June 01, 2023

EDI and API Integration in Logistics: How to Choose the Right Option

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The technology significantly impacts the supply chain and introduces various solutions to enhance connectivity throughout the logistics process. Two of the most common tools are electronic data interchange (EDI) and application program interface (API). 

While big volumes of data prevail in business processes, these systems specialize in transferring information across different partners and companies. Although both protocols basically perform the same task, which is sharing data with multiple recipients, they differ in capabilities and methods. As a result, many industries use them to streamline communication and workflows.

We’ll focus on each protocol’s features and provide guidelines on choosing the right one for your business.

What is EDI vs API: crucial differences in logistics

There are ongoing discussions around API vs EDI in the logistics sector. It’s a comprehensive issue posing multiple practical and theoretical concerns. As logistical challenges and demands keep changing, organizations seek to obtain the proper tools.

The essence of EDI 

EDI is the acronym for Electronic Data Interchange, a technology that speeds up logistics operations and removes manual errors by automating numerous business-to-business interactions. EDI enhances stakeholder communication in all areas, including production, shipping, sales, and support.

EDI has been around since the early 1970s. This protocol has been a global standard for exchanging information in logistics. As time and technology have altered, EDI appeared obsolete in some respects, adding strain on server processing resources. Moreover, a diversity of modern standards makes EDI-powered procedures more complicated.  

The essence of API

API, or Application Programming Interface, performs the same job as EDI but in a different manner.

The solution allows for a seamless data flow from one party to another in real-time. API have simpler interfaces and development environments, which makes them more convenient for users. With a range of discrete, self-contained updates, EDI is less flexible and more time-consuming.  

While EDI sets up a connection between two EDI systems, API is cloud-based and allows various systems to interact. With API, data exchange takes less than a second, which makes API preferable for industry giants like Amazon.

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Major EDI vs API difference

Both EDI and API formats imply transmitting data among parties, although they attain this through different means.

While EDI is a standard solution for transferring structured data, API is a set of protocols and tools for building software applications enabling the exchange of both structured and unstructured information. EDI is a network-based tool, and API relies on the cloud to provide connectivity. The resulting flexibility is one of the primary reasons many businesses choose API when considering EDI vs API integration.

APIs can be used to transmit data in real-time, and they do not rely on a specific format. APIs are generally easier to integrate than EDI and can be less expensive to implement and maintain. Unlike EDI, API can also perform real-time validations and universal transmission without human interference.

Statistics regarding API adoption show that companies implementing this protocol have increased their market capitalization by above 12%.

Is this evidence enough to say that API is transcendent over EDI? Based on practical experience, the situation is not that simple. 

EDI vs API comparison

Although there are numerous arguments in favor of API, there is no universal recipe for which solution is better. Furthermore, the diverse EDI vs API usage examples demonstrate the prevalence of EDI in the modern supply chain landscape. A traditional process of exchanging data, EDI is familiar to many players. Companies with all operations already established through this protocol are often unwilling to switch to a new solution.

Let’s compare the two systems by several criteria to understand EDI vs API meaning better.

The exchange of business documents between computing systems in a standard electronic format through FTP or AS2. A standard protocol allowing computers to interact through the cloud.
Simpler integration with legacy systems. The need for a third party to convert data to EDI format. In many cases, higher cost efficiency. Not compatible with traditional systems. Programming may require significant learning. Development and maintenance require expertise and skills. Can crush systems at the testing phase.
Data transfer in minutes. Already employed by many players. Limited to the information contained in EDI standards. Data transfer in seconds. Can facilitate the exchange of more data. Safety concerns: with an API, you add another potential attack area to your website. No need to match versions between two parties since API connects already established systems, like TMS, WMS, and ERP.
Robust security and privacy settings. EDI provides a secure connection between only two parties and lets each party transfer information after set-up is finished. Only predefined authorized users can access the transferred information. API is software-dependent on the web, hence greater exposure to data breaches. Because of the solution’s connectivity to many systems, all systems can be under threat in case of a data breach.
EDI is a popular solution that has become an industry standard. Many players in logistics are set up with EDI. API is a new and less popular player than EDI. Some EDI users may stick to traditional software without switching to API.

