EDI vs. APIs: Understanding the Key Differences and Why Both Matter

Electronic Data Interchange (EDI) enables businesses to share vital information with their trading partners in real time, no matter where they are in the world.

Before EDI, managing orders was a slow and error-prone process. A buyer would call a supplier to place an order, and the supplier would manually enter the details into their system to generate an invoice. Delays, typos, and miscommunication were common — and disruptions to the supply chain were almost guaranteed.

EDI changed everything by automating these steps. Using standardized protocols, businesses can now exchange data directly between their systems. A buyer creates a purchase order and sends it instantly to the supplier’s system. The supplier processes the order, generates an invoice, and updates shipping details — all automatically, saving time and reducing errors.

Here’s an example: Imagine a bookstore needs to order 50 copies of a bestselling novel. Without EDI, the store manager would call the publisher to place the order. The publisher would then manually record the request, enter it into their system, and send an invoice by email or fax. Mistakes could easily happen — like entering 15 books instead of 50 — or the process could be delayed by a missed call or a lost fax.

With EDI, the bookstore’s system sends the order directly to the publisher’s system. The publisher instantly processes the request, generates an invoice, and confirms the shipping details — all without any back-and-forth.

By automating processes like these, EDI speeds up transactions, minimizes errors, and keeps supply chains running smoothly.

APIs, or application programming interfaces, are tools that let different software systems talk to each other. They simplify how systems share information, making integration faster and more efficient.

Here’s an easy way to think about APIs: Imagine you’re at a restaurant. You tell the server what you want (the request), and the server passes your order to the kitchen (the system). Then, once your order is ready, the server brings your meal (the response). APIs work the same way, acting as go-betweens to ensure requests and responses are clear.

Here’s a more real-world example: Say you’re building an e-commerce delivery app. Your app needs to connect with customer systems to track orders, manage inventory, and coordinate delivery drivers. APIs facilitate this connection, letting your app and the customer systems share data instantly.

Without APIs, these tasks would require manual updates or slow file transfers. With APIs, everything happens in real time, reducing delays and mistakes. They help streamline processes and ensure smooth communication between systems, even when those systems are completely different.

EDI and API technology both allow for the sharing of information between systems, but they serve different purposes. EDI has been a reliable choice for decades, known for managing large, repetitive tasks like bulk order processing. In contrast, APIs are designed for faster and more flexible communication. Choosing between them comes down to what your business needs, and understanding their differences makes that decision much clearer.

EDI has been a staple of supply chain communication for decades. It’s known for being reliable and efficient, especially when it comes to securely exchanging data between trading partners. The standardized formats make collaboration smoother and ensure everyone stays compliant.

APIs, however, are shaking things up. They let businesses share data in real time instead of relying on the batch processing EDI uses. This makes APIs a better fit for tasks where speed and flexibility matter.

What really sets APIs apart is how easily they work with cloud systems. They’re more adaptable to changing business needs and cost less to set up than EDI, making them an attractive choice for companies that want a scalable, modern solution.

Compared to EDI, APIs bring agility and real-time connections to the table, but they require regular updates and careful management to perform at their best.

For some companies, EDI-API integrations are a practical way to improve how they manage their supply chains. EDI provides the structure and dependability needed for exchanging large amounts of data securely and consistently, while APIs add the speed and flexibility to provide real-time updates.

EDI is what allows major retailers like Target, Walmart, and other big-box stores to send purchase orders and invoices to suppliers — making sure everything is standardized and free of errors. At the same time, APIs make it possible for the store to track inventory levels in real time and adjust stock quickly when demand changes.

This combination of EDI and APIs isn’t limited to retail. Many companies across industries rely on EDI-API connections to streamline their workflows. EDI handles documents like manifests and invoices, keeping backend operations smooth, while APIs enable instant updates, like tracking shipments or sharing delivery details with customers.

Two technologies, one team. That’s EDI and ADIs.

Deciding between EDI, an API, or an integrated approach comes down to what your business needs and how your current systems work. EDI provides the structure and reliability for handling large-scale transactions, while APIs offer the speed and flexibility you need to adapt to real-time demands. 

Connect with an EDI expert today to explore your options and find the best EDI-API fit for your business.