Effective and timely communication is critical in the supply chain, where multiple stakeholders collaborate. APIs enable real-time communication between multiple parties, so it is not surprising that companies that have adopted APIs have seen their market capitalization grow by more than 12% compared to companies that have not adopted APIs.
APIs can be used by supply chain companies in their digital transformation journeys. However, API is not the only choice that supply chain specialists have, as APIs also have downsides.
This article will cover supply chain APIs with examples and compare them to legacy electronic data interchange( EDI) systems. Additionally, we will provide a framework for supply chain managers how to decide between API and EDI.
What are the types of supply chain APIs?
Supply chain APIs cover the most critical information sources in supply chains:
Booking-related API can be used for:
- Making booking reservations for containers
- Checking booking status
Invoice & document API
They can be used for:
- Retrieving and transmitting invoice details
- Retrieving and transmitting details from documents such as bills of lading
Schedule-related API can be used for:
- Retrieving vessels schedule
- Retrieving predicted arrival time of vessels
They can be used for :
- Tracking the real-time location of containers and vessels
- Warehouse shipment status
Price and tariffs API
- Finding spot prices for shipping across different transportation modes
- Finding tariff-related information, such as the US harmonized tariff system
Examples of supply chain APIs
First, we provide some API examples to clarify what APIs can achieve for the supply chain:
- Vessel schedules for Maersk vessels API.
- Spot Offers for Maersk & Sealand API.
- Real-time predicted ETA for vessels API.
- Ocean invoice details API.
- Provide an up-to-date list of post offices and Royal Mail customer service points.
- An API for integration between business and Royal Mail.
In this part, we will compare supply chain API and EDI so supply chain and logistic specialists can understand their differences more clearly.
Supply chain API vs electronic data interchange (EDI)
APIs in the supply chain allow direct connection to applications instead of a file transfer system. API allows real-time communication between different systems whereas EDI only allows communication between EDI systems. EDI replaces paper-based documents with a standardized electronic format.
Top 5 advantages of supply chain APIs
Companies use different ERP and CRM tools and integrating the different systems with supply chain data is crucial. API can directly connect to ERP and CRM systems and remove intermediary file transfer servers and related processes making data transfer simpler.
2. Resource efficiency
Fewer resources are required for managing API-driven transactions. This will allow supply chain managers to allocate scarce resources more efficiently.
3. Real-time data connection
Real-time data can be collected and shared across parties. For example, real-time shipment status can be communicated using APIs.
4. Increase efficiency by automating
Certain actions such as sending pick-up requests to a carrier system can be automated which is a considerable improvement over manually sending each request. Automation in the supply chain :
- Minimize human error
- Automate manual tasks
- Increase supply chain visibility
5. Compatibility with future technologies
Almost 90% of developers use APIs in some format. They are widely used in new technologies and given their easy adaptability, supply chain companies can integrate with new technologies such as IoT easily.
Disadvantages of supply chain APIs
1. More open to attacks
Security is one of the main issues of APIs. 95% of APIs suffered a security incident in 2020. APIs rely on the web, making them more open to hacking and security incidents than EDI. However, security risks can be mitigated by testing API security rigorously. API testing can cover many areas such as performance and functionality.
Testifi is the provider of PULSE which is an artificial intelligence-based API testing tool that automates API testing. PULSE claims to decrease the cost and effort associated with API testing by 50+%. Industry-leading companies such as Amazon and BMW use Testifi’s services.
For more on API security testing, read API Security Testing: Importance, Automation & Common Issues.
2. No standards
API communication standards are not as unified as EDI. This can lead to inefficiency and miscommunication when different standards are used.
Advantages of EDI
EDI has been around since the 1970s and around 60% of companies use it. There are many vendors available that offer EDI services. If you are looking for EDI service providers you can check our 120+ list of EDI system providers.
EDI is secure by design and encrypts data to maintain data integrity and confidentiality. However, this is not to say that EDI can not be hacked. Companies still have to take cybersecurity measures.
Disadvantages of EDI
EDI initial investment can be expensive, also the ongoing expenses such as maintenance and staff training can increase the total cost associated with EDI adoption.
EDI transmission can take 15 minutes to 4 hours which is slow for the current agile and fast paced working environment.
Number of versions
If the versions of EDI do not match across partners, neither will be able to communicate until they upgrade and match each other’s versions.
EDI is a 50-year-old technology and even though it has evolved over the years it is not compatible with emerging technologies. For example, events monitored by IoT devices, such as product damage detection using digital cameras, may not be compatible with classic EDIs.
Which solution to choose?
As discussed, both API and EDI have advantages and disadvantages. Choosing among them depends on your business goals and trading partner infrastructures. However, companies can pursue a hybrid strategy to maximize the utility offered by API and EDI. Additionally, a hybrid approach mitigates the risk of missing out on impactful opportunities that can increase revenue growth and operational efficiency.
A hybrid approach is useful when working with partners that are primarily relying on either EDIs or APIs. A hybrid strategy can be utilized to link together a constantly growing ecosystem of new data sources and applications with established back-end systems.
If you are trying to understand how you can leverage API and EDI in the supply chain, reach out to us:
Cem has been the principal analyst at AIMultiple since 2017. AIMultiple informs hundreds of thousands of businesses (as per similarWeb) including 60% of Fortune 500 every month.
Cem's work has been cited by leading global publications including Business Insider, Forbes, Washington Post, global firms like Deloitte, HPE, NGOs like World Economic Forum and supranational organizations like European Commission. You can see more reputable companies and media that referenced AIMultiple.
Throughout his career, Cem served as a tech consultant, tech buyer and tech entrepreneur. He advised businesses on their enterprise software, automation, cloud, AI / ML and other technology related decisions at McKinsey & Company and Altman Solon for more than a decade. He also published a McKinsey report on digitalization.
He led technology strategy and procurement of a telco while reporting to the CEO. He has also led commercial growth of deep tech company Hypatos that reached a 7 digit annual recurring revenue and a 9 digit valuation from 0 within 2 years. Cem's work in Hypatos was covered by leading technology publications like TechCrunch and Business Insider.
Cem regularly speaks at international technology conferences. He graduated from Bogazici University as a computer engineer and holds an MBA from Columbia Business School.
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