What’s the role of EDI and APIs in Logistics?
A popular debate happening around the logistics industry is about what’s better, EDI or API? There is no shortage of opinions on the topic being written in articles and discussed by panels at trade shows.
The truth is, both technologies have a role in the present and future of how logistics information gets shared. And, like most polarizing debate topics, any definitive answer about which is best probably lies somewhere in the middle.
Figuring out what the role of either technology should be, and which is best will depend on the specific company using it. And, deciding this starts with understanding how each works.
Both are a way to exchange data – which can be everything from shipment track and track information, to order details, to freight invoices.
To illustrate the need – and value – of either type of data exchange solution, here’s a typical example representing just a few of the ways a retailer can leverage these technologies. To start, any retailer can receive order information from customers and send it on to their fulfillment center, who will in turn pack and ship the order to its destination. Once shipped, the package tracking number can be shared back with the retailer, as can other important data like inventory levels and receiving notifications.
Then, the retailer may leverage similar connections with the carrier to get regular tracking updates on the status of the delivery – and ultimately a final delivery confirmation.
When you consider the amount of information that needs to be shared for just one shipment, the value of doing so digitally becomes very obvious, from both a speed and accuracy perspective.
The debate between API and EDI is not about if there is value in communicating electronically, it’s more about if one is better, cheaper, or faster than the other. This is where things are not so black and white, and why both will continue to have their place in the industry.
EDI is an “old” technology in the sense it’s been used by the industry for decades, while API as a method is relatively young. EDI is the standard most companies use now and it’s a solution that works very reliably. Yet despite being around for a long time, it’s has not been fully adopted by everyone in the industry – many companies make do with neither. There is a lot of room to grow for EDI with, or without, APIs as an alternative option.
Although rarely how the debate is positioned, in many ways it’s the lack of full EDI adoption that is API’s opportunity to become the ‘future’ as it aspires to be. In other words, the opportunity for API is not because there are so many inherent limitations with EDI or because API does so many things better – it’s that there are so many companies not using either. The problem may end up being however that the laggards in EDI adoption are not typically on the forefront of change, nor the type of companies looking to try a less-tested method like API.
The EDI v. API debate is an important one. But technology aside, the more important point is that logistics companies – providers and shippers alike – need to be pushing forward with implementing better methods of sharing and using data. Both platforms have a role in the future of logistics technology and can provide value to their adopters that helps them right now and positions them for growth in the future.