EDI vs API: Which is Right for My Business

Choosing the best way to share supply chain data

Over the years, businesses have relied on two main technologies to exchange data between systems: Electronic Data Interchange (EDI) and Application Programming Interfaces (APIs). Each option allows you to transfer data quickly and securely, but they have different methods, capabilities and trade-offs to consider.

Making the best choice for your supply chain data depends on several factors. Continue reading to understand the strengths of each and how they can be used to support your business goals.

What is EDI?

Electronic Data Interchange (EDI) is a standardized method for transferring data between computer systems. EDI technology was developed in the 1960s to help accelerate the flow of shipping and transportation documents.

EDI structures data in a standardized format, allowing companies to communicate things like order information, invoices and shipment updates without manual intervention. For many years, EDI was the only option for exchanging data across logistics networks, and it's still widely used in the industry today.

Pros of EDI

Reliability

With its rigid standardization, EDI has a strong track record for stability, making it dependable for many logistics operations.

Data security

EDI transactions follow strict exchange protocols, keeping data highly secure and compliant with regulations like HIPAA and GDPR.

Legacy integration

Many large companies and ERP (Enterprise Resource Planning) systems are already built around EDI protocols, making it easier for them to continue using it without costly overhauls.

Cons of EDI

Lack of real-time updates

EDI typically works in batch processing mode, meaning that information is sent and received at specific intervals, leading to potential delays in getting data.

Limited flexibility

Because EDI relies on standardized data formats, adding new fields or updating data requirements can be challenging and may require significant adjustments.

Costly implementation

Establishing and maintaining EDI systems can be expensive because of licensing fees, specialized infrastructure and ongoing support requirements.

When to use EDI

High-volume, established partnerships

EDI is ideal for organizations with high transaction volumes and established relationships with trading partners that already use EDI. Its batch-processing capability is efficient for handling large amounts of data in a structured way.

Regulated industries

If your business operates in a highly regulated sector - like healthcare or finance - that requires you to follow specific data security and compliance standards, EDI's rigid protocols may be beneficial.

Legacy systems in place

If your logistics operations rely on older Enterprise Resource Planning (ERP) systems that already use EDI, or if your partners use EDI protocols, it can be beneficial to stay with that system.

What is API?

Application Programming Interface (API) is a modern approach to data integration that enables different applications to interact in real time. Unlike EDI, APIs allow for more flexible, rapid data exchange and can send and receive smaller packets of information continuously. In logistics, APIs allow for instant updates on inventory, shipments and orders - which enhances operational visibility and customer service.

Pros of API

Real-time data

APIs can provide instant updates that help improve decision-making and responsiveness within the supply chain.

Flexibility and scalability

APIs are more adaptable, which allows companies to easily add new data fields or make updates.

Lower costs for modern applications

APIs often require less infrastructure investment and can integrate easily with cloud-based systems, making them cost-effective for businesses with modern tech setups.

Cons of API

Reliability concerns

APIs rely on continuous internet connectivity and may be vulnerable to disruptions if the network goes down.

Complex setup for legacy systems

Integrating APIs with older, more traditional systems can be complicated and may require custom development.

Data security considerations

APIs can bring security risks, especially if they aren't set up properly. Ensuring secure access and managing permissions across systems is essential for success.

When to Use API

Need for real-time visibility

APIs are a game-changer for companies seeking real-time visibility into shipments, inventory and order statuses. They allow for near-instant data updates, allowing logistics managers to respond quickly to issues like delays, shortages or route changes.

Scaling operations with new partners

APIs make it easier to add new partners, customers and service providers without standardizing everyone on the same data format. This flexibility is particularly useful for businesses aiming to scale or diversify their supplier base.

Cloud-native systems and modern tech stacks

APIs are a natural fit for companies that use cloud-based or SaaS platforms. Their lightweight, modular design is ideal for connecting with cloud services and integrating various applications within a modern tech stack.

How they compare

Here's a quick overview of the two systems:

	EDI	API
Implementation speed	21 days	2-3 days
Integration type	Computer-to-computer	Web-based
Transaction type	Batch files	Individual files
IT resource requirements	Extensive	Limited
Industry standardization	Highly standardized	No widespread standards

5 key things to consider

When choosing between the two options, here are some things to keep in mind:

Data update frequency

If batch processing and periodic updates are acceptable, EDI may do the job. However, API is generally the better option for real-time updates.

Implementation and maintenance costs

EDI implementations are more costly and time-consuming upfront, while API solutions can often be set up more quickly with lower ongoing expenses, especially for cloud-enabled operations.

Partner requirements

If enough of your logistics partners or major clients already use EDI, adopting it may streamline your communications. APIs offer more flexibility and speed if you're dealing with partners who favor digital and cloud-based solutions.

Flexibility and future-proofing

EDI's structure can be hard to modify, which is a drawback if you anticipate frequently changing data needs. API solutions allow you to adapt more easily to changing business requirements, whether it's expanding your data fields or scaling integrations with new partners.

Security and compliance needs

Both API and EDI can meet data security needs, but EDI's rigid standards are often preferred in highly regulated industries. APIs require robust cybersecurity measures but can be configured to effectively meet modern security standards.

For some businesses, a hybrid approach may make the most sense. Many logistics companies use EDI to handle large data exchanges with long-term partners while leveraging APIs to communicate with newer, cloud-based systems or provide real-time data. This combination can help reduce costs, boost responsiveness and maintain compliance across different types of transactions.

Get connected with ArcBest

Having the right technology makes it easier to do business. ArcBest can help you get the most out of it. Learn more about API and EDI options and explore our other tools for managing your supply chain.

Suggested Read: Benefits of Integrating Data with Your Logistics Provider

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