs don’t have to reinvent the wheel every time they share data with a visibility provider, partner, carrier or customer.

Less Customization and Lower Costs for APIs

API code is simplified and structured to clearly define how a program will interact with the rest of the software world. Instead of lengthy customization cycles, one company using APIs shares documentation that outlines how the other party can connect to the system.

APIs can combine data from multiple systems to automate processes with minimal custom code. And that code is usually reusable for other systems or similar processes because it’s built on universal standards.

Many developers and transportation specialists are more familiar and comfortable programming with APIs than EDI. That gives you access to a wider pool of affordable talent if you need outside help.

An API approach saves time, IT resources and potentially nasty data entanglements along the way.

APIs Produces Results EDI Can’t Match

Most commercial applications we use today are built on API technology. They’ve played a pivotal role in improving many industries, and they’re now changing global logistics. Using APIs as the building blocks of digitization for your supply chain enables real-time visibility without the costs of customizing EDI. Integrations into TMS, OMS, WMS, ERP and similar systems are simpler as they all connect via APIs.

Achieving real-time supply chain visibility requires going beyond traditional freight tracking to digitizing the full transportation value chain from quote to invoice. This state happens only when companies move from EDI to APIs.

Admittedly, this move can be intimidating at first glance. John Webb, Senior IT Manager of Supply Chain for Abbvie, didn’t seriously consider APIs for his supply chain when it entered the scene. But that changed once he saw the possibilities.

In an interview focused on end-to-end supply chain visibility, John shared how his experience changed after working with APIs. “It was a game-changer,” he noted. “My mind started racing about all the things we could use with an API and that architecture to automate some of these manual processes.”

4 Key EDI And API Differences Beyond Real-Time Tracking

EDI and API architectural differences matter. Their contrasting approaches to delivering shipment data mean real advantages — and consequences — for shippers, logistics service providers and carriers.

These areas of supply chain visibility vary widely depending on your data communication method.

1. Standardization of Data

Unlike EDI, API governs the type and format of communications that any application can make of an associated program, such as a TMS or carrier network. The API lets you set which information is available and what portions are strictly off limits.

An API can take data from numerous programs and present everything in a normalized view. For example, the format and naming conventions of shipment destinations often vary between systems. APIs can make life much easier for everyone in the supply chain by standardizing this data.

With a little custom code, an API solution can recognize System A’s “Chicago IL,” System B’s “IL-CHI” and System C’s “Chig.IL” as the same location and display “Chicago, Illinois” in the dashboard.

2. Faster, More Reliable Rate Quotes

Obtaining a quote without an API is painful. It can involve long games of phone tag with price verification occurring after delivery. EDI-based solutions try to remove the manual processes but are often more trouble than they’re worth. Building a quote process on an API foundation offers many advantages over an EDI approach.

API Rate Quote Solutions

  • Instant, accurate and secure rate quotes
  • No more static rate bureaus
  • Real-time rates
  • A billing process that reduces the potential for human error

EDI Technology for Rate Quotes

  • Expensive rate bureaus, databases and IT
  • Large data download
  • Static data causes latency
  • One-time setup takes 3-6 months

For LTL shipments, an API solution can also reduce dependencies on SMC3, facilitate quote and invoice matching, and enable spot freight. EDI will require more development, delays and manual processes to simplify your quoting process. Adjusting the existing architecture is far more complex and riskier in the end.

3. Automated Dispatch

Using technology for dispatch keeps shippers and carriers focused on what matters. It’s the ideal solution for both parties. But EDI has made the process cumbersome. An API approach eliminates the headaches of EDI dispatching.

API Dispatch Solutions

  • Immediate connection to dispatch agency
  • Real-time data dispatching
  • Automatic PRO# generation
  • Instant pickup confirmation number

EDI Technology for Dispatch

  • Manual Bills of Lading
  • Database maintenance
  • Unknown PRO#s
  • No pickup confirmation number

Many LTL shippers may be skeptical of an API solution if they rely on EDI 204. But API solutions can replace that method while reducing billing errors and manual touchpoints.

4. Future-Proofing and Supporting New Technologies

Infrastructures built for evolving technology ensure your investments last longer. Relying on the cloud and APIs instead of EDI is essential for future-proofing your supply chain visibility software.

Supply chain executives worldwide want to incorporate blockchain into their supply chain. The potential is huge. Blockchain can offer more transparency into product origins, shipment visibility and proof of delivery with fewer third parties needed. While most organizations aren’t ready for this advanced, unalterable audit trail, one thing is clear: Blockchain simply isn’t compatible with EDI.

APIs are already connected to various systems and can easily add information to a blockchain. EDI, on the other hand, is a non-starter because nothing is standardized or real-time. Doubling down on APIs ensures your company is technologically competitive for the foreseeable future.

The Bottom Line: APIs Win in Every Way

API adoption will lower your operating costs and increase your net income. Continued EDI customization and expansion will drive up your costs without netting modern benefits. Switching to an API digital infrastructure allows you to grow customer satisfaction and loyalty, a critical differentiator in any competitive market. Your ability to capture market share quickly will only increase.

At this point, too few companies are pushing an API-first agenda, and they’re leaving money on the table. Supply chain and transportation enterprises must shift their questioning from “should we consider APIs?” to “when will we begin using API connectivity?”

Get real-time supply chain visibility built on a digital infrastructure.

Chat with an API supply chain expert today.