EDI, Punchout, and API—What’s the Difference, and Why is Each Important?

It wasn’t that long ago that far too many processes involving sharing data, accessing products, and connecting within the supply chain were performed manually. When we dissect the use of Electronic Data Interchange (EDI), Punchout, and API, we see that this connection, access, and communication, has dramatically evolved. Here’s a look at how, where each is used, and why each is important within your supply chain.

Electronic Data Interchange (EDI) – Connection

From its inception, EDI allowed businesses to digitally exchange information such as purchase orders, sales catalogs, invoices, and advance shipment notifications for more than 50 years. Developed to provide an open standard to exchange documents internally and with other companies, EDI was unfortunately not designed to work over the Internet. The standardized EDI protocol to exchange documents used point-to-point network connections to establish direct links between their networks.

Because it replaced manual document exchange methods, it allowed a business to integrate its software platforms and automate labor-intensive and costly systems. EDI was widely adopted, leading to the growth of Value-Added Networks (VANs) to secure B2B communications.

Given its ability to streamline operations and keep processing costs low, EDI’s integration and automation capabilities are still used today.

Punchout – Access

First on the scene, pre-Internet EDI systems are not as flexible or easy to implement as modern digital Punchout platforms. While both are used to transact business, their goals and capabilities are very different. The significant difference between punchout and EDI is that Punchout focuses on shopping integrations, while EDI targets data transfer.

A punchout puts an online store inside a customer’s e-procurement system using the Commerce eXtensible Markup Language (cXML) and Open Catalog Interface (OCI) standards for communication between e-commerce platforms and e-procurement systems. Level 2 punchout, which combines an e-commerce site with a catalog file, can also access the punchout website. Currently, major B2B suppliers, such as Amazon Business, Staples, CDW, and Grainger, offer punchout.

Application Programmable Interface (API) – Communication

API is a web-based protocol that allows different systems to communicate. API integrations are the standard for connecting thousands of modern cloud apps. API Integration’s seamless connectivity allows for process automation and the sharing and embedding data between applications and systems. An API facilitates communication and connectivity between two or more software applications. In effect, APIs act as interpreters between systems.

APIs enable a digital supply chain involving inventory levels, shipment logistics, order status, etc., which can be accessed in real-time. APIs ensure that supply chain data and actions are available to the systems and individuals for the best possible business decisions across the entire supply chain.

Machine-to-machine in nature, they are invisible to end-users, communicating in the background. Commonly, the four classes used are order management APIs, control tower APIs, master data APIs, and specification APIs.

API-enabled supply chain optimization includes artificial intelligence and machine learning, global application development, and continuity directives. APIs provide supply chains greater reliability, flexibility, and transparency.

The exchange of information, safe and direct access to catalogs and communication continue to support the supply chain evolution, making decisions, providing flexibility, cost savings, and reliability involve all three of these technologies—even older EDI.