API versus EDI Explained

A few years ago, I read an article that said that by the year 2020, APIs would replace approximately twenty-five percent of EDI connections. The rest of the communications between businesses would continue to be handled through legacy technologies and applications. This forecast was hard to imagine as being an effective supply chain management solution. To understand this solution, you should know the differences between API and EDI.  Knowing these differences will allow you to make an educated choice when you choose your software solution.

 

How EDI Works

EDI is the most used widely used technology to transfer data from one system to another system. This interchange provides your business with a secure and easy means to send data to other companies electronically rather than by paper. This system uses standardized electronic formats to make it easy for your computer system to process the data. This system will significantly reduce or even eliminate your need to use manual labor.

EDI is one of the safest means to transfer your data, which is why it is one of the most popular methods. These solutions are set up to give access only to specified, authorized users. With this transfer system, businesses can send large amounts of data at the same time, along with transferring large quantities of documents during a single transfer.

For an explanation of the mechanisms behind sending this data, see our other blog post about EDI Communication Protocols.

 

How API Works

API (application programming interface) consists of a set of programming specifications and instructions to access web-based software applications. These applications allow your software platform to communicate with others. API is an interface between software programs and assists them in interacting effectively. The system also enables software systems to communicate with one another without fear of intervention from users.

A standard web-based API utilizes HTTP or HTTPS to communicate so no special communication software needs to be installed to facilitate data transfer.

A good example of the API system is the use of credit cards to make purchases. The credit card information given when you buy an item at a store is sent to a remote application to verify your card information is correct. When the confirmation is made that your card is valid, the application will send a communication back to the store clerk that there was confirmation, and the order can be processed.

The real-time connection through APIs is what makes it more effective than the EDI system. APIs can transfer data in under a second, so all the data is updated instantly, and there is no need for a middle person. If your company uses the API to transfer supply chain data, businesses can automatically add pickup requests into their carrier's system. This process will improve your efficiency as it removes the time otherwise needed to make the requests manually.

 

Conclusion

API and EDI are essentially the same thing. API is newer and isn’t governed by the same ridged standards as EDI but EDI comes with a proven track record and built in error catching.
It can cause intense frustration if you try to build an EDI/API system from the ground up, and do not have the business domain knowledge or expertise. Knowing whether to use API or EDI can be challenging to determine. Crackerjack-IT is your solution to making this decision. We specialize in coding, customizing, and designing software solutions and we’re confident we can help you too!

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