Modern supply chain management solutions often rely on both EDI and APIs. EDI is often seen as the business standard for B2B transactions, however, the use of APIs has become more prevalent, especially for real-time data transfer. Businesses aren’t forced to choose between using modern APIs over traditional EDI, as there are uses for both in B2B integrations. As businesses digitally transform, they must adopt a balanced strategy for B2B integrations by embracing real-time transactions via APIs to augment their batch transactions via EDI. This will allow organizations to enable new mobile use cases, embrace the use of IoT devices in B2B transactions, and speed up internal DevOps processes.
With MuleSoft’s Anypoint Platform, businesses can consolidate all their integration needs across APIs and EDI, enable centralized visibility across all data streams, accurate monitoring of enterprise performance, and enhance security.
The case for EDI
Electronic Data Interchange (EDI), is the most popular communication technology used to transfer data from one enterprise to another. EDI has several key features that drive it’s popularity including:
- Bulk data transfer – Enterprises can send large datasets, including the ability to transfer huge quantities of documents with a single transfer.
- Standardization and reliability – EDI communications leverage well-defined standards leading to a significant increase in accuracy and efficiency.
- Security – EDI solutions provide access only to predefined authorized users, and use audit trails and archives to accurately track use, making. This makes EDI one of the safest ways to transfer data.
- Process automation – EDI is an accepted convention that already follows business processes. For example: if a company sends an X12 850 PO document to a supplier, the recipient already knows how to begin the order fulfillment process.
The power of EDI can be easily illustrated by a real-life example. In the healthcare industry, there is constant exchange of business information between healthcare providers and health insurance companies. On a daily basis, thousands of patients get treatment from providers. For efficiency and accuracy, providers prefer to collate claims at a regular interval, and send batches of claims across to the insurance companies.
While the standards system of EDI has many benefits, there are drawbacks as well:
- High implementation cost – Specific software is needed to create and parse EDI messages that adhere to all rules. Additional costs include programming EDI systems and ongoing maintenance. The investment in time and costs adds up quickly, making it expensive for smaller businesses to use EDI.
- Delayed time-to-market – EDI isn’t able to keep up with some of the technological software developments, such as real-time visibility and responsiveness.
The case for APIs
Application Programming Interface (API), is a set of programming instructions and standards for accessing web-based software applications that allow software platforms to communicate with each other. APIs have several key characteristics that are driving their adoption including:
- Real-time communication – APIs can transfer data in near real-time. With the ability to process supply chain data in real-time, businesses such as retailers and 3PLs can resolve issues faster and make more accurate projections about their supply chain.
- Cost-effective – Developing APIs is cheap and straightforward. API code is simplified and structured to clearly define how a program will interact with others.
- Connectivity – APIs easily connect to enterprise applications, databases, and other systems of record. Their lightweight nature makes it easy to connect from mobile devices.
In the retail and consumer goods industry, there has been a proliferation of IoT devices that track the real-time consumption of products from store shelves. These IoT devices can leverage the lightweight nature of APIs to process replenishment orders of products in real-time as stock starts running low on store shelves.
As APIs continue to evolve to meet B2B integration needs, they have opportunities to improve:
- Lack of standardization – Unlike EDI, there are no standard business document formats for API-based data exchange transactions. API transactions use JSON, XML, YAML, and other data-serialization formats that are generic and not specific for business context.
- Higher cost to maintain compliance – Compliance becomes a challenge with an API-only approach. APIs leveraged in a federated development environment increase the risk profile, and may inadvertently create vulnerabilities or exploits without a strong uniform data governance process and policy.
Where is the industry going?
While the industry is beginning to see the rise of APIs for B2B transactions, EDI will likely remain the standard because of the robust reliability and security that it provides. However, we are starting to see that EDI and APIs can be complementary to each other.
API integrations augment EDI and give deeper context to the B2B integrations within a digital ecosystem. For example, end-to-end visibility across the entire supply chain requires integrations into order management systems (OMS), warehouse management systems (WMS), and enterprise resource planning systems (ERPs). This requires digitizing the entire supply chain from quote to invoice — meaning APIs and EDI will both play a crucial role.
An enterprise may receive a purchase order via EDI from their trading partner. This subsequently initiates the ordering, shipping, and fulfillment processes within the enterprise. These processes can be augmented by leveraging APIs to look up inventory before processing the order, or to handle transport cancellation and exception notifications associated with the shipping process. A combination of these processes enables enterprises to accurately process the purchase order and subsequent dependent processes.
Leverage API-led connectivity to modernize B2B integrations
MuleSoft believes enterprise integration should be consolidated into a single solution, Anypoint Platform. The platform provides the ability to rapidly develop B2B integrations by leveraging the power of both EDI and APIs. This allows organizations to have centralized visibility across all transactions, end-to-end monitoring of enterprise performance, and enhanced security.
Now customers can extend the power of Anypoint Platform to their B2B use cases as well. We suggest taking an API-led connectivity approach to B2B, which creates a decoupled architecture that abstracts underlying complexities to focus on building partner relationships. So regardless of how your business partners want to do business, MuleSoft’s Anypoint Platform is designed to support both modern APIs and legacy EDI all on one platform.
For more information on how to leverage both APIs and EDI together, check out the Anypoint Partner Manager webinar.