Understanding EDI vs. API: Part One

In the ever-changing and always-improving world of technology, some outdated systems have overstayed their welcome. In the supply chain world, it’s Electronic Data Interchange (EDI). When it comes to transferring and sharing information, EDI and Application Programming Interface (API) aim to accomplish the same tasks, but API is the clear winner.

The functionality gap between EDI and API parallels landlines and modern cellular networks. Yes, both can be used to make a call. But a 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 a phone that plugs into the wall, 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.” And, “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. (Long before many 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 but are using different versions, one party has to upgrade before integration. Then, in order to share documents or information they must agree on the same complex transmission guidelines to establish a connection.

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, with projects lasting 3-6 months before EDI is considered fully functional.

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.

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 (and tomorrow’s) technology.

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 Produce 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 API.

project44’s Advanced Visibility Platform takes an API-first approach, helping you achieve greater visibility and increased performance. Request a demo to learn more.