In the B2B e-commerce business, you will find yourself surrounded by an overwhelming amount of software options to run your business. Many of these options then have the added complication of being strikingly similar to each other. That is the case with EDI and API.
You are probably here because you are confused about the whole EDI vs API debate, and which of the two to choose for your company. After all, they are both praised as being “the best option” for company data transfer. So, we are going to differentiate them and then give you a simple guide to help you make an informed decision.
Let’s dive right in:
What is EDI?
EDI, or electronic data interchange, is the most widely used B2B data transfer technology. Businesses can use it to send data to other businesses easily and securely, eliminating the need for cumbersome paperwork. It employs standardized electronic formats that make it simple for computer systems to process the information, reducing or even eliminating the need for manual labor.
With EDI, businesses can send massive amounts of data to trading partners, enhancing supply chain management. For ease and efficiency, it also offers the possibility to transfer large amounts of documents in a single transfer. This strategy also reduces the likelihood of errors. The supply chain management system may significantly change as a result of increased efficiency. Data shows that for more than half of the survey respondents, using different EDI documents increases supply chain performance.
The computer systems need to interpret the information transaction on their own since EDI minimizes, and in most cases eliminates, the need for human intervention. EDI achieves this by using predetermined standard formats that both parties in the data transfer process must use. Accuracy and efficiency are therefore increased because human error is taken out of the equation.
EDI deployment significantly increases the accuracy and reliability of company data and eliminates the need for the manual reworking of purchase orders, which can be tiresome. Because each order can be processed automatically via EDI, the entire process is more accurate and moves faster.
EDI Pros
- EDI is extensively used in the B2B industry. It has been around for several decades and is deeply embedded in e-commerce standard practice
- It is the most secure means of data transfer
- It is easy to find EDI-compliant trading partners
- For trading partners who cannot access EDI, there are collaborative supplier portals that allow sharing of EDI features between buyers and suppliers.
- EDI can be outsourced, or easily ERP-integrated
EDI Cons
- EDI can be extremely expensive for mid to small-sized companies to maintain.
- The presence of several standards increases the chances of incompatibility with software and trusted suppliers.
- EDI implementation is complex.
What is API?
Application Programming Interface (API) is a type of software interface that enables two applications to communicate with one another without user intervention being involved. By categorization, API is a group of computer programs and operations.
API, in its simplest form, refers to computer code that may be accessed or executed. It is therefore a code that enables data interchange and communication between two distinct software programs regardless of how different the code that runs them is.
It also allows products or services to interact with each other without needing to understand how the interactions are carried out. In many ways, API is an intermediary between applications that are fundamentally different, but which have to work together.
APIs have a variety of uses. Their most attractive feature is that they can simplify and speed up software development. Developers can enhance existing systems with features from other suppliers.
For example, accommodation booking, image recognition, recommender engine, and even payment processing can all be used in applications that did not previously have these features. Developers can also use API to create brand-new apps by using services from third-party applications or providers. In each of these cases, experts do not need to work from scratch with the source code to understand how other solutions function.
To work with any other program, developers only need to link it to their own. In other words, APIs operate as an abstraction layer between two systems, concealing the latter's complexity and unnecessary details.
API Pros
- Allows efficient communication between different apps, which helps B2B buyers, clients, and suppliers process purchase orders quickly and securely
- API management is less expensive than EDI
- Fast-tracks software development
- You can personalize APIs to suit the unique needs of your business
API Cons
- Not as widespread in the B2B industry
- High maintenance cost
- Advanced skills are needed to create and operate them
Which Should I Choose?
Now for the question we have all been waiting for: which is best?
While it is true that some businesses are switching to independent API integration, EDI is firmly established in the freight and logistics sector and it is not expected to be pushed out any time soon.
Contrary to popular belief, EDI is not too outdated to be effective. From its inception, it has evolved to meet changing e-commerce rules and industry-specific requirements. Your communication with partner businesses can greatly benefit from EDI integration when it is properly optimized.
However, there are benefits to using logistics API connectivity as well, and the epidemic has undoubtedly increased the demand for real-time communication alternatives in the sector.
Ultimately, the choice between EDI and API comes down to what is ideal for your specific business. You will also make this decision based on the technologies you and your partners use.
However, they do not have to pit against each other: EDI may speed up downstream business processes and data orchestration, while API connectivity can supplement EDI by adding additional context to the B2B interactions of your digital ecosystem. You might be able to increase your ability to communicate data by combining the two models.
A Final Note…
Whatever model, or a mix of models, you choose to employ, internal teams may find it difficult and time-consuming to set up, manage, and update these systems. API management, for example, needs highly skilled staff. EDI management is expensive.
To make sure that your systems remain optimal and safe and that your communication channels and data exchange remain dependable and transparent, think about outsourcing the majority of the job to an IT partner who can manage both data transaction models.
Key Takeaways
- EDI is a means of data transfer between companies in the form of standardized formats. It is a widely established method used extensively by the B2B e-commerce industry
- API is like an interface that connects two different applications, allowing them to share functionalities. Some people refer to it as a contract that helps different software communicate and work together.
- You do not have to stick to binaries, weighing EDI vs API. One of the best options is to find a way to combine both of them and exploit all of their advantages. API and EDI can both serve your business.
Summary
Choosing the right software will make or break your company. There are countless options out there and you need to make the best decision possible. Deciding between API and EDI will be one of the most important choices you will ever make, and you now have all the tools you need to make a wise choice.
