EDI vs. API
EDI grabbed a few headlines in 2015 as data took centre stage in supply chain. Heading into 2016, predictions are being made suggesting that this will be the year that EDI gets phased out in favour of newer, nimbler technologies.
eft sat down with project44’s CTO Wally Ibrahim to learn more about EDI and the potential of new technologies, such as API at disrupting data interchange.
There seems to be some confusion over whether EDI is a protocol or a technology – can you put this confusion to rest for us?
EDI (Electronic Data Interchange)is a communication technology used to transmit data from one system to another. It’s in no way a business protocol; it’s just a tool. Actually it’s just a very outdated tool.
EDI was borne in the 1940s, and refined in the 1970s. While most technologies have become significantly more sophisticated over the past 45 years, EDI has not been modernized as the Internet's capabilities have grown. It might seem like the compulsory communication tool in our industry, but its value pales in comparison to newer and more innovative options like APIs (Application Program Interfaces).
If EDI is an outdated technology from the 1970s, what impact does the use of this EDI technology have on the freight and logistics industries?
EDI’s technical shortfalls increase the overall cost of freight transportation, lead to greater inefficiencies, and limit end-to-end visibility. With EDI, shippers and 3PLs are spending more time on administrative tasks and less time on revenue generating activities. Furthermore, they have no access to the big data required to make dynamic business decisions
Here’s why. EDI runs data transmission over timers. Information is stored and then forwarded without confirmation, just like a fax machine.That storage delay causes daily occurrences, like dispatching a package, to take between 30 to 120 minutes, increasing the likelihood of missed pickups and requiring more calls and emails to manage processes that should be automated. These large gaps in data transfer also force companies to make business decisions based on stale and unreliable information. Using EDI is like asking a stockbroker to make trades today with yesterday’s paper. There is no way to make proactive decisions, identify risks, or bypass issues before they lead to unnecessary costs and increased customer frustration. Businesses in 2016 are far too dynamic to rely on such an outdated tool to be the backbone of their business.
Given the challenges and general industry dissatisfaction with EDI, is there a better solution for Shippers and 3PLs to secure and communicate with capacity?
Yes. It’s only a matter of time before those who continue to use EDI are left behind.
EDI has too many hurdles for today’s supply chain – it’s too difficult to implement, too expensive to maintain, and too rigid to work in a dynamic marketplace. The future of freight transportation connectivity is Freight APIs.
APIs are a messaging format that allows data to be transmitted from one system to another in nanoseconds, increasing productivity and revenue for businesses. In addition, the code is simplified and structured to clearly define howa program will interact with the rest of the software world, saving time, IT resources, and potentially nasty data entanglements along the way.
For years, APIs have transformed other industries. They are the same technology that connects the businesses in Amazon’s e-commerce marketplace and powers Uber’s on demand taxi network. Yet, most freight and transportation systems have yet to ride this wave.
For a Shipper or 3PL looking to improve its data interchange capabilities, can you walk us through the execution of an integration of a modern service like API in comparison to EDI?
Cumbersome and time-consuming implementation processes are required to set up an EDI integration, which can take months and carry hidden costs. Set up of project44’s APIs is a one-time process, resulting in immediate access to an entire network of carriers– the code is simple and clearly structured. It requires less than a week of time from start to finish to connect a shipper or 3PL into project44’s API network. In addition to building best-in-class integration platforms, project44 provides resources to help transportation companies in all different stages of IT development learn more about APIs. The project44 team ensures a seamless, worry-free implementation experience.
Managing rates can be a huge time commitment for 3PLs and Shippers. How does rating through API compare to rate via static rate bureaus? Conversely, How do rating APIs improve a carrier’s ability to quote rates?
In order to stay competitive, shippers and 3PLs need the most accurate and complete rating information about a potential shipment, in the fastest way possible. Rating bureaus are no longer the best option to achieve that. With static rate bureaus, like SMC3, teams spend significant time loading LTL customer specific or blanket tariffs into their TMS and troubleshooting rates that don’t match those claimed by carriers.
Freight APIs remove the manual nature of getting a rate quote. Shippers and 3PLs can spend their time on activities that add value to their business rather than on administrative, onerous tasks. Once tariffs are loaded in for a carrier, those rules are consistently applied moving forward, without needing to be managed moving forward. Every time a rate quote is requested, accurate rates for preferred carriers are automatically pulled into a TMS and broken down by key assessorials. It’s that simple
On the flipside, carriers need a reliable technology to generate dynamic rate quotes that take into account market conditions and quickly get those rates in front of shippers and 3PLs. If you look at the pricing models of airlines or sporting events, they fill their seats based on variations in their supply and demand. That’s real-time, online pricing powered by API web-services and it will never be available to carriers who use EDI or rate bureaus. project44 introduced dynamic pricing technology to the freight industry through a pricing engine API earlier this year.
Give us a prediction on how data interchange is going to have to evolve in the industry given the importance of data and analytics in real-time.
Shippers, 3PLs and carriers need to embrace new data communication solutions that streamline the freight transportation process and focus on greater efficiencies and visibility. Web service APIs are one such solution that will continue to gain traction.
project44’s Freight APIs are moving beyond just facilitating supply chains communication in a real-time, streamlined way. We’re leveraging APIs to enable advanced analytic capabilities, paving the way for proactive supply chain management. With our Freight APIs, possibilities exist to increase margins and improve operations that could never be possible by using EDI or rating agencies. Carriers are able to manage their capacity and respond to market conditions by dynamically modifying their pricing, ensuring competitive rates. Shippers, retailers, and 3PLs have, for the first time ever, real-time access to the big data required to address risky circumstances or proactively respond to transportation shortfalls.