EDI & API: The Changing Connection Technologies Used in TMS

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As the global supply chain continues through digital transformation, connection technologies used in TMS implementation and integration will evolve as well. While many new system vendors bill application programming interface (API) as the best way to eliminate integration problems, thousands of supply chain entities continue to rely on the use of electronic data interchange (EDI). Moreover, other supply chain still rely on manual processes. To understand the changing state of how a TMS can connect with legacy systems, new platforms, and other technologies, shippers need to understand the very technologies that empower such connections.

What Are the Limits of Connection Technologies Used in TMS Implementation and Integration?

It is best to break down the changing connection technologies used in TMS implementation by understanding the three, primary means of connection. The most fundamental is a manual-based system, relying on manual data entry through every system. For example, entering data into a Microsoft Excel file that is then shared with others in a company is this rudimentary means of connecting. Unfortunately, manual processes undermine the efficiency and capability in newer, more advanced TMS platforms.

How to Evaluate, Select & Build the Case for A TMS

Perhaps the most widely recognized and used connection technologies used in TMS is electronic data interchange. This type of connection relies on a set of data that is shared among systems, triggering the action of multiple parties. EDI is more efficient than traditional, paper-based systems. It allows for the immediate transfer and processing of information, including order fulfillment. It eliminates the intermediaries in order processing, empowering shippers with more efficient, rapid operations.

Furthermore, this technology can send a large volume of information at once, and it typically aids TMS integration with legacy systems. That is part of the reason that EDI is still heavily used within the industry. Unfortunately, the diversity of EDI is limited. For example, it is based on timers, not necessarily real-time data. EDI-based transactions breakdown easily, and maintenance costs are typically higher. The IT team needs to be larger, and a standard EDI can take months to set up. One final issue exists, the number of EDI vendors available today is decreasing.

Onto API. The use of an API sounds like the best-case scenario for connection technologies used in TMS. Even then, and API implementation could be a significant challenge for organizations that never understood or were well-versed in EDI. It is this uncertainty that leads to an unwillingness to leverage APIs.

Is API Going to Replace EDI or Not?

EDI still leads the race for connection technologies used in TMS deployment. With that in mind, API use is increasing among parcel and LTL carriers. The benefits of using an API to implement new technology are significant. Moreover, API eliminates many of the concerns associated with EDI use. An API provides real-time data, and it can overcome the barriers to data retrieval and access in legacy systems, notes William B Cassidy of the Journal of Commerce.

Furthermore, APIs are cloud-based, meaning it can be maintained without disruption, and it is an essential building block to the use of big data analytics. Ultimately, an API offers more integration capabilities concerning unique needs and software customization than EDI-based connections, notes Supply Chain 24/7. In general, APIs cost less to implement than an EDI, but for organizations that still lack the basics of EDI connection technologies used in TMS implementation, using an API can feel overwhelming. As a result, it is not likely that APIs will completely replace EDI as the standard means for connection within the next year or two. With that in mind, shippers need to understand why the future of TMS is still API-driven.

How to Prepare for the Future of Changing Connection Technologies

APIs allow vendors to rapidly roll out changes to basic software and connectivity in a moment’s notice. Their diversity is well suited for the many challenges and changing needs of supply chain management. To ensure an organization does not get left behind, shippers need to take steps today to prepare for future API use. These include:

  • Know where your organization stands, as well as the connection technologies in use by your supply chain partners, vendors, and suppliers.
  • Make small improvements that offer significant advantages.
  • Move away from legacy systems and manual processes, where possible and within reason.
  • Implement a cloud-based TMS.
  • Consider the costs versus benefits of new connection technologies.
  • Retrofit your supply chain network with technologies to track data.
  • Be mindful of future supply chain capabilities, such as blockchain-based platforms.  

Align Your Organization with the Future of Supply Chain and Transportation Management With an Advanced TMS

Major carriers and transportation providers are actively pursuing an API focused future. Shippers that do not align their organization with the necessities for API use will see their available software capabilities continue to dwindle, especially as the number of EDI-using software developers and vendors decreases. While an API may require a re-tooling of your IT department, its benefits far outweigh the costs associated with maintaining your existing EDI. As significant parcel and LTL carriers are moving forward with API integration, it is in your best interest to do the same.

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