From a technical standpoint, many businesses could replace traditional EDI B2B integration technologies with APIs. What a business must do, however, is ensure that such a replacement is feasible. This EDI vs API comparison table aims to help companies assess each option’s potential value.

To get a better understanding of API in logistics, check our articles about WMS and TMS integrations use cases.

Checklist for choosing the optimal solution

The following step toward the perfect solution choice is the selection checklist we composed based on our profound experience in logistics.

  • Consider the types of data you need to exchange. EDI might be the optimal choice for structured data, such as purchase orders, invoices, and shipment notices. On the other hand, API may be more appropriate if you deal with unstructured data, including product descriptions or images.
  • Evaluate your current infrastructure. EDI requires specialized software and hardware, so if your organization already has an EDI system in place, it may be more cost-effective to continue using it. If you are already applying APIs for other purposes, you may consider expanding an API for logistics data as well.
  • Assess the complexity of the integration. APIs are generally easier to integrate than EDI systems, which require more technical expertise. If you have limited technical resources or seek a more straightforward integration process, an API may be better.
  • Consider the cost. Your expenses with each solution will depend on your specific case. EDI systems can be costly to implement and maintain. However, API integration can also be expensive, as it is tied to the complexity of the task and the level of support required.
  • Evaluate the level of customization you need. EDI is a standardized format, which means that customization options are limited. If you require more flexibility in terms of data formats and protocols, an API may be a more favorable option.
  • Consider the necessary level of security. The required level of security may differ depending on the nature of the data being exchanged. Evaluate the security features of EDI vs API integration and ensure they meet your organization’s security demands.
  • Evaluate the scalability of each option. Consider the potential growth of your company and the scalability of both solutions. APIs are typically more scalable than EDI systems, which may require significant upgrades as your organization expands.
  • Assess the level of technical support available. You’ll need technical expertise to implement and maintain both EDI and API solutions. Remember that with API, as a relatively new technology, programming may require learning.
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FAQ about EDI and API integrations in logistics

🔴 What is EDI vs API in logistics?

EDI and API are essential technologies used in logistics to exchange information between different systems. While EDI is a standard format for transferring documents, APIs are used to access real-time information from web-based applications.

Which is better: EDI or API?

The choice between EDI and API is determined by the specific needs of your business. If you require the exchange of structured documents between different systems, EDI may be a better option. API will be perfect if you need real-time communication and data exchange. In some cases, businesses may use a combination of both EDI and API to achieve their logistics goals.

🔴 How do EDI & APIs work together?

The synergy of EDI and API can provide a powerful solution for managing logistics processes. For example, EDI can be employed to exchange purchase orders and shipping notices between different systems, while APIs can help retrieve real-time tracking information and shipping rates. Thus, businesses can automate processes and improve the accuracy of their logistics data. Additionally, some EDI systems offer APIs to enable real-time integration with other tools. This allows for integrations of EDI with other applications, such as transportation management systems, warehouse management systems, or enterprise resource planning systems.

Final thoughts

Businesses should take into account multiple factors when considering EDI vs API integration. While numerous logistics processes still rely on EDI systems, API offers more benefits and opportunities as a more advanced technology.

Implementing technical novelty may seem challenging at the beginning; however, the envisaged dividends can be impressive. For instance, if a company works with real-time data and has a sophisticated transportation management system, then API technology can grant sufficient flexibility to match customer challenges and fuel business growth.

We at Coreteka recognize the massive potential of API technology. Therefore, we emphasize API integrations as a part of the ideal digital transformation strategy. A deep knowledge of the logistics industry from within helps us implement these solutions competently and comprehensively consult our clients on all related matters. 

Are you ready for establishing accurate data exchange processes in your logistics business? Contact us to learn how we could help.