Knowing the Differences Between EDI and API

In today’s business environment, supply chain processes must move faster than ever before. An effective supply chain management solution relies on EDI or API. Both technologies allow you to quickly and securely transfer data from one system to another, which is a big part of the supply chain management process.

For years EDI (Electronic Data Interchange) has been the standard document interchange system. It continues to be used for business partner communication within the supply chain. On the other hand, API is becoming a popular alternative to EDI.

EDI software plays an important role in the integration of B2B systems and Trading Partners. API allows software to use functions defined in another software. It can also be used for B2B Integration if APIs are created for that. Therefore, it is worth comparing EDI with API so that you can choose the right approach for your next B2B Integration project!

Although both EDI and API are widely used across multiple business software solutions, they are different. Understanding the differences is crucial when it comes to making an informed decision about which software solution to use for your business.

What is Electronic Data Interchange (EDI)?

EDI systems emerged in the 1970s as a way to streamline business processes. It has long been the industry standard due to its safety and reliability. EDI allows business documents to be exchanged in electronic format. Trading partner companies can transfer documents such as purchase orders, invoices, ASNs, BOL and more. It is common in the logistics industry.

EDI plays an important role in the integration of B2B systems and Trade Partners. It was developed to simplify B2B communication and reduce (or eliminate) paper-based communication. But EDI’s story is not that simple. Different EDI standards have emerged in different parts of the world. For example, EDIFACT in Europe, ANSI X12 in the USA, etc. (EDIFACT message standard is still widely used in Europe. The use of ANSI X12 is widespread in the USA and Asia.)

When an organization uses EDI, it provides access and connectivity only to the stakeholders they have contracted with. It ensures security and ensures that companies have audit trails and archives. However, establishing EDI connections between the two partners is often cumbersome, and although EDI message structures are standardized, different parties may use them differently.

Some companies are looking for alternatives to EDI and are wondering if API is a better choice.

SAP EDI Integrations

What is Application Program Interfaces (API)?

Developed in the early 2000s, API is a new version of information exchange. It has been frequently used in Cloud SaaS (Software as a Service) applications since its development. APIs move data quickly from one system to another. In other words, it automates data sharing from system to system. The API helps devices communicate with each other in real-time. Web service APIs enable easy integration into back-end business systems. Companies leave parts of their software available or “open,” allowing other software to easily integrate with them.

Compare EDI and API

EDI and API are both integration technologies. Both transmit data from one business partner to another. However, each of them has strengths and weaknesses. There are differences between EDI and API because of their respective origins and purposes. So what’s the difference between API and EDI integration?

Although EDI solutions are an older technology, they are still the most popular standard as they have been used by many companies for many years. According to some companies, the reliability of EDI technology is higher than API because it has a longer history. On the other hand, although API is a newer technology, its powerful features for synchronizing web applications make it stand out.

The use of the API and related toolkits can help software developers start and finish their projects faster. Also, the API is a little easier to use. It allows you to save both time and money by simplifying the realization of projects with simpler interfaces and development environments.

The API implementation can be less costly and simpler than EDI, as it does not require ongoing maintenance or translation services. Also, when transmitting data with EDI, the data is first stored and then transmitted. As a result, there may be some limitations on real-time access and responsiveness. However, the API needs more collaboration to reach communication standards and can therefore be balanced with the advantages of EDI.

APIs definitely have some innovative features that make them increasingly popular. However, EDI remains a popular choice due to its solid reliability and security that has long made it the industry standard for data exchange.

EDI vs API: Which Should You Choose?

EDI and API technologies enable exchanging data by transferring data from one system to another; So how do you know which one to use? The answer to this question is not very clear because it depends on your trading partner system and applications.

Your data exchange needs are usually determined by your ecosystem. You can identify the best solutions and technologies that will enable you to participate in that ecosystem by understanding your ecosystem. For example, some industries that exchange lots of financial data may require more layers of security, governance, and compliance than non-standardized API integrations can provide. Therefore, the choice between EDI and API will depend on your company’s individual needs. Firms should review the requirements of their trading partners when considering API and EDI.

Why You Need EDI and API?

We mentioned that it is not easy to choose between EDI and API. You must know your company’s needs and ecosystem well when making a choice. However, if your business is planning to grow, it is likely that you will need to support both mechanisms on a single platform.

You may not have to choose between EDI and APIs because they are complementary to each other. Your organization may not be black and white enough to need just one of these, so EDI and API technologies need to work together. API integration improves EDI and EDI helps enable downstream business processes and data orchestration, while API provides deeper context to B2B integrations with your digital ecosystem. In short, you could argue that both processes are equally critical to business success. To learn more about  B2B integration, read our wiki post “What is B2B Integration?

Whether you are involved in a business partner, customer, cloud service or SaaS application, each has its own unique configuration, customization, and integration challenges. But the truth is that your opponents are facing exactly the same challenges. Anyone who can quickly adapt to every communication and data requirement (EDI, non-EDI, or API) will stand out in the industry.

Benefits Of Connecting EDI & API

EDI is so deeply embedded in the structure of businesses in logistics, supply chain, retail, manufacturing and finance that we will rely on this communication tool for a long time. EDI is sufficient for sending confirmation messages, purchase orders or invoices.

However, there is a growing demand to support connectivity with the API. All in all, the API adds a completely new and exciting perspective to the story. We believe APIs will bring greater visibility to supply chains and using timely data will increase traceability of goods, improve the ability to better forecast and demand planning and optimize processes. EDI and API should be able to work together in harmony, but first you need to find the right way to connect them.

If you are interested in EDI & API integration, feel free to contact us for more information.

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