Author: Kiran Vasu
The backbone of an efficient supply chain management solution is a quick and secure exchange of data from one entity to the other.
For a long time, Electronic Data Interchange has been the de facto standard as a document exchange system.
API is rapidly gaining popularity and acceptance within trading partner communities in the supply chain space.
EDI
EDI, or Electronic Data Interchange, is the most popular communication technology that’s used to effectively transfer data from system to system. It offers a paperless option to businesses for securely transfer data within their business community electronically. There are various standardized electronic formats that make it easy for computer systems to process the information eliminating the need of manual intervention.
There are numerous ways to exchange data. Some of the options being Value Added Networks, point to point communications like AS2, SFTP … etc. Although most of these mechanisms are internet-based but because EDI solutions are set up to provide access only to authorized users and employ audit trails and archives to accurately track use, there’s no need to worry about security and accountability. EDI is one of the safest ways to transfer data, which is a big reason for its popularity.
With EDI, companies are able to send large amounts of data at the same time, including the ability to transfer huge quantities of documents with a single transfer. This is not only convenient and efficient, but also contributes to minimizing any potential inaccuracies. This increase in efficiency can make a big difference in the efficiency of a supply chain management system. A survey by Supply Chain Insights revealed that the implementation of various EDI documents improved supply chain performance for more than half of the respondents.
The fact that EDI minimizes human intervention means that computer systems must be able to understand the data that’s exchanged. That means that a clearly defined standard format must be maintained by all parties, which is exactly what EDI documents help accomplish. For example, if a company sends an 850 PO document to a supplier, the recipient already knows how to begin the order fulfillment process.
Another way that EDI makes sending documents more efficient is the way in which it helps reduce the integration costs of document integration by creating standards for layouts of common business documents such as ANSI, EDIFACT and ebXML.
But while the standards system has a lot of benefits, there are drawbacks to it as well. Each of the standards has different versions, which means that the number of standards that are available is quite high. That can make it difficult for smaller businesses that are trading with larger companies that use updated versions of the same standards.
API
Application Programming Interface, or API, is a set of programming instructions and standards for accessing web-based software applications that allow software platforms to communicate with each other. Basically, API serves as an interface between software programs and helps them interact effectively, similarly to how a user interface helps humans interact with computers. This allows software systems to communicate with each other without any intervention from users.
A good example of this is online purchasing. When you enter your credit card information to buy an item online, the web store uses an API to send that information to a remote application, which then verifies it to ensure that it’s correct.
After confirming that your credit card info is valid, the application sends back a confirmation that the order can be processed. This real-time connection is what makes API so effective when compared with EDI. APIs are able to transfer data in less than a second, which means that all of the data can be updated instantly, without the need for an intermediary. It’s easy to see the benefits that this can bring to supply chain management.
When using API to transfer supply chain data, companies can automatically add pickup requests into a carrier’s system, which can greatly improve efficiency by removing the time it would take to make each request manually. Today’s technology provides retailers and 3PLs with real-time access to Big Data that can help quickly respond to issues and make accurate projections about numerous parts of the supply chain.
EDI vs API
Both EDI and APIs are excellent tools for secure business information exchange. These tools are essential for businesses, as data is more valuable than ever. EDI and API need not necessarily be mutually exclusive and can essentially complement each other. EDI systems could be modernized by marrying them with
APIs
APIs can be added as a new communication channel, an extension to EDI solutions. This way not only can the system process electronic documents, but can also communicate with partners willing to leverage APIs. Bridging the two world requires hybrid integration capabilities, the ability to connect on-premise and cloud-based tools to enable improved data sharing. A solution that can connect EDI and API need to be ready to tackle the challenge of the variety of data formats. An integration solution needs to be able to transform the data format so that the system that receives the data gets it in a format that it can understand. EDI and API need to be able to work together in symbiosis, provided the right way to connect them are employed.
Continue to read my upcoming blogs for more information.
