What is an API Integration? And how does it affect EDI?

Global supply chain problems are ever-increasing, with the disruption of recent years going beyond anything we’ve seen previously. That’s why industry leaders are increasingly turning their attention to new solutions and technologies to overcome these challenges, many of which emerge from the fact that:

  • Supply chain disruptions that last a month or longer happen every 3.7 years on average, with losses equaling up to 42% of one year’s revenue before interest and tax over a decade.
  • Amid the COVID-19 pandemic, some 85% of supply chain executives encountered problems with their current digital technologies, prompting a search for new solutions. 
  • Digital transformation has long been at the forefront of investment and innovation in supply chain management. However, 50% of supply chain executives believe their businesses lack sufficient digital culture and training. 

The race for digitisation is well underway. Despite this, selecting the right solution continues to pose a challenge to businesses across various industries. 

One significant development is Application Programming Interface (API) usage in a space dominated by Electronic Data Interchange (EDI). EDI and APIs can perform similar functions, with integrations that enable supply chain communication.

So what are APIs, and how can they accelerate digital transformation in supply chains? That’s the question we’re going to answer in this blog.

Suggested reading: If you want to learn more about gaining a competitive advantage with optimised and efficient supply chains, check out our free eBook — The Supply Chain Centred Business

What is an API integration?

APIs are software intermediaries that enable two independent web tools or applications to communicate. APIs contain definitions and protocols for integrating application software between systems, essentially acting as a form of interface. 

APIs enable bi-directional data flow — a user response is sent to a system, which sends the response back to the user and system. Numerous software platforms offer APIs as part of their value proposition, and B2B businesses are starting to do the same. 

APIs live within digital systems and are ubiquitous. Even if you’re not familiar with them, many APIs already play a significant role in everyday life. This includes:

  • APIs embedded within Google Maps
  • Shopping cart APIs that facilitate to access data sets from online stores
  • Booking platforms like Tripadvisor ingesting data from airlines and hotels with APIs

Like EDI, APIs enable rapid data transfer and custom integrations between systems across supply chains including: 

  • Enterprise resource planning (ERP)
  • Warehouse management systems (WMS) 
  • Manufacturing execution systems (MES)

Often the only way to facilitate integrations with these systems for effective communication and data transfer with minimal human involvement is via API. The seamless sharing of data is one of the hallmarks of digitisation, and APIs are becoming fundamental in this process, with some 83% of respondents in a recent survey of IT professionals stating that APIs are an essential part of digital transformation. 

So, given the functionality and widespread use of API, what exactly is its relationship with traditional solutions like EDI? Let’s take a closer look. 

APIs and EDI

APIs offer a promising avenue for innovation in supply chain management. Crucially, a recent study found that APIs can enhance traditional solutions like EDI and managed file transfer, which remain fundamental in B2B logistics and supply chain data transfer. 

For example, EDI data can be translated directly from a trading partner to an ERP’s interface using APIs, allowing businesses to multiply the power of their EDI data. This facilitates the creation of a single source of truth for logistics and supply chains within ERP platforms.

API transfers are even more beneficial given that traditional file-based integrations are often slow, inefficient and struggle to validate documents in real-time. APIs offer real-time data sharing for structured data instead. 

Here’s a quick comparison of API and EDI in a supply-chain context: 

  • APIs offer synchronous calls for near-real-time data sharing and transfer, while EDI is asynchronous and batch-processed.
  • While EDI offers its own standards and formats, API messages are usually XML or JSON.
  • EDI is batch-driven, whereas API handles modular requests. 
  • APIs are ad-hoc, supporting quick integrations, whereas EDI supports longer-term interactions. 
  • EDI is heavily designed around industry standards, whereas API is much more open-ended. 

Despite evident advantages, APIs still lack the standardisation that forms one of the key benefits EDI offers to businesses. As things stand, APIs are more of a force multiplier than an actual replacement for EDI in any meaningful sense.

