What’s The Role of EDI and API in The Modern Supply Chain?
Today’s world is called ‘modern’ for a reason. Technology has entered almost every industry today, including eCommerce, healthcare, fitness, fashion, and whatnot. Among the many industries, the goods and raw material distribution is also going through a major transformation. It is through new tools and innovative methodology that supply chain management is reinvented.
With the increasing competition in the industry, one cannot afford any kind of problem in management. The modern supply chain needs to live up to the challenges in the industry caused by the increasing competition. This is also one of the main reasons behind the shift in the supply chain using innovative technology such as EDI and API.
If you have heard these terms for the first time, you are up for an exciting ride. In this in-depth blog, we will simplify everything for you. We will first walk you through the basics and then head towards the nitty-gritties, one section at a time. So, follow us and keep learning. As we said, we will start from the very bottom, which means we will explain the terms to you to begin with.
EDI and API- what are they?
Now, the key two terms that need our attention are- EDI and API. So, let’s know what they exactly are.
Electronic Data Interchange or EDI is the computer-to-computer exchange of business documents in a standard electronic format. It has been around since the 1970s. It works by first establishing a connection to a secure, peer-to-peer network. EDI standardizes a large number of physical documents and converts the data into an electronic format.
API stands for Application Programming Interface, which is software that allows two applications to talk to each other. API functions like EDI but in a different manner. While EDI connects two EDI systems, API is a web-based protocol that allows different electronic systems to communicate with each other. With API, the data flows in second between two systems.
How do supply chain companies use EDI?
As we mentioned above, supply chain companies are increasingly using EDI for better efficiency and productivity of their supply chain management. However, using EDI doesn’t just make the supply chain efficient; but it has several other benefits to offer.
There are a number of documents that EDI facilitates in the modern supply chain. Find them mentioned below.
- Order acknowledgements
- Order amendments
- Shipment notifications
- Commission sales reports
- Price/sales catalogs
- Routing instructions
- Specifications and technical information
In a broader scenario, EDI is responsible for three major roles in the supply chain. These roles are further classified as-
- Electronic integration
- Information diffusion and sharing
- Electronic marketplaces
Modern supply chain companies use EDI systems to provide imported services to the customers. It enables businesses to maintain visibility through the ecosystem and move away from cumbersome and clunky legacy systems.
EDI and API in supply chain management- How are these two different?
People often take EDI and API to be one and the same. However, as we mentioned above, there are significant differences between EDI and API. We will see how these two are different by analyzing their pros and cons below. So, stay glued as we uncover the differences between EDI vs. API in supply chain management.
Let’s begin with the pros of EDI first.
- Data Security
EDIs are known for their robust security and privacy features. It ensures the company that its data and trade secrets are safe and cannot be stolen. EDI opens highly secure connections between the involved parties to avoid any uncertainty in the supply chain.
- Ease of use
EDI easily streamlines data connection and transmission. With EDI, the lengthy manual work can be done in a few minutes which ultimately lessens the manual labor as well as cuts down costs.
Because of its widespread popularity, EDI has become an industry standard for providing great accessibility. Many supply chain companies are setting up EDI in their supply chain for this same reason.
Here are a few cons of EDI-
- Number of versions
EDI has three different versions, and these versions must match between the two parties. This sometimes becomes a problem because the outdated versions are not compatible with each other. Thus, both parties should stay on the same page in terms of versions.
- Outdated technology
EDI uses technology that becomes outdated quickly. In addition to that, it has a history of minimal updates and, therefore, isn’t quite compatible with technologies like blockchain. As a result, EDI may not be very relevant for companies looking to invest in newer systems.
- Cost factor
Yes, EDI is great for the supply chain and all, but it’s not cheap. This is because it takes time to synchronize systems and train the employees and thus, becomes costly often.
Now, let’s come to the pros and cons of API.
Here are the pros of API-
- Faster data accumulation
API is known as the powerhouse of accumulating data. As it is not dependent on the manual users uploading documents, API uses IoT to connect systems and updates information and data security as and when it becomes available. API is, in fact, very fast in accumulating accurate data as compared to EDI.
- It’s simple
API simplifies the data transmission quite significantly as it allows the users to gather data without any need for customization. Further, with API, there’s no need to match the versions between the two parties.
