EDI, API, and Blockchain: Looking at the Road Ahead

Posted by Brooke Lester on Feb 22, 2018 8:06 AM

EDI, API, and Blockchain Looking at the Road Ahead

Technology is a business enabler, yet it changes so rapidly that there is frequently confusion about what kinds of technology are the best ones to implement at your firm. An example of a recent debate is whether you should continue using an EDI system or move to APIs. Moreover, blockchain technology has become a much-discussed form of payment. Should you be accepting it or not?

Companies should not abandon their EDI systems, though they should not ignore APIs either. Blockchain technology is also going to play a greater role in the businesses of tomorrow. Read on to learn why APIs and an EDI system can work together and where blockchain technology fits in at your firm.

What Are APIs?

To understand how APIs work with an EDI system, it is crucial to know what APIs are. 

APIs stand for application program interface. They form a connectivity layer that allows devices to speak to one another in real time. APIs are a fast, seamless way to access data. While many people only think about APIs because of the role they play in mobile applications, they have the power to transform the way decisions are made within the supply chain. 

Should You Abandon Your EDI System for APIs?

APIs are the future of information transmission, especially in the world of business. But, does that mean you should give up your EDI system for APIs?

The short answer is “no.” Your EDI system is a reliable, simple, and cost-effective method to transmit information to your trading partners (and for them to communicate with you). While some technology experts predict the demise of the EDI system, those dire warnings are a bit premature. 

For a start, your EDI system is not going anywhere because it works. Many companies across the world still use them every day to transmit and receive information. Although the technology that powers legacy EDI systems is not new, it has stood the test of time. 

Second, there are many companies out there who have not digitized at all. These firms have not even put an EDI system into place, so they are not at the point where they are thinking about how APIs can benefit them. While there are enormous advantages to utilizing APIs, there is still much more education to be done about this technology. 

That being said, APIs can definitely enhance communication between trading partners. They do not have to compete with your EDI system; instead, they can work with it and complement it. 

How Can Your EDI System Work with APIs?

You do not have to completely replace your EDI system with APIs in order to reap the gains from the latter technology. Conversely, you do not have to ignore APIs and stick with a legacy EDI system because of your concerns about how well APIs work. You can integrate APIs into your existing EDI solution. 

There is middleware (an application that sits between applications and operating systems that leverages services from other applications) that integrate APIs into your EDI system. This makes the process of exchanging information faster and more efficient. 

The way this works can be well illustrated with an example. Harper Lighting purchases raw materials from Green Mountain Metals through its EDI system. Green Mountain sends Harper an invoice through its EDI system.

Now suppose Harper Lighting wants to know when the raw materials will arrive at its warehouses. Its legacy EDI system cannot provide that information, so Harper uses a query through an API. It offers real-time information about where the shipment is and when it is expected to arrive. Thus, EDI and APIs work together in this scenario to provide a seamless experience.

While APIs have been a fixture in the software development industry for a number of years, the rest of the enterprise is in the process of determining how they can benefit from them. APIs are not going to replace your EDI system anytime soon, but you can definitely expect to read more about them (and see more of them) in the coming years as EDI system vendors leverage them for greater value.

What Is Blockchain Technology?

Blockchain technology has been making waves in the news for its growing popularity as a payment option. Does it have a role in the supply chain, though? Many industry experts enthusiastically say “yes.”

Again, to understand where blockchain technology fits into the supply chain, it is vital to understand exactly what it is. The blockchain is a database that runs across a global network of independent computers. It is a decentralized open ledger in which every transaction is recorded and available for all transaction participants to view and verify. You cannot change the entry in the blockchain ledger without agreement from all transaction partners. 

Where Does Blockchain Fit into the Supply Chain?

So, where does blockchain fit into the supply chain? It makes exchanging information about transactions simpler and impossible to repudiate. It provides transparency to every transaction completed.

With blockchain, you do not need emails, spreadsheets, data feeds, or any other form of communication; everything is visible immediately. Unless everyone agrees to change the ledger entry, no one can argue that it is not accurate. 

Some major companies are already using blockchain. For example, Walmart has begun to follow the movement of pork in Beijing with the aid of blockchain, and mining firm BHP Billiton utilizes blockchain to track mineral analysis performed by outside vendors. 

Blockchain and Your EDI System

Blockchain has the potential to have a positive impact on the supply chain by making transactions more transparent and quicker. The question becomes, what is the relationship between blockchain and your EDI system?

As with APIs, some industry analysts predict that blockchain technology will completely replace your EDI system at some point in the future. Other experts believe that blockchain can complement EDI systems rather than completely supplant them. 

The supply chain, with its necessity for transparency and agility, is the perfect candidate for the adoption of blockchain technology. It offers greater visibility into transactions. Today, shared visibility tools exist, though they are generally proprietary and are not interoperable with one another.

Blockchain, in contrast, continues to evolve. The Linux Foundation launched the Hyperledger project in December 2015 to encourage the use of blockchain within the enterprise. IBM calls blockchain “the linchpin for delivering a true ‘network of networks’ for supply chains” which will enable organizations to seamlessly integrate information flows across the entire supply chain. 

That being said, vendors such as IBM do not believe that blockchain will do away with EDI systems completely. Rather, there is room for blockchain to complement your existing EDI system. Blockchain will work with your EDI system to create a synthesized record of information flows visible throughout the supply chain.

To encourage its customers to adopt blockchain technology, IBM will be adding support for its blockchain product to its B2B Integrator gateway software. How does it work? The IBM B2B Integrator will connect to the blockchain ledger and populate it with information about transactions. Once that information is published, everyone in the network can see it.

There are advantages to utilizing an enterprise blockchain solution. While such a solution requires an investment, it also ensures security. All of the participants on the network are known to one another and they have permission to conduct transactions. Compare this with blockchain ledgers that are not designed for enterprise use, wherein participants are anonymous, and there is no mutual trust or consensus.

Integrating APIs and Blockchain into Your EDI System: You Do Not Have to Go It Alone

Many organizations treat new technologies with caution. “They sound good on paper,” decision makers say. “But will we actually see the benefit from them, and at the very least, what is our ROI?”

These firms are right to be cautious. Implementing new technologies, especially when they lack the internal expertise to do so, represents a huge investment of time, money, and resources. If they are going to put a new solution in place, it had better be one that will show results and do so quickly.

Fortunately, companies do not have to do it on their own. There are experienced, knowledgeable, and trustworthy partners who can help you through the process; they assist you in choosing the right solutions that meet your company’s unique needs, implement them, and provide post-implementation training and support. Throughout the entire process, your integration partner is there for you. 

APIs and blockchain have the power to completely transform the supply chain. They can work with your EDI system so you can get the greatest return on your investment while staying competitive and agile. To learn more, contact us today!