The (Somewhat) Great Debate: EDI vs API

Communication between business partners and trading partners is a crucial piece of the productivity puzzle. While attempting to improve upon communication, you’ve likely come across the terms Application Programming Interfaces, better known as APIs – and Electronic Data Interchange, most commonly referred to as EDI.

Trading partners leverage these two technologies to effectively communicate large amounts of data in the ordering process. EDI was first introduced in the ‘60s and adopted at scale in the ‘80s, becoming the standard method of document exchange for a wide range of industries. However, APIs have risen in popularity across many industries, impacting B2B communication at large.

Each has its own merit, and to be completely upfront – they should be used together. However, it’s important for manufacturers, trading partners, suppliers, and retailers to understand the basics behind EDI vs API. Let’s get started.

EDI vs. API: What’s the big difference?

EDI and API serve as vital technologies for facilitating data exchange between business partners. EDI is specifically designed for the structured exchange of business data among EDI systems of trading partners, whereas APIs play a crucial role in integrating and enabling real-time communication between diverse software applications.

Navigating the onboarding process in the modern landscape proves to be a challenging and intricate task. Contemporary B2B onboarding procedures demand the utilization of data formats acknowledged by EDI standards and protocols like AS2 or SFTP. However, the modern IT onboarding landscape extends beyond, encompassing the implementation of new cloud or on-premise applications, often necessitating additional support for APIs.

Consequently, businesses find themselves increasingly reliant on both EDI and API technologies, with each department advocating for the superiority of their chosen tool. Despite the inherent advantages and disadvantages of EDI and APIs, both play integral roles in shaping how companies engage within their business ecosystems.

So, what’s the real difference?

EDI data is mapped to a certain standard and then transmitted to an external partner, which may limit its use as it’s one-to-one connection. However, it's a standardized, secure, and compliant means of data exchange that allows for a unified and regulated system.

APIs are often seen in cloud-based software as a service (SaaS) model, offering real-time data exchange and back-end integrations. Unfortunately, they do not adhere to any compliance standard which limits their use in many industries – and with many trading partners.

OK – But are they really that different? 

Let’s address an elephant in the room. APIs and EDI are not competing forces. In fact, it’s a little silly for us to pin them against each other in a versus environment. Here’s the truth.

EDIs and APIs each have their advantages in a B2B environment. Let’s dive a little deeper.

EDI vs API: Evaluating the Benefits  

Deciding between EDI vs API isn’t such a black-and-white answer. It all depends on the needs of your trading partners and supply chain. Both EDI and API simplify B2B communications – but figuring out where to deploy them may take some careful consideration.

The Benefits of EDI

EDI excels due to its standardization across various industries, ensuring effective data transmission between carriers, suppliers, third-party logistics providers, and trading partners. If you need help choosing an EDI provider, check out our guide. In the meantime, here are some of the pros of EDI.

• Accessible: For decades, EDI has been the standard data transmission method for trading partners, used widely across the logistics industry. This allows for a wide range of partner options due to its well-established success.
• Compliance: Established EDI compliance guidelines in accordance with a specific standard help maximize communication accuracy, enhance accuracy, improve business relationships, enable scalability, and reduce costs by improving overall efficiencies.
• Security: Established standards and agreements between trading partners and stakeholders to improve security, privacy, and overall trackability.

The Benefits of API

APIs offer instantaneous business communication and data flow. Additionally, due to their more novel nature, there are more automation and integration features built in to maximize useability.

• Speedy Communication & Updates: APIs can move faster and update quicker, mostly due to their cloud reliance. This allows for real-time data transmission.
• Flexibility: Given the newer nature of APIs, they are better equipped for integration with emerging solutions, and are adaptable to newer supply chain processes.

EDI vs API: Why You Need Both for B2B Communication

As we mentioned, it’s not really a matter of EDI or APIs. Instead, you should think of these two means of data exchange as harmonious. These are two methods of communication that can complement one another quite well.

Both EDI and APIs offer mechanisms to automate, orchestrate, and conduct dataflows between trading partners and suppliers. While everyone’s ecosystems are unique, we rarely see a business environment that allows for only one of these methods. There are certain factors that may impact whether or not EDI or APIs should govern the majority of your supply chain or data flow (like a need for increased security or compliance requirements).

Think of it this way:

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API integration augments EDI, providing enhanced context to B2B integrations throughout your digital landscape, while EDI empowers downstream data orchestration and business processes. Meanwhile, EDI plays a crucial role in facilitating downstream business processes and orchestrating data.

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Each plays a role. EDI is crucial for ordering, shipping, and fulfillment – while APIs are essential for price checks or inventory management on an e-commerce platform. So, it’s not really a matter of EDI vs API – but rather figuring out the best possible way to harmonize both for optimal results.

EDI vs API Use Cases

When push comes to shove – suppliers, trading partners, and other relevant parties need a secure exchange of formatted data. That’s it.

Here are some key points to remember and consider:

• Both EDI and API exchanges adhere to standards.
• EDI provides a more standardized and centralized governance of these standards that is widely adopted and accepted in the supply chain realm.
• Both EDI and API will require specialized software and expertise to install, configure, integrate, and manage.

Here are some use cases you may encounter:

You want to connect from EDI to API: Outsource your EDI or sign up to a managed provider (or VAN). While you can try to manage this in-house, the risk of EDI non-compliance can be costly as chargebacks rack up.

You want to move from EDI to API: While less common, this may require a custom integration that allows for data translation between EDI and API.

The Great Debate is Over

The battle of EDI versus API in the realm of B2B communication is not about choosing one over the other but finding a harmonious integration of both technologies. EDI brings decades of standardized success, ensuring effective data transmission and compliance across various industries. 

On the other hand, APIs offer real-time communication, flexibility, and automation features, making them essential for modern supply chain processes. Both technologies play unique and complementary roles in enhancing business processes. Instead of viewing it as a competition, businesses should strive to leverage the strengths of both EDI and APIs for optimal results, creating a seamless and efficient communication ecosystem for their trading partners and suppliers.