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API vs. EDI

The API versus EDI Debate

EDI has been used for decades as the standard document exchange system. API is becoming a popular alternative, gaining use for trading partner communications within the supply chain. Which solution should you choose?

What are EDI and API?

Emerging during the 1970’s, EDI or Electronic Data Interchange has been the long-time industry standard due to its security and reliability. EDI establishes a set of messaging standards, transferring data from system to system without using paper, reducing the need for manual labor. EDI is used to exchange business documents in electronic format—purchase orders, invoices, ASNs, BOL and more—between companies that do business with each other, called trading partners.

API, or Application Program Interfaces, is the newcomer to information exchange. Developed in the early 2000’s, API is often used in Cloud SaaS (Software as a Service) applications to quickly move data between one system and another. API enables devices to speak to each other in real time. API’s allow companies to leave parts of their software available or “open” so other software can easily integrate to them. One term you may have encountered is “RESTful API”. REST stands for Representational State Transfer. It relies on a stateless, client-server, cacheable communications protocol, usually HTTP.

Data transmission API vs EDI

API Versus EDI Integration

So what’s the difference between API and EDI integration? Both transmit data from one party to another, but each has its own strengths and weaknesses. API implementation may be less costly and simpler than EDI by not requiring on-going maintenance or translation services. However, API may require more collaboration to reach communication standards, especially when a new trading partner is added. Meanwhile, EDI operates from an agreed upon standard for communication. For example: if a company sends an 850 PO document to a supplier, the recipient already knows to begin the order fulfillment process. EDI Data is stored then transmitted, which may result in some limitations to real-time visibility and responsiveness.

API or EDI, Which Should You Choose?

When considering API versus EDI, it may not be an either/or situation, depending on your company’s individual needs. Businesses should consider the requirements of their trading partner(s). Gartner estimates that 25% of B2B interactions will be performed through APIs by 2020 while the majority will still be handled by “legacy approaches”. Increasingly, trading partners may use a mix of APIs and these legacy systems, including EDI. Another issue to consider is compliance and security. Some information, such as financial data, may be subject to audits. API integration may not be a suitable solution to adhere to compliance regulations.

Whether your company needs to implement EDI requirements to meet Honda certification, or pursue API integration with Amazon, Radley can provide the solution you need to automate business transactions. Contact a product specialist today to get started.

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