EDI vs. API- What's Right For Your Business?

EDI Vs. API July 25, 2020

Chloe Henderson

Learning the differences between EDI vs. API models helps business owners determine which solution will better enhance their daily operations and data transfers.

The data exchange and supply chain management provided by EDI and API integration differ significantly due to their standardization, formatting, and security measures. These differences have a considerable impact on how internal and external business communication is conducted.

What is an EDI?

Electronic data interchange (EDI) is a communication technology that allows systems to exchange information in an electronic format, eliminating physical paperwork. By standardizing data, businesses can increase workflow while reducing manual labor.

Using EDI allows companies to take advantage of their electronic data format to streamline external supply chain operations. This web service enhances communication between suppliers, transporters, and distribution centers, among other third parties, by the privacy policy and information transmittance.

Depending on what systems a company wants to connect, there are several model options, such as peer-to-peer, serial links, and network providers. While there are numerous types of EDI integration, this generally web-based solution only allows certain users to access data. By authorizing only pre-verified users and archiving audit trails, many companies do not worry about additional protection. These measures adequately secure data during transfers and keep track of who pulled each file, promoting accountability.

The robust architecture in EDI software also allows organizations to transfer large business documents in one call. This function increases the efficiency and convenience of data sharing between companies and minimizes potential discrepancies. Whereas, without an EDI solution, the information would be manually written and sent to third-party clients, increasing the chances of human error and reducing service speed.

By utilizing an electronic format, the EDI system automates data transmittance, requiring less human intervention. This standardization reduces the time it takes to share information while improving data accuracy and operational efficiency. This exchange also reduces company data integration costs by accepting common documentation such as ANSI, EDIFACT, and ebXML. This eliminates the need to implement additional components to translate various formats.

Overall, an EDI system has many benefits, including-

Enhanced data speed and accuracy
Reduced paper waste
Improved internal and external communication
Enhanced operational efficiency
Better supply chain management

However, EDI platforms also have their drawbacks. By accepting three electronic data formats, smaller businesses may have issues collaborating information with larger organizations that utilize updated standard versions.

Another considerable setback is its lack of software development. Whereas other systems can present real-time data and quick responsiveness, this model can sometimes require a long time to adapt to another business's protocols.

What is an API?

An application programming interface (API) is an advanced cloud-based software regulated by standards to integrate other web-based applications. Through automated data translation and sharing, modern
API technology enables services to communicate without the need for human intervention. This solution is able to achieve this by having three vital characteristics-

Procedures - APIs are programmed to execute specific tasks and functions initiated by different user commands.

Protocols - Depending on the type of API, different protocols are used to regulate data formatting between systems.

Tools - Tools are the functions that make up the components necessary to develop software and programs.

This program interface has been gaining popularity, as APIs have high functionality and can be used in almost every internal and external operation. For example, when someone makes an online purchase, they enter their payment information and receive a confirmation alert. Within a matter of seconds, the website's API sends the credit card information to a remote service to verify the transaction and, upon approval, alerts the consumer that their purchase is complete.

APIs are also used when surfing the internet. When a user searches something online, the API takes this command, interprets it, and retrieves all relevant resources to populate pages. Depending on how the data was formatted on these servers, the solution may need to translate before delivering the information to the user.

This real-time connectivity is causing many businesses to reconsider their EDI solution. API technology can skim through multiple resources and servers in seconds to give the most up-to-date information to the user. This feature can be especially helpful within an organization's supply chain.

By automatically updating operations such as inventory levels, purchase orders, sales, marketing performance, and demand forecasting, management can make accurate data-based decisions. Rather than requiring an employee to navigate through various independent systems for this information, an API provides a universal platform with access to all data exchange. This saves the company on labor costs and allows employees to spend their time on other operations.

API integration offers businesses several advantages, including-

A broader scope of business performance
Personalized services
Ability to adapt to any technology
Easy component implementation
Automated data sharing
Updated information
Efficient internal and external communication

EDI vs. API

While EDIs are currently the most used integration solution among businesses, many users are switching to API solutions because of their wide availability and advanced technology. While EDIs have great reliability and security measures, APIs are practically unlimited when it comes to the types of systems it can interconnect with.

While both technologies offer supply chain management and streamlined communication, companies need to first understand their needs in order to choose.

Similar to EDIs, API services offer several models to enhance specific operations. However, they differ significantly in infrastructure. EDIs are limited due to older technology, which leaves them unable to provide real-time information and interpret various data formats outside of their standardization. On the other hand, API integration offers these features, along with immense flexibility. The API design also allows software developers to quickly implement new components so the solution can grow with business expansion.

Therefore, if a company is looking for a limited solution that efficiently handles large amounts of data between systems, EDI will suffice. However, businesses focusing on scalability, quick response time, functionality, and software flexibility should consider API integration.