API vs EDI Integration: What is the difference?

Global supply chain problems are ever-increasing, with the disruption of recent years going beyond anything we’ve seen previously. That’s why industry leaders are increasingly turning their attention to new solutions and technologies to overcome these challenges, many of which emerge from the fact that:

• Supply chain disruptions that last a month or longer happen every 3.7 years on average, with losses equaling up to 42% of one year’s revenue before interest and tax over a decade.
• Amid the COVID-19 pandemic, some 85% of supply chain executives encountered problems with their current digital technologies, prompting a search for new solutions.
• Digital transformation has long been at the forefront of investment and innovation in supply chain management. However, some supply chain executives believe their businesses lack sufficient digital culture and training.

The race for digitization is well underway. Despite this, selecting the right solution continues to pose a challenge to businesses across various industries. One significant development is Application Programming Interface (API) usage in a space dominated by Electronic Data Interchange (EDI). EDI and APIs can perform similar functions, with integrations that enable supply chain communication.

What is an API integration?

APIs are software intermediaries that enable two independent web tools or applications to communicate. APIs contain definitions and protocols for integrating application software between systems, essentially acting as a form of interface. APIs enable bi-directional data flow — a user response is sent to a system, which sends the response back to the user and system. Numerous software platforms offer APIs as part of their value proposition, and B2B businesses are starting to do the same.

Like EDI, APIs enable rapid data transfer and custom integrations between systems across supply chains including:

• Enterprise resource planning (ERP)
• Warehouse management systems (WMS)
• Manufacturing execution systems (MES)

So, given the functionality and expanded use of API, what exactly is its relationship with traditional solutions like EDI? Let’s take a closer look.

Here’s a quick comparison of API and EDI in a supply-chain context:

• APIs offer synchronous calls for near-real-time data sharing and transfer, while EDI is asynchronous and batch-processed.
• While EDI offers its own standards and formats, API messages are usually XML or JSON.
• EDI is batch-driven, whereas API handles modular requests.
• APIs are ad-hoc, supporting quick integrations, whereas EDI supports longer-term interactions.
• EDI is heavily designed around industry standards, whereas API is much more open-ended.

Despite evident advantages, APIs still lack the standardization that forms one of the key benefits EDI offers to businesses. As things stand, APIs are more of a force multiplier than an actual replacement for EDI in any meaningful sense.

Moreover, Gartner forecasts that APIs are likely to become the most significant attack vector for businesses, posing potential security issues which could have major consequences. Contrastingly, EDI has the potential to be more secure than APIs when appropriately implemented, and the risks are well-established.

To learn more about how you can take advantage of Effective Data’s Integration offerings, please visit our website at Effective-Data.com or reach to our account team for assistance.