EDI vs. API in Manufacturing

8 minute read | 26 Jan 2024

By Boomi

For your organization to succeed, information needs to move at the speed of business. The faster you can get the right data to the right place, the better the outcome for your bottom line.

Electronic Data Interchange (EDI) and Application Programming Interfaces (APIs) are two common methods for exchanging information between systems. Both are an essential part of the ongoing digital transformation of the manufacturing space. But each serves particular needs and has its own distinct characteristics. Here’s a breakdown of EDI vs API for manufacturing.

What Is EDI?

EDI is a method of digitally transferring business data between trading partners in a standardized electronic format. This streamlined exchange of information enables the batch processing of documents such as invoices, orders, quotes, etc.

What are some of the advantages of EDI?

Among other benefits, EDI:

  • Reduces supply chain and business process errors
  • Enhances efficiency
  • Empowers you to automate your business processes
  • Eliminates manual data entry and paper-based communication

How EDI Works

EDI provides a common language for different computer applications and systems to communicate seamlessly and without human intervention.

To facilitate interoperability, trading partners first agree on which specific EDI standards and protocols they will use to define the structure and content of various transaction types, such as purchase orders, invoices, and shipment notifications.

Common standard formats for EDI messages include:

  • XML
  • X12
  • HL7
  • RosettaNet
  • Tradacoms

The EDI Process

When documents need to be sent by EDI, the structured data is first collected from enterprise resource planning (ERP) systems and converted into the pre-agreed message standard by EDI translation software.

These documents are transmitted via secure and reliable communication protocols, such as AS2, FTP, or web services using SOAP or HTML.

The receiving system confirms receipt of the message, and its EDI translation software converts the data into a format understood by the destination ERP system.

In a nutshell, here are the key aspects of EDI’s inner workings that you need to remember:

If you want to learn more about how EDI works, explore our EDI Buyer’s Guide.

What Is an API?

An API acts as a bridge between various software applications and allows them to exchange data or functionality in real time. This permits integration and interoperability across a wide range of disparate systems and allows them to work together harmoniously.

How an API Works

API rules and protocols specify how different software components should interact and which formats they should use to communicate. They enable developers to access and leverage specific functionality or data without needing a comprehensive understanding of the underlying code, saving time and money.

Developers can make requests, or “calls,” for specific operations or data, and an API endpoint responds by performing the requested function or retrieving the required information.

Here are some key elements of API functionality to remember when considering how they can add value to your business:

  • Customizable and flexible formats
  • Secure and reliable
  • Integrate with web services
  • Enable real-time communication
  • Suitable for large enterprises

How To Choose Between EDI and API

There are many different factors to consider when evaluating solutions based on EDI vs. API technology.

When to choose EDI

If your manufacturing operation already has a mature EDI setup with established trading partners, it may make sense to continue using EDI.

In cases where EDI systems are outdated or cannot meet the challenges of current integration requirements, businesses can opt for EDI modernization or consider transitioning to APIs for a more future-proof and efficient data exchange solution.

When to choose APIs

If real-time data exchange and interaction with applications are critical, API integration might be the right choice.

APIs offer a more flexible and agile approach, meaning you can adapt more quickly to changing business needs and rapidly take advantage of technological advancements.

As companies increasingly integrate ERP systems into their operations, the ability of APIs to unlock a frictionless flow of information to and from external applications and services is becoming essential.

Why Manufacturers Need APIs and EDI

Wondering why you need APIs and EDI? Here are just a few of their key uses in the manufacturing process:

  1. Support for Internet of Things (IoT)

APIs and EDI facilitate the integration of data from IoT devices into existing business applications and enhance the efficiency of interconnected systems. This empowers organizations with a continuous flow of IoT information that they can use to fuel actionable, data-driven decisions on how to optimize operations best.

  1. Automation and Workflow Efficiency

EDI and APIs also enhance supply chain analytics by providing timely and accurate data, improving decision-making processes, and maximizing overall operational efficiency. To find out more about the transformative power of supply chain analytics, read our ebook “Why Supply Chain Analytics Are the Key to a High-Performing, Resilient Supply Chain.”

  1. Security and Compliance

APIs and EDI contribute to security and compliance by providing controlled and standardized channels for data exchange. Through secure protocols and authentication mechanisms, both APIs and EDI help safeguard sensitive information, ensuring that only authorized parties can access and transmit data while adhering to industry-specific compliance standards.

  1. Batch Processing

Batch processing with EDI and APIs allows organizations to handle large volumes of data efficiently, enabling the simultaneous transmission of multiple transactions or requests in a consolidated manner and thereby optimizing data processing workflows. It makes order processing more efficient with fewer errors.

  1. Customization 

The flexible interfaces and protocols that EDI and APIs provide allow huge scope for software customization. This adaptability enables organizations to tailor data exchange processes to their specific business needs and accommodate varied requirements from external partners.

Optimize Your Manufacturing Operations With Boomi

Digital transformation does not mean there is a clear winner when it comes to EDI vs. API. Both are essential tools for manufacturers.

APIs come out ahead in terms of facilitating real-time communication, integration with modern systems, and customization. Meanwhile, EDI offers reliable and standardized data exchange, compliance with industry standards, and is a long-standing method of business communication. By leveraging the best of both technologies, manufacturers can optimize their operations and stay competitive in a rapidly evolving industry.

Boomi B2B/EDI Management and Boomi API Management solutions will help streamline your business and ensure your manufacturing operation delivers at peak performance.

Feeling held back by legacy EDI? Get Boomi’s guide, EDI Modernization: 5 Strategies for Success, and learn how to take advantage of modern data connectivity.