Moreover, Gartner forecasts that APIs are likely to become the most significant attack vector for businesses, posing potential security issues which could have major consequences. Contrastingly, EDI has the potential to be more secure than APIs when appropriately implemented, and the risks are well-established.

The benefits of API integration

APIs offer logistics and supply chain businesses the potential to go deeper and access more benefits than traditional solutions. However, businesses can still maintain the chief advantages of an effective EDI solution.

That’s because the two have the capacity to work together in harmony — EDI handles the grunt work of data exchange while APIs mobilise that data. API is quick and adaptive, whereas EDI has the clout required for extensive data transfer. 

There are several benefits that businesses can access with API integration tools within the context of EDI, but there are three that stand out above the rest.

#1: Automation

APIs are often simple to automate and thereby ensure seamless, real-time data transfers between linked applications. Like EDI, API facilitates computer-to-computer communication, eradicating the need for error-ridden and time consuming human input.

Once implemented, API automation is relatively easy to orchestrate. Additionally, most IT professionals possess the requisite knowledge to automate API pickup requests and calls. As a foundational interfacing technology, API is very well-supported by cross-industry third-party tools.

If a business already uses an ERP, it is almost certainly integratable using APIs. Moreover, API integration has the ability to automate the flow of EDI data and documents to other platforms, including ERPs.

#2: Scalability

APIs provide a steady stream of near-real-time data. By integrating a client or supplier’s data via API, businesses can receive a continuous flow of data from a source. This is excellent for soliciting speed when it matters most, for example, when dealing with just in time (JIT) logistics processes. 

APIs are also inherently scalable, as they allow multiple systems to communicate with a businesses underlying services and processes. While EDI supports larger, batch-driven data transfer, APIs support a series of shorter, modular requests, so using the two together offers the best of both.

#3: Reduced errors

Like EDI, once integrated, APIs eliminate human interaction and reduce errors. Any errors stop the API call from taking place, reducing the chance of data corruption and error-related downtime. Instead of error-ridden data being ingested into the system, the API call is simply rejected or fails. 

APIs ingest data based on pre-established schema — when the data retrieved from one system to the other is raw data, it has been untouched by the humans, reducing related errors. Once API integrations and endpoints are created and tested, they should run smoothly for the duration.

Get the support you need for your API integration

API and EDI are fundamentally similar in that both serve as integrative solutions for computer-to-computer communication, but it’s worth bearing in mind how they differ: 

  • EDI: Electronic data interchange is an asynchronous methodology built on long-established specifications and industry-specific protocols that allow businesses to exchange
  • API: API integration platforms can interface data in near-enough real-time, connecting systems without EDI. Real-time transfers and integrations with tools outside the strict remit of EDI are well-supported by APIs

Businesses often face challenges when it comes to setting up EDI relationships and integrating business critical documents into modern systems like ERP and WMS. They may also have EDI relationships with some trading partners, but need support to setup new Trading partners via API

At Data Interchange, we understand how API and EDI can work together, which is why our cloud platform DiNet provides access to support for common EDI protocols and connectivity options that help achieve API integration. DiNet comes with a range of integration options alongside dashboards for viewing alerts, reports, and insights. The platform also connects you and your client’s to our state-of-the-art cloud EDI, offering the industry-specific connectivity of EDI with API adaptability.

There’s no reason why these EDI and API can’t work together and drive improved business processes, and our API management and integrations work to multiply the usefulness of EDI. If you’d like to learn more about how we can help you overcome B2B integration challenges and optimise the exchange of crucial business documentation across supply chains, get in touch with our team today.

1McKinsey – Risk, resilience, and rebalancing in global value chains

2McKinsey – Resetting supply chains for the next normal

3PwC – Future of the Logistics Industry

4Cloud Elements 2020 Study: 83% find API Integration ‘Critical’ to Business Strategy

5Gartner – Use APIs to Modernize EDI for B2B Ecosystem Integration

6Gartner – API Security: Protect your APIs from Attacks and Data Breaches

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