Supply chain professionals are desperately in need of a technology revolution that replaces EDI systems with modern web services to standardize complex data and facilitate real-time interactions.
For years, web service Application Programming Interfaces (APIs) have transformed other industries. From the ability to shop online to mobile banking, APIs are the connections that make it possible for data to be transmitted from one system to another, increasing productivity and revenue for businesses. Yet, most freight and transportation systems have yet to ride this wave.
Why Replace an Incumbent, Entrenched Product like EDI?
In the 1970s, businesses started using Electronic Data Interchange (EDI) to replace postal mail and fax communication. It allowed for information to be processed and read more easily by multiple systems. Moving to electronic document sharing from paper-based communication helped reduce cost, limit human errors and improve relationships between partners and customers.
Over the past 45 years, technology has gotten significantly more sophisticated. Unfortunately, EDI has not been refined or modernized as the Internet's capabilities have grown. On the flip side, web service APIs are the building blocks for the most dynamic and innovative software and web applications of today – Google Maps, YouTube, Kayak, etc.
If your supply chain is using a communication tool based off of the Internet from 1970 rather than modern APIs, it's going to be at a significant disadvantage. Here are a few reasons why.
1. EDI 204's slow speed leads to more missed pickups
EDI may be the current industry default, but it's old technology that runs data transmission over timers. Latency of EDI 204 (used when tendering a load) often leads to shipments taking between 30 and 120 minutes to be received by a carrier. That means information is not being transmitted in real-time, increasing the likelihood of missed pickups and triggering more phone calls and emails to manage dispatching processes that should be automated.
APIs transmit your supply chain information to capacity in nanoseconds, resulting in real-time freight transportation management. They allow you to automatically add your pickup requests into a carrier's system to maximize on-time performance while eliminating time spent manually communicating requests.
2. EDI 214 creates a reactive supply chain.
Limited EDI connections require manual processes to retrieve pro numbers and tracking details. Furthermore, large gaps in information resulting from EDI 214 constrain your ability to generate standard, 360-degree reports. That means your team is not only wasting productivity on administrative tasks, but also acting on stale information with no way of identifying potential red flags or bypassing an issue before it leads to unnecessary costs and increased customer frustration.
Web Service APIs optimize your connection to capacity through a standard, two-way communication mechanism. Subsequently, you are able utilize capacity efficiently, set appropriate customer expectations, reduce your supply chain waste, and harness accurate data to proactively manage your supply chain.
3. EDI is costly to set up and difficult to maintain
EDI solutions are costly systems that offer limited business returns. Most value-added networks (VANs) require grueling and time-consuming setup processes with carriers that carry hefty fees. VANs also charge for all data transmitting across their network, which can get expensive for a solution that does not provide real-time visibility or predictive analytics. In addition, day-to-day maintenance and trouble shooting result in high operational expenditures and inefficient internal staff.
Although EDI is entrenched in our supply chain management systems, there is no risk in upgrading to web service APIs. API integration is simple while still being customizable. From a development standpoint, the system architecture is easy to scale, and maintenance is minimal.
APIs are better aligned with bottom line growth, allowing supply chains to communicate in a real-time, streamlined way with their partners (and vise versa). They help businesses run more cost-effective operations as they grow, paving the way for increased profits, decreased overhead costs and better customer satisfaction. While changing systems might be intimidating, risk only clings to business that continue to rely on an outdated, unresponsive system.
Think of it this way. If you had a choice, would you stream music on your iPhone's Pandora app or play it on an eight-track tape deck?