When it comes to retail distribution services, supply chain integration is a business strategy that brings suppliers (or links of the supply chain) together into a close working relationship. Each link of your supply chain adds time and monetary costs to your operation. When you integrate these separate pieces, it helps to optimize the collective performance of your supply chain.
This integration allows business partners and organizations to see reliable information about order quantities, purchase orders, inventory and more. Effective system integration can be achieved through electronic data interchange (EDI) or application program interface (API). Some benefits of EDI and API include cost effectiveness, the ability to keep up with demand, an increase in speed and ease of communication, and the ability to forecast potential problems.
What is EDI (Electronic Data Interchange)?
EDI is a data transaction system that speeds up important logistics processes in the supply chain. It is the electronic exchange of business information in a standard format. Supply chain integration through EDI process removes the possibility of human error in typical correspondence and data entry. This system integration also increases the ease of communication between business partners.
EDI allows documents such as purchase orders to be sent directly between trading partners over an electronic network, allowing for faster processing, shipping and invoicing. Anything from purchase orders and invoices to customs and inventory documents can be exchanged via EDI. Utilizing EDI also allows your business to consistently maintain extensive and unique requirements with your trading partners.
In order for this type of supply chain integration to be successful, the data in the documents must be converted to meet certain EDI standards. These standard EDI formats are developed specifically for the various EDI documents that you might exchange with business partners. Your system works to create an EDI version of documents you create and send them to suppliers in your EDI network. There are two EDI standards that are used most commonly:
- American National Standards Institute/Accredited Standards Committee X12 (ANSI ASC X12). This was originally created to support companies across different industries in North America; today there are more than 300,000 companies worldwide using it.
- EDI for Administration, Commerce and Transport (EDIFACT). Many companies adopted this very early on and it is still used widely across Europe.
Additionally, in warehousing and fulfillment, some of the most commonly used EDI transactions are 940/945: Order (Shipment Request)/Outbound Shipment Notification and 943/944: Advanced Shipment Notification (ASN)/Receipt Confirmation.
What is API (Application Program Interface)?
API is similar to EDI in that it allows seamless transmission of data from one system to another. However, API allows devices to speak to each other in real time, which can allow companies to access data, such as inventory levels and order statuses, much faster than with EDI. APIs are designed using simplified code that clearly defines how a program will interact and allows other software applications to integrate with it so information can pass back and forth very quickly.
Adopting API can lower your operating costs, improve visibility and streamline your onboarding process. The software architecture behind APIs also allows for easier scalability than EDIs, and typically does not require expensive or complicated maintenance. If you’re using API integration, you do need an IT department or a third-party company that can interpret the data that is sent through the API.
EDI and API in Retail
Most businesses in the retail industry use EDI or API (or sometimes both) in their retail supply chains to help manage business relationships with suppliers, vendors and distributors. The majority of big box retailers will only work with companies that have these systems in place and focusing on vendor compliance can be beneficial for your relationships with all your trading partners. Additionally, by implementing API or EDI in retail, you can increase the speed, accuracy and decision-making process of your business operations. This type of system integration will also allow you to gain better control of your inventory, improve inventory predictability and increase response time.
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EDI vs. API
Is API replacing EDI? Not necessarily. Although it is older, EDI is still widespread and often mandated by trading partners, as it allows companies to exchange documents in a well-governed and secured manner. However, EDI doesn’t offer the real time transfer and visibility of information that API does. APIs, on the other hand, are designed specifically to keep up with the fast-paced nature of business today. This allows you to monitor your supply chain in real time and respond to any problems or issues much faster than with EDI. As APIs are highly technical, they may not be the best choice for companies that do not have an IT department with development capabilities or an external partner who can help with maintenance.
APIs certainly offer some innovative features, but EDI still remains a popular choice because of the security and reliability it offers. When deciding which integration to use, it’s important to look at regulations in your industry. API integration might not be as suitable for some compliance regulations as EDI would be. It’s also possible to leverage both API and EDI technologies to achieve exactly what you need.
Supply Chain Integration and ITS Logistics
To put it simply, at ITS Logistics we are experts at supply chain integration and EDI and API implementation. Our experienced engineering and operations teams have seen and done it all and possess the industry expertise to implement seamless integration across all platforms.
We have the ability to integrate with both EDI and API, depending on what you are looking for and what works best in your business. Additionally, we have a full IT staff specializing in network optimization, custom programming, business intelligence, and integration. Our knowledgeable implementation team can help you decide what the best solution for your business is and customize your EDI or API experience to fit your needs.
How to get started
Superior EDI and API integration is foundational for success in your supply chain. At ITS, we create a logistics solution for you that allows effective integration, making your business more efficient. Call us today for more information and to see how we can help.
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