- Technology compatibility
API is highly compatible with new technologies. As new technologies roll out every now and then, API adopts them well and further accelerates the capability and visibility among the supply chain.
Let’s have a look at the pros of API next.
- New technology
API is relatively a newer technology and, therefore, less popular than EDI. Due to this, there are more EDI users, and API will take some time to make its way to more supply chain companies.
- Less secure
Due to being software-dependent on the web, it’s more prone to hacking, data breaches, and other threats. Due to being connected to many systems, API often falls behind when it comes to data security.
- Requires a stable internet connection
API requires a stable internet connection to function. If the connection isn’t stable, interruptions can affect every system connected via API.
What are the advantages of using EDI in the modern supply chain?
As modern supply chain companies are relying on EDI, let’s find out the many advantages of EDI for businesses next. Let’s get started!
Instant exchange of documents
With the help of EDI in the supply chain, the exchange of information takes place in real-time between trading partners. Moreover, real-time transactions eliminate redundant, time-consuming, and risk-prone tasks from the management.
Speeds up the business cycle
EDI prevents the modern supply chain from wasting any time and money by cutting down the processing time through automation. By doing so, it speeds up the business cycle to a great extent. Moreover, EDI order processing substitutes for the traditional order-to-shipment cycles.
EDI reduces waste
EDI is a great eco-friendly alternative to the traditional paper-based process that generates a lot of waste and harms the environment. This way, EDI takes care of the huge paperwork as well as saves trees. A win for sure, isn’t it?
EDI doesn’t just streamline the transactions but all types of communications between the trading partners. This will result in more sales and enhance the relationship between the partners and customers.
Peak inventory management
Not only real-time transactions, EDI also earned a reputation for helping companies maintain their inventory levels. It also helps them to meet immediate demand and optimize their stock as per the rising demand in real-time.
Prevents inventory-related issues
By getting real-time updates with EDI, businesses can use the latest information to set up timely alerts that promote resource allocation as well as prevent any kind of inventory shortages or excess inventory issues.
Supply chain companies feel a lot more secure when they have an EDI at the place. This is because EDI solutions are designed to ensure security and only allow strict access to authorized users. It is also equipped with archive tracking and audit trail capabilities.
EDI helps supply chain companies avoid errors that could be dangerous for the management. When employees manually enter the data into ERP, there’s a high probability of mistakes, but EDI takes care of this uncertainty. Thus, the supply chain becomes more accurate.
Which are the promising future trends in EDI for supply chain management?
We will now proceed to the key trends permeating EDI integration in supply chain management. So, read and understand these trends as we analyze them below.
The merge of EDI and API
EDI and API together are setting up new supply chain management trends. APIs are considered prime adversaries of EDI solutions. APIs offer communication flexibility and enable different teams and parties to exchange data with cloud-based apps.
When introduced with EDI, APIs can be quite beneficial for the supply chain management. AS APIs and EDIs are both taking hold of business settings; investing in both EDI and API-based processes is a very logical future trend in EDI for supply chain management.
When emerging technologies like IoT, blockchain, and AI will merge with EDI and API, it will solve new challenges in supply chain management. The “Big 3” emerging technologies will be applied creatively by Chief Supply Chain Officers (CSCOs) to generate meaningful business innovation.
Moreover, it would also result in reduced costs, and CSCOs can benefit from a considerably quicker ROI than standard EDI usage patterns.
eCommerce is redefining the global supply chain
The continuous growth of eCommerce has resulted in some magnificent changes in the global supply chain processes. Today’s leading platforms are widely using eCommerce to accommodate B2B transactions.
As B2B enterprises are venturing into eCommerce platforms, they are on the lookout for systems that can enhance integration with their online trading partners. Moreover, with EDI, maintaining a well-integrated supply chain and providing full online shopping benefits is very much possible.
Adopt EDI and API today and transform the future of your supply chain business.
If you are figuring out ways to transform your modern supply chain, handle the increasing competition like a winner, reduce management problems, increase data security and achieve high sales, the solution is adopting EDI and API technologies. From the points mentioned above, we understand that the future of EDI in 2022 and beyond is bright and will benefit supply chain management in promising ways.
If you want to lead your supply chain business towards productivity and efficiency, we can help you. We can help integrate EDI and API into your business and give you an edge over the competitors. In case you wish to discuss your needs with a skilled team, we are here at your service. We will be glad to meet and discuss your project in length.