There have been huge advances in transportation technology in the last half-century — including self-landing rockets on barges and self-driving cars — yet the predominant technology used to connect us to data about our supply chains is decades old. We look at electronic data interchange (EDI) as more of a shark than a dinosaur. It’s evolved — transactions are very dense and hold a lot of valuable information, parsing them is still complicated, and not many people know about the details of how it all works together.

EDI  first started making itself known in supply chain management back in the 1960s. Earlier on, U.S. Army Master Sgt. Edward A. Guilbert was confronted with the unprecedented challenge of airlifting supplies into Berlin after it was cut off from Western Europe by the Soviet Union in 1948. He developed a form of electronic communication between shipment supply chains in the Army. Although EDI started being used commercially in the 1960s, widespread supply chain EDI integration didn’t happen until the early 90s. All the same, EDI was a critical facilitator in early globalization and continues to dominate international trade transactions.

Whether we like it or not, EDI remains the backbone of supply chain integration and visibility; it’s a need, not a want. Everyone needs it and no one wants to deal with it! Instead of looking for a replacement technology, we must learn how to embrace a future in which EDI offers superior supply chain interoperability via pre-connected capabilities.  

EDI standards, created nearly 40 years ago, were intended to increase efficiencies of dealings between companies, bringing lower costs. However, this has held only partly true. The efficiencies in sending and receiving documents can be achieved, but only after a time-consuming implementation and integration process.  Companies are still building point-to-point custom EDI integrations for each of their trading partners. This takes months, and the results are often unreliable. The future needs to offer a pre-connected network of supply chain partners, allowing for connections and interactions that take seconds to establish, not weeks or months.    

It’s clear that the future of supply chain integrations will be pre-built, interoperable networks.  As technology progresses, and there are more best-of-breed software providers, new market entrants won’t want to deal with all the operational overhead of integrating with their best-of-breed providers or with their supply chain partners. What they want is a solution that solves this problem for them.

The right integration platform allows connectivity to a network and transmission of any transaction type with any trading partner by adopting application programming interfaces. An API is a set of definitions and protocols to build and integrate application software. The platform should also offer the JavaScript Object Notation data format. JSON is a lightweight format for storing and transporting data, which is "self-describing" and easy to understand. Using a JSON interface, transactions can be converted to any EDI format, so that you can connect only once to the API that handles each partner by building a master-data mapping environment, regardless of your partner’s EDI format and version. The beauty of a dedicated platform is that it validates and converts JSON data into the required EDI format automatically.

It's no exaggeration to say that most companies would prefer to get rid of EDI. They certainly don’t want to take the time and trouble to constantly build EDI integrations. But the hard fact is that they have to. This is not inherent in EDI itself. Imagine a world where every company started to adopt a new technology such as blockchain. They would build their own APIs, and the same challenge of integration would still exist. Companies would still have to build custom integrations to all of these endpoints. In the end, it doesn’t matter what the technology is; it’s still about connecting to all these supply chain partners in one place.
Companies that want to get this done in the easiest and cheapest way possible often end up duct-taping stuff together. Or they hire consultants, who come in once, and then depart — leaving future integrations and customizations to an inexperienced internal IT department, who return to the duct-tape approach. While this may result in a quick ramp-up, it escalates costs over time, because of the need for extensive maintenance and support over the long run.

The future is a pre-connected supply chain network where any merchant or carrier, hospital, retailer or logistics provider that comes on board doesn’t have to build an integration, but instead simply plugs into a platform that allows them to do business with anyone.

It sounds simple, but it isn’t. Many EDI services have advertised their ability to do this, but haven’t been able to deliver. With a well-designed, truly software-as-a-service (SaaS) platform, rather than one that’s been converted from an installed-code model, companies can come onto the platform on a self-service basis and invite their partners to communicate in a central network.

A lot of EDI providers are competing purely on cost. A good analogy is the early competition on digital storage, with Rackspace struggling for dominance in the market with Google and AWS. They were each offering the same service and essentially the same product, with cost the only differentiator. Rackspace ultimately failed in the market because they didn’t have a product that could compete. Cost isn’t a great way to compete in any market. If EDI goes the same way, the products that are most valuable are going to be the ones that have the best customer experience, and solve the core job to be done for EDI, which is fast onboarding and the fastest production issue resolution possible. The cost of EDI will continue to fall, but the winner in the space is going to have the best product experience.

When a company buys other software systems, such as an enterprise resource planning software (ERP), transportation management (TMS) or warehouse management (WMS), it might not pause to think about how those systems will provide connectivity to its supply chain. Companies just want the problem to be solved as soon as they deploy that software. And, frankly, they have every reason to expect this to be the case. This simply isn’t a problem that companies should have to solve anymore. It should be like flipping a light switch.

Technology is meant to speed up productivity and eliminate repetitive work, allowing jobs in supply chain management to be done easier and faster. Now, with a pre-connected self-service platform, this is becoming true for EDI.