Gotcha! Watch Your Steps With Scan-Based Trading

By Sean Gallagher  |  Posted 2003-03-01 Print this article Print
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Synchronizing data is no baby step
The matching of product data moving inside suppliers' and retailers' supply-chain systems is required before companies can even think of trading cards for bucks based on scanning bar codes at the checkout lane. This means not just getting product codes and descriptions in the retailer's system to match those in each supplier's database, but "cleaning" the data to remove any erroneous items or "free-form" data that may have been entered into systems to fudge the books. "The top of the checklist should be determining how clean the data you're receiving from suppliers is now," says AMR Research analyst Peter Abell. The formatting and structure of the data must match. Only then can data be shared through a directory of products or electronic document exchanges.

You'll need to follow the right standards
In order to make sure the work you do to synchronize data is reusable across the retailers and suppliers you trade with, you'll need to convince them all to adhere to standard ways of formatting their information.

Fortunately, there are standards bodies working to solve that problem for you. The Uniform Code Council and EAN International, the two organizations governing bar-code standards worldwide, are currently building a directory, called UCCnet, which will let retailers electronically locate and synchronize with supplier data. So far, according to Steve Arens, UCC's senior director of market development, UCCnet has just over 300 companies signed up for the service.

To take advantage, retailers will have to modify their software to handle larger identification numbers—the Global Trading Identification Number, or GTIN.

The GTIN unifies the two predominant product identification systems in the world—the UCC's UPC, and EAN International's European Article Numbering. The UPC and EAN are 12 and 13 digits each, respectively, including a last digit for error correction; the GTIN adds more digits to each to create a 14-digit identification number. The GTIN will be used as the basis for the next new bar-code standard, called Reduced Size Symbology (RSS), which UCC and EAN hope to roll out completely by January 2005.

Another key piece of UCCnet's scheme is the Global Location Number (GLN), a number that identifies where suppliers are physically and electronically, to speed trading. And to make it even more structured, both the GTIN and the GLN are part of UCCnet's Global Data Dictionary—a directory structure that defines item attributes and other requirements for synchronization. The goal of UCCnet is to provide a way for retailers to browse suppliers' data, and synch all references to their products.

Bar codes aren't accurate enough
The Universal Product Code that is captured in a bar code only has 12 digits and only categorizes a product. It takes more digits to identify a specific product and manufacturer. An extension of the UPC standard, known as Guideline #21, provides for additional data on greeting cards, magazines and books, but most point-of-sale and retail systems can't read the extended barcode.

To solve this problem, the Auto-ID Center at MIT is developing the Electronic Product Code (EPC), a 28-digit number that can be used with radio-frequency identification (RFID) chips and other electronic labels to give each product its own unique identifier. However, wide acceptance of EPC is a number of years away.

You'll need to remodel to make room for new product codes
In order to use the GTIN codes to synchronize product, you'll need to modify your software and databases to handle their joint product identification code standard, called the Global Trading Identification Number.

"The systems are structured for 12 or 13 digits now," says UCC's Arens. To take advantage of the GTIN and UCCnet, he says, "They have to go to 14 digits." Most major retailers are already set up for up to 13 digits, since an international standard uses that many, but most U.S. grocers still can only handle UPC's 12 digits.

AMR analyst Abell says smart companies will make room for 28-digit Electronic Product Codes "to avoid having to fix it later."

Standards are not complete answers
Even when UCCnet is fully deployed, you'll still need a third-party service provider or a direct connection between retailers and suppliers for handling the most important pieces of data in your scanner-based trading: prices and promotional data. Pricing data is just what it's called—information on what the product costs. Promotional data provides information on special pricing retailers can get if they meet specific supplier requirements—like giving a product more prominent display, or special discounts based on when the product gets sold.

There's a need for speed
Sales data must be submitted to the supplier quickly in order to maintain stock levels—viaLink recommends that the data be transferred daily. "'Daily data daily' is what we suggest to our customers," says Betsy Hill, director of marketing for viaLink. That means in turn being able to handle as much as 2 billion characters of data every day, coming in from large retailers such as Target or Wal-Mart, according to Abell.

Codes must be readable
In 1998, American Greetings discovered that the bar codes on some of its cards couldn't be read by retailers' checkout systems. This slowed down transactions, increased errors and created an added cost to its retailers. Both American Greetings' retailers and final customers were unhappy. American Greetings solved the problem by purchasing Xaminer 6500LS bar-code verifiers from Atlanta-based Stratix Corp. to assure the quality of bars at its printing plants.

Sean Gallagher is editor of Ziff Davis Internet's enterprise verticals group. Previously, Gallagher was technology editor for Baseline, before joining Ziff Davis, he was editorial director of Fawcette Technical Publications' enterprise developer publications group, and the Labs managing editor of CMP's InformationWeek. A former naval officer and former systems integrator, Gallagher lives and works in Baltimore, Maryland.

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