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DataBar: Is your supply chain prepared?


By Jane Fazzalari

Since the global standards organization GS1 first announced its plans for DataBar — a new labeling system that stores massive amounts of product data — retail industry stakeholders have been discussing its potential impacts. Major retailers such as Target and Walgreens have already started replacing the standard UPC code on their coupons with DataBar bar code and updated their POS systems according to accommodate the new labelling system.

Capable of holding 14 Global Trade Item Numbers (GTINs) and up to 74 application identifiers, DataBar labels can carry much more information than traditional EAN/UPC labels, including serial and batch numbers, processing facility of origin, manufacturing standards, expiration dates and other details. All this information is encoded in a small, flexible format that can be resized for many specific product applications.

DataBar labels can be used in open global trade, on any product, by 2014. But already many companies are exploring its usefulness for these and other applications:

  • Dairy, fresh produce and other perishables that have short expiration dates

  • Products that are manufactured according to kosher requirements and other strict standards

  • Small products, like jewelry, where an EAN/UPC label might be precluded by size

  • Hardware or other products with an unusual shape that makes them hard to label

  • Pharmaceuticals and other products that have recall concerns — making the processing facility and batch number critical

  • Fashion and apparel products which could be coded to reflect distinct dye, fabric or sewing batches that may vary across multiple production runs

According to GS1, within the next three years every consumer products manufacturer and retailer should be prepared to manage transactions using DataBar-enabled technology. Whatever the eventual acceptance level of this emerging labeling system, it does hold promise for many companies who could benefit from having easy access to volumes of information at the individual product level.

However, before your business fully embraces the DataBar concept, it is critical to ask: Are we prepared to manage this new volume of granular product data? How can it help our supply chain operate more efficiently, improve customer service, protect margins and accomplish other key strategic goals?

More data: An obvious benefit for retailers

As anyone who works in retail is aware, store-level point-of-sale (POS) data is often filled with inaccuracies because of shrinkage, expired products that will remain unsold, damaged packaging and other issues. Manual corrections consume precious time and money, while throwing off the accuracy of the entire supply chain.

By maximizing item traceability, DataBar labels can help minimize errors and provide a highly accurate picture of actual store-level sales and on-hand, sellable inventories. Retailers can maximize their profits by displaying and selling items according to expiration date, instead of having consumers reject expired products, or products approaching their sell-by date, in favor of newer items. The value of traditional EAN/UPC barcodes is limited for items with varying expiration dates, because they contain only minimal product information. While DataBar labels can’t stop consumers from “shopping from the back of the shelf,” the freshness information encoded in the DataBar label can help retailers understand the impact of this behaviour on their inventories.

DataBar labels also enable retailers to track and study the impact of markdowns and waste across all their products. When older products are discarded as waste, retailers can track this obsolescence in real time, instead of waiting for individual stores to manually process their inventory corrections. As a result, they can make more exacting purchase orders that minimize waste and maximize profit margins.

As retailers place more and more emphasis on extremely fresh categories such as bakery items and prepared foods, new DataBar labels can have obvious benefits. By tracking sales of these very fresh categories at the item and shelf level, the DataBar labeling system can help retailers manage demand and maximize margin. For example, retailers can code fresh products so that after a certain period, the price is marked down automatically. They can also more effectively manage multiple deliveries of identical items delivered on the same day — distinguishing between produce delivered at 6:00 a.m. and produce delivered at 4:00 p.m. The conventional inventory rule of “first in, first out” is not always observed when shoppers are making choices — and DataBar can reveal what is really happening in the aisle.

Because their small size makes DataBar well-suited for individual products, this new labeling system can also save retailers the time and money that is often invested in breaking down manufacturers’ or shippers’ cases and relabeling individual products. With DataBar labels already affixed at the item level, products can quickly be unpacked and moved directly to the retail shelf.

Cases can also be packed to include mixed units, with DataBar providing the capability to track which items are actually selling. If there are continuing issues with deliveries — for example, certain produce is always arriving bruised — the granular information encoded in the DataBar label simplifies the process of tracking these errors back through the supply chain, making it possible to eliminate careless shippers and other problem vendors that are affecting sales performance at retail.

While it remains to be seen whether DataBar will truly be embraced by the worldwide retail industry by 2014 — which is the goal of the GS1 organization — one thing is certain. Combined with advanced supply chain solutions that are designed to manage and apply data in a strategic manner, the new level of information provided by DataBar has the potential to deliver significant benefits for many manufacturers and retailers. This new item- and shelf-level labeling system has the potential to raise the bar in the retail industry — but only you can decide if DataBar is the right choice for your own business.

Jane Fazzalari, VP, Retail Industry at JDA Software.

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