EDI vs. API in Supply Chain

Technology has completely changed the way supply chains are managed around the world. Many organizations use SaaS platforms and IoT technology to track inventory levels, monitor shipments, process returns, and more. 

Many supply chain management programs use either EDI or API technology. Both are effective options for data sharing, but they work differently. At Unilog, we used cloud-based API technology on our Logivice platform to offer fast and reliable supply chain monitoring. In this article, we’ll talk about the differences between EDI and API technology and how they affect your supply chain. 

What is EDI? 

EDI stands for Electronic Data Interchange. Organizations have been using EDI for supply chain management since the 1970s. Decades later, it’s still a very popular way to transfer data between systems. 

Most of today’s EDI systems are web-based, although they can also work using peer-to-peer networks or other transfer methods. EDI converts large volumes of data into documents that are then sent to the receiving party using one of a variety of transport protocols. EDI standardized a format for a number of common business documents, helping businesses cut down on a huge volume of manual labor. 

What is API?

API stands for Application Program Interface. It is a much newer data transfer solution than EDI. EDIs can only communicate and share data with other EDI systems. However, APIs are a web-based protocol that integrates with many different types of systems to share data. They are reusable, which means that they can be reprogrammed to work with many different types of systems and interfaces. This makes it easy to develop and integrate new systems as necessary. 

APIs use cloud technology to store and transfer data. This results in extremely fast and convenient data transfer. Many organizations have switched from EDI to API for their supply chain solutions because this technology is faster and more flexible. Additionally, API allows for more automation within the supply chain. 

Pros and Cons of EDI For Supply Chain

Although EDI is an older technology, there are still many advantages to using it for supply chain management. The biggest advantage is that EDI can transfer massive quantities of data at one time. It also requires users to send data in standard formats, which reduces confusion and human error. 

This can be both a benefit and a drawback, depending on your unique supply chain challenges. For some organizations, the standard nature of EDI makes things more efficient, but for others, it can be limiting and minimize the number of potential integrations. 

EDI is also very secure, making it a good option for organizations that need to transfer sensitive pieces of information. This is because EDI uses a secure web-based connection between two systems, and the systems use advanced security measures to prevent third parties from accessing the information. 

The biggest disadvantage of using EDI for the supply chain is its lack of flexibility. To set up an EDI exchange, both parties must use compatible EDI systems. There are three different versions of each EDI system, so if one of your shipping partners has a different version from yours, you won’t be able to set up an EDI exchange. 

Additionally, EDI hasn’t changed much since it was initially adopted decades ago. This means that new technologies won’t necessarily be compatible with it. If you’re only using EDI for data management, this could limit the number of supply chain partners you could work with in the future. 

Finally, EDI technology can be expensive to set up. Although it is much cheaper than managing paper documents, it is often more expensive than API solutions. Additionally, setting up an EDI can be very time-consuming. You’ll need to train your entire team to use the specific version you chose, and it can also take a long time to finalize your EDI integrations. 

Pros and Cons of API For Supply Chain

As a newer technology, API has a wide range of benefits for its users. However, there are some potential downsides to be aware of as well. 

The biggest advantage of using API is that it can transfer data almost instantly, and it will also transfer data automatically as it becomes available. This results in reliable access to real-time data, which is often crucial for managing a global shipping strategy. Additionally, users don’t have to manually upload and transfer documents – the system handles that automatically. 

Another advantage of API is that it is compatible with a wide range of data systems. APIs require little to no customization, which makes them easy to set up. This flexibility is excellent for organizations that work with several different supply chain partners. 

The biggest downside of using API is that it isn’t as secure as EDI. Although cloud technology is very secure, it is more vulnerable to outside threats. Additionally, a shaky internet connection could interfere with data transfers. 

EDI vs. API: Which One Is Right For You?

There are many factors to consider when choosing a data transfer solution for your organization. The flexibility and cost-effectiveness of API has made it a popular choice for supply chain management across a variety of industries. If you need to access real-time supply chain data from a variety of sources, API is likely going to be the best choice for you. 

However, there are some situations where it still makes sense to use EDI. You may have supply chain partners that only share data using EDI and need to implement this technology to accommodate them. Some organizations also prefer to use EDI because of the security benefits it offers. 

Using technology to manage your supply chain is a must in today’s fast-paced global economy. Whether it’s via API or EDI, digital data transfer gives you faster access to inventory and shipping information you need to manage your business. 

If you’re struggling to stay on top of your supply chain, Unilog is here to help. As a 4PL, we manage every aspect of your supply chain from inventory management all the way to returns. Our cloud-based Logivice system allows you to access all of their supply chain information in one place for maximum transparency and efficiency. Contact us today to learn more about our supply chain management solutions.