For decades, EDI (Electronic Data Interchange) has been the standard approach for exchanging documents electronically between companies. B2B integration by way of EDI continues to dominate supply chain processes in sectors across production, automotive , logistics, and commerce. A growing number of companies now expect their business partners to use EDI. At the same time, APIs (Application Programming Interfaces) are also emerging as an increasingly attractive alternative to EDI. As APIs gain traction as an alternative option for structured communication between partners, the decision-makers at many businesses are interested in finding out what are the key differences between EDI and API integration.
How does EDI differ from API?
To enable the electronic interchange of data between partners, businesses can take either the EDI or API approach. Each of the methods, however, has its own strengths and weaknesses that need to be considered.
The first APIs were developed back in the early 2000s. In contrast to EDI, APIs are focused on the real-time exchange of data (synchronous data transfer). Web service APIs, in particular, offer very uncomplicated integration into back-end systems. However, aspects such as compliance and security are not covered quite as thoroughly as in EDI. Hence, API integration may not be an appropriate solution when it comes to comprehensively fulfilling compliance guidelines for sensitive data, for example in the finance and healthcare sectors. It was also not conceived for the transmission of huge amounts of data. Additionally, and unlike in EDI, no widely accepted standards have been established with APIs. Furthermore, a new data layer needs to be created for the API implementation each time. This may lead to substantial additional efforts in onboarding new partners. The most common use cases for API integration are single requests for data in real-time or to provide a connection with API-enabled cloud applications.
EDI, on the other hand, was developed as an option for speeding up business processes by enabling the transfer of mass data from one system to another using internationally established messaging standards (EDIFACT, ANSI X12). EDI achieves a substantial reduction in the manual efforts required for processing bulk data thanks to the standardized, automated transmission of digital records such as orders and confirmations, shipping notifications, and invoices between partners. EDI data is saved at regular intervals and then transmitted (asynchronously invoked for batch data interchange). As a result, this approach can only be used to a limited extent for real-time access to data or situations requiring the ability to react synchronously.
The high value of EDI becomes especially apparent due to the highly standardized, sector-specific and regional standards, as well as its status as a recognized solution for ensuring that compliance guidelines are met. An additional strength of EDI is the uncomplicated onboarding of new business partners. New partners who are already connected to the service provider’s network can be integrated quickly and effortlessly. Overall, the typical use case for EDI is the reliable conversion and transfer of batch data within the scope of the system-to-system integration of external partners. In this way, EDI integration enables processes to be optimized, significantly reducing costs for transactions with long-term business partners.
Choosing between EDI and API
When weighing EDI against API, it’s essential to consider the strengths and weaknesses of each approach. For instance, the API implementation can be less costly than EDI since no running costs or efforts are required for maintenance or data translation. The value of this advantage gets diminished when compared to the major complexity of adding new business partners and the high level of cooperation required in order to set communication standards.
Considering EDI vs. API may not, in fact, lead to an either-or result. Companies are increasingly choosing to use a combination of both EDI and API integration. Looking to the future, it’s highly probable that EDI will continue to cover the majority of B2B traffic. Ongoing development and updates around the globe also ensure that companies using EDI integration always remain up to date with state-of-the-art technology.
Full EDI connection for minimum complexity
A full EDI connection remains the most economical option for securing a reliable flow of information with important business partners. With its cloud-based Managed EDI Service, Retarus takes on the task of managing the secure transmission of business data. Retarus ensures that all EDI formats on the market are converted perfectly. Optimizing their processes in this way reduces inhouse complexity for the customer, who would otherwise be saddled with the additional costs associated with running an on-premise solution including extra administration, operations, and training efforts. Retarus has many years of experience in the planning and execution of EDI projects, as well as running Managed EDI services. The comprehensive service package includes a seamless transition to the cloud, not to mention the wide-ranging, personal customer care from A to Z.
Perfect partner management and value-added options
As part of its comprehensive partner management service, Retarus also handles the connection of new partners to the system. New partner onboarding includes the creation of a high-quality EDI format document, the provision of a testing environment with testing options, as well as the final integration and approval of the EDI connection.
This allows the partner to already start preparing for the connection independently in advance, without generating any additional costs. Beyond the partner onboarding procedure, the Managed EDI Service offers practical value-added services such as the validation of inbound documents (e.g. invoice verification) or legally compliant long-term archiving. Would you like to optimize your supply chain with high scalability, impressive speed, and superior service? If you are interested in finding out more about your EDI options, please feel free to get in touch with your local Retarus representative. We’re looking forward to hearing from you!