Supply Chain Basics: Technology, How Much – How Soon

Globalization has made the world smaller. Companies are more closely connected to their suppliers and customers than they used to be, and the supply chain has become a web of connections between suppliers and receivers. The Internet has been a major factor in this globalization. Companies can now exchange data with ease and speed, and much of the exchange can be automated. The result is a growing complexity of the supply chain as company networks become integrated into a global network. A simple exchange of data among individual companies is no longer sufficient. Companies in the supply chain need to communicate with each other, and a common “language” is required to facilitate this communication. Barcodes are one form of that language, but the language requirements are rapidly becoming more complex as more is asked of it. The changing language and its attendant technologies create the need for a new, more robust set of standards for recording and exchanging product information on a global scale. They also create new opportunities in the areas of product availability and safety, customer service, and supply chain efficiency for both consumers and businesses. As component prices drop and consumer fears of privacy invasion are addressed, the adoption rates for these technologies will accelerate. The new solutions are built on systems, such as barcodes, that have been in use for many years. More than 30 years ago, the introduction of the barcode initiated a transformation of the consumer packaging industry that brought greater convenience to consumers worldwide. Barcodes are in widespread use today, with more than 5 billion scans a day according to some estimates, and are an established element of retail sales. Companies are increasingly requiring labels such as barcodes, smart labels, and radio frequency identification (RFID) tags on shipments to help automated systems manage inventory and track their products. Labels produced to meet customer requirements are called “compliance labels” because the labels are designed to comply with a customer’s requirements. Compliance labels usually follow formats defined by the customer. New standards are now being implemented to expand and improve the applicability of technologies to monitor and record product information. RFID, the Global Data Synchronization Network (GDSN), and the Electronic Product Code (EPC) global network are examples of new technological platforms that employ common product identification and information standards. At the same time improvements are being introduced to the “old” barcodes. According to a recent survey, the highest technological priority for supermarkets was conversion to the 13- or 14-digit barcodes that allow for more uniform coding, easier data exchange between companies, and for more information about the product to be included on the labels. These changes will give barcode users access to the global networks that use them. Smaller growers and distributors should consider taking these steps: (1) Become knowledgeable about the new technologies and new ideas in barcodes. (2) Find out about the benefits of implementing the new solutions by reading articles, searching in magazines and on the Internet, and talking to people in the industry. (3) Participate in conferences to experience the technology firsthand and to discuss with experts. (4) Visit companies that have installed these systems to find out what’s involved. (5) Let bigger companies work out the details before committing funds in a new system. Small- and medium-sized growers and distributors need to start preparing to become an integral part of synchronized data systems that can satisfy changing consumer needs. Too much delay in adapting to this new business environment may result in the loss of customers and competitiveness. Implementation of these new technologies, however, should enable businesses to provide more personalized service and build lasting relationships based on individual needs.