What Are The Differences Between EDI And API?

What Are The Differences Between EDI And API?

EDI and API are the two most used integration technologies in the B2B industry. Although both technologies allow an efficient information exchange between businesses, both have different functionalities. 

For decades, EDI has been the universal approach for the digital exchange of information between companies. This B2B integration method is still common, particularly in supply chain industries, including manufacturers, logistics, and eCommerce. On the other hand, API is emerging as an attractive alternative to EDI.

EDI was developed to speed up business processes by enabling mass data transfer from system to system. It uses internationally established messaging standards such as ANSI X 12, TRADACOMS, ebXML, and UN EDIFACT. The standardized, automated transmission of digital records, such as shipping notifications and invoices, helps companies process big data with a substantial reduction in time and manual efforts required.

Before EDI, buyers would call suppliers to verbally place their orders. Suppliers would then manually enter the order in a system, generate an invoice, and send it to the buyer. This manual communication would take huge time and costs, often delaying the processes to accomplish. After EDI, buyers and suppliers can communicate everything, from placing the order to shipping notifications, via computer software securely and quickly. 

Given that EDI requires minimal human efforts, computer systems must be able to understand the data exchanged. So, all partners or systems engaged in the trade should have a clearly defined standard format, and this is exactly what EDI documents help accomplish. In this way, businesses achieve greater efficiency and accuracy while reducing the chances of human errors resulting from incorrect document handling or illegible handwriting.

It’s worth noting that EDI solutions provide access only to pre-authorized users. They also use audit trails and archives to track their usage accurately. In addition, EDI follows highly standardized, sector-specific, and regional standards. All of this makes EDI one of the safest ways to exchange data, making it popular for companies like banks and hospitals that handle sensitive information. Another strength of EDI is the easy onboarding of new business partners. Those who are already using the service provider’s network can be integrated quickly without any hassle.

EDI data is saved at regular intervals before transmitting further, thus facilitating asynchronous data transfer. In contrast, API enables real-time synchronous data transfer between web-based software applications through a protocol known as the HTTPS protocol. 

Basically, API enables software programs to communicate effectively in the same way a user interface helps humans interact with computers. API serves as an interface between software programs, enabling them to communicate with each other without human intervention. The client system sends a request, and the server system then sends back a response to the request, creating a way for the two systems to exchange information.

For example, when you buy something online and enter your credit card details, the information is transferred from the web store via an API to a remote app to confirm that the details are valid. Once it’s confirmed, the app sends a confirmation to the web store, and your order is processed further. This is how modern applications work.

The most common applications of APIs are online travel booking, instant chat, streaming services, digital payment transfer, and more apps, which require data in real time. For example, Facebook can determine your current location by accessing the API provided by your mobile OS. Similarly, you can access the list of orders received at Walmart as the retailer uses an API for companies that want to trade with them. In the supply chain industry, the technology provides retailers and third-party logistics with real-time access to big data. So, they can resolve issues quickly and make accurate projections.  

When choosing between EDI and API, it’s important to consider the pros and cons of each. Accordingly, you can choose the solution that aligns with the objectives of your organization and optimizes overall efficiency. For example, API implementation can be less costly than EDI, but when it comes to security and onboarding new business partners, EDI is highly preferable to work with. As we foresee the future, it looks like EDI will continue to dominate B2B traffic. Ongoing development and improvements in the technology ensure that companies using EDI integration will always remain up to date.

EDI remains a major tool for B2B communications, and APIs are becoming common in today’s digital economy. So, many organizations are increasingly switching to the hybrid approach - a combination of EDI and API. For example, big companies like Walmart and Amazon have been using EDI channels for decades, and they are using API channels in parallel. 

Amosoft provides capabilities with both API and EPI integration as per your unique business needs. Our goal is to simplify and streamline your supply chain and logistic processes, helping you deliver value to your partners and clients.

Contact Amosoft to learn about our B2B integration solutions.