Is EDI Relevant?
In my travels helping businesses with the fundamentals of Eclipse, I’m constantly asked about EDI or Electronic Data Interchange. I find that the electrical industry is generally on board having long standing relationships with vendor and electronic data interchange. Interestingly, plumbing, HVAC, and pipe valve fitting distributors appear behind the curve and are still discussing the pros and cons. Let's first examine the history and terminology and try to gain some answers.
What is EDI? The editor of Eyefortransport explains it like this in their 9/8/105 blog. “EDI – Electronic Data Interchange – is a set of protocols used by many players in the supply chain to transmit data to one another. It helped transform a paper-heavy process to one using computers. Technology has advanced huge amounts since the inaugural roll-out of EDI. Today data has become a major value-centre for the supply chain. Does EDI still have what it takes to transfer information effectively with today’s business velocity?”
EDI certainly isn’t new. It has been around since the 1960s long before the internet. In 1968, the Transportation Data Coordinating Committee (TDCC) was originated by a team consisting of railroad corporations to develop EDI standard formats, as transportation companies were exchanging electronic messages.
The US grocery and automotive industries quickly embraced the technology and today all major industries employ EDI and follow its compliance standard that govern the flow of data between companies and supposedly streamline the supply chain and cut costs. Who enjoys the cost savings in 2018? Sears was a major force in implementing EDI. (Oh boy, let’s model our supply chain after Sears….)
Eyefortransport in their 9/8/105 blogs say 85% of industry polled is still using EDI and 43% of them are frustrated. Of the 57% that are not frustrated, there is a strong sense that its days are numbered.
Application Programming Interface
At Zerion, we employ distribution’s most talented staff of programmers who are industry experts in mapping EDI for sales, purchasing, AR, and AP. Our programmers’ major source of frustration is the lack of response from manufacturers to provide the necessary information to map digital information to a VAN. Think of a VAN as the middle man or value-added network. These private companies generate revenue to facilitate the EDI and provide network services transferring the data between the distributor and the manufacturer and/or customer.
Business is now faced with a new and improved protocol that may be contributing to the frustration and lack of response. It’s called API or application programming Interface. SelectHub defines API in a recent blog.
“API is a set of programming instructions and standards for accessing web-based software applications that allow software platforms to communicate with each other. Basically, API serves as an interface between software programs and helps them interact effectively, (similarly to how a user interface helps humans interact with computers). This allows software systems to communicate with each other without any intervention from users.”
“A good example of this is online purchasing. When you enter your credit card information to buy an item online, the web store uses an API to send that information to a remote application, which then verifies it to ensure that it’s correct. After confirming that your credit card info is valid, the application sends back a confirmation that the order can be processed.”
“This kind of real-time connection is what makes API so effective when compared with EDI. APIs are able to transfer data in less than a second, which means that all of the data can be updated instantly, without the need for an intermediary. It’s easy to see the benefits that this can bring to supply chain management.”
“When using API to transfer supply chain data, companies can automatically add pickup requests into a carrier’s system, which can greatly improve efficiency by removing the time it would take to make each request manually. Today’s technology provides retailers and 3PLs with real-time access to Big Data that can help quickly respond to issues and make accurate projections about numerous parts of the supply chain.”
To summarize, we are speculating that EDI isn’t taught in detail to the millennial's
who are entering the work force. This would account for the lack of response from vendors and the continued frustration with distributors. API on the other hand isn’t common in the century old electrical and plumbing industry. Let's face it, the grid hasn’t changed, the products haven’t changed, so why would the digital technology change? I can tell you first hand that the margins have changed! They are getting lower and distributors need to open the hood of their Eclipse ERP system and take a hard look at the fundamentals.