EDI vs API

EDI and API integrations are the two primary options when it comes to connecting supply chain partners. They both allow relatively quick exchanges of information between partners, facilitating effective communication during the supply chain management process. Even though both are widely used for similar purposes, they are not exactly interchangeable. Before committing to one or the other, it is important for business leaders to understand whether API or EDI will offer the most precise fit for their needs.

1. EDI and API integration both allow business partners to transmit data back and forth.
2. APIs have replaced some EDI connections, but much B2B communication still moves through legacy applications and technologies like EDI.
3. There are pros and cons to using either EDI or API. The decision to choose one or the other depends on the specific situation.

EDI vs API At a Glance

The differences between these two technologies are nuanced. To simplify matters, however, it is possible to consider the primary differences between EDI and API in terms of the following seven questions:

Pro Tip: Asynchronous data is data that is not synchronized when it is sent or received. This usually refers to data that is transmitted at intermittent intervals rather than in a steady stream, which means that the first parts of the complete file might not always be the first to be sent and arrive at the destination. Synchronous data is data that is sent as a continuous stream and is accompanied by timing signals to ensure that the transmitter and the receiver are in step (synchronized) with one another.

To understand the differences more completely, it helps to examine API and EDI independently.

How Does an API Work?

API (short for Application Programming Interface) is an intermediary that allows web-based applications to communicate with one another. This communication happens over the internet in real-time, and it does not require manual intervention. For example, a retailer may have an API connection with a supplier partner to create a dashboard showing the supplier’s remaining inventory for each item. The dashboard will update immediately and automatically as the supplier’s inventory is depleted or replenished.

Pros and Cons of APIs

When compared to EDI, there are some key advantages and disadvantages to using an API connection. Many of the strengths and weaknesses relate to the nature of an API as a real-time, web-based connection.

Benefits of API

• API is more immediate than EDI because the data transfer happens automatically, without human intervention. The actual data transfer itself is often much faster via an API connection as well, transferring data in minutes instead of hours.
• An API connection is simple to maintain. There is very little need to customize a connection, and partners can “set it and forget it.” That is, barring any major changes, an API connection continues to work without maintenance.
• API is more modern. The technology is still being built and supported, so the work done on it is done with the future in mind. 

• The relatively new nature of API is a disadvantage as well as an advantage. The technology hasn’t been perfected yet, and some companies still haven’t adopted it.
• API connections are more vulnerable to security risks. Because the information passes over the internet, it is susceptible to hackers or data breaches.
• API isn’t as reliable as EDI. If either partner’s internet connection falters, the API connection will go down with it. Even though most businesses have incredibly reliable internet now, any downtime can be costly.

It is possible to contextualize these advantages and disadvantages by comparing API to EDI.

How Does EDI Work?

For those who work in logistics and supply chain management, it’s important to understand what EDI is and how it works. It’s the most common method big-box retailers use to transfer information back and forth with their supplier partners. 

EDI data exchanges can occur via various pathways including peer-to-peer networks and serial links. Many EDI connections occur over the internet, though that isn’t necessarily a requirement.

EDI relies heavily on an EDI translator, which converts business data into digestible format before passing it to another business partner. Once the business on the other end has received the EDI exchange, the information goes back through an EDI translator, which returns it to an internal format for processing. 

Think of it like morse code. A message is determined and then translated into morse code to send it, then the recipient needs to take the message and translate it back to their spoken language to understand it. For a deeper understanding of this process, it is helpful to know what EDI is and how it works.

Pros and Cons of EDIs

EDI is still a staple in the logistics world. This method of transferring data does have its own advantages and disadvantages compared to API, and it is worth recognizing the pros and cons.

• EDI is incredibly secure. These systems are known for ensuring excellent security and privacy, allowing organizations to transmit sensitive information with confidence. Each connection is only accessible to two parties, and the authorized users are predefined, so the information is not vulnerable to hackers or data breaches.
• EDI is easy to use, at least compared to doing things manually. It may not be as easy to maintain as API, though, which is why there is still a need for an EDI service in addition to the EDI platform itself.
• EDI is very accessible. It has been around for decades, and it is currently the industry standard. As such, a business will find that many of their partners (especially big-box stores) are already using EDI.
• EDI is very dependable. If both partners establish and maintain the connection correctly, any amount of downtime is highly unlikely.

• EDI relies on outdated technology. There have only been minimal improvements in the last few decades, which means EDI has not evolved with the times. Data transfers take a long time, and EDI has not been future-proofed to prepare for new technologies like blockchain.
• There are multiple versions of EDI. Partners must use the same versions, or integration will be impossible.
• EDI only accommodates communication between two partners. Including a third party requires a new channel to be established. To create consistency across the different channels, each organization involved must use the same transmission methods and document codes.
• EDI is costly to maintain. It takes time and effort to bring employees up to date with the process, and even to teach them all of the relevant EDI terms. It may take months to bring an EDI connection completely up to speed, and maintaining the connection requires manual intervention on an ongoing basis. The EDI specialists who provide these services can command high salaries.

Given the advantages and disadvantages of both options, the choice between EDI versus API depends on the situation.

When to Choose EDI vs API?

The primary advantage of API over EDI is that the connection is far easier (and therefore less expensive) to maintain. With an API, business partners can essentially “set it and forget it.” Still, many big-box stores prefer EDI for the same reason many financial organizations still use COBOL: It has been around for a long time, has always worked, and still does. API has started to replace EDI in some situations, but EDI is still the industry standard because of its reliability and security above all else.

Ultimately, the choice between API and EDI comes down to the specific situation. Typically, the most influential factor in the decision process is if the business you are partnering with already utilizes an EDI connection.. For example, many big-box stores still insist upon EDI, while other businesses have made the leap to API. Big-box retail stores have the negotiating power, so they set the terms, and their suppliers have to adapt accordingly.