As disruptive technology continues to find its way into logistics stakeholders’ workflows, there is also a parallel transition within industry standards of businesses migrating from archaic technology platforms to contemporary alternatives. This includes the industry’s foremost and ubiquitous data transfer method — the electronic data interchange (EDI) — in which data is transferred electronically via a standardized format that allows one company to send information to another.
EDI dates back to the ’70s, when several standards were formulated, leading to mass adoption across different industries, including logistics and transport. However, a new industry standard called the application programming interface (API) now contests EDI’s dominance within the segment.
“Fundamentally, EDI is a very strict, specification-driven technology or a way of transferring data. EDI uses AS2, a data transfer protocol, to ensure that the data between two parties is secure when it’s transferred. Whereas, API is a bit more relaxed in its abilities to customize, as it’s based on a programming format where you can make calls to certain sets of data to receive whenever you need to,” said Justin McMillan, the COO of logistics consulting company UpstartWorks.
This, however, cannot be amounted to as API’s superiority over EDI — at least not at all times. McMillan explained that API would be better only if it is “supported better,” as EDI comes with standard historical specifications that are understood unequivocally across the industry.
“Companies now want to move towards an API-supported system because it’s more customizable. It helps them do things real time and access more parts of a platform or a database, with wider abilities to create customized ways of getting reports,” said McMillan. “With EDI, there are only a handful of specific ways to transfer data.”
Aside from the technological challenges with transitioning to API from EDI, companies would also have to bear the financial burden of adoption. For instance, vendors having an in-house data interface expert would be a rarity even in the case of EDI as it is an expensive exercise.
Amazon’s recent announcement on its intention to push for API adoption among its vendor clients makes it a difficult situation for vendors to navigate. McMillan contended that companies would have to find experts who can work with the library of information provided by that specific API — unlike EDI that is universally applicable.
“The challenge today is that API support is not as robust as it needs to be to get people to adopt it,” said McMillan. “Right now, though Amazon’s API works faster than EDI, it is nearly equal to EDI in terms of features as it makes the same calls and accesses the same information. API has not gotten to the point where it can pull more data than what is available with EDI today, like sales or operational reports.”
McMillan did tout API as the future of logistics, pointing out its ability to make businesses operate faster and process easier. Within warehouses, API adoption can help vendors during volatility and peak seasons, allowing them to handle and process more orders due to accurate and more real-time access to data. API implementation can go beyond inventory management, helping companies sync with databases like Amazon to have a seamless purchase order management and monitor affiliate information.
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