October 02, 2014 Opinion piece
Optimising efficiency in the retail supply chain has been a key focus for us since identification standards were first introduced. The cost savings are stark – through the use of GS1 barcodes on products, the estimated annual savings for the retail industry are £10.9bn.
But even greater savings and efficiencies are possible. To help industry take best advantage of this potential, our focus sits within two areas over the coming period – automating the ‘order to cash’ cycle and encoding variable data on fresh foods.
Order to cash
Manufacturers, retailers and delivery companies need to exchange business information to support their trading processes.
The order to cash cycle comprises three steps – order of goods, delivery of goods and payment for goods delivered. The main (though not only) messages covered by the cycle are orders, despatch advice and invoices.
Our role in this cycle is to enable automation of these messages seamlessly between trading partners. This is achieved using our eCom standard, known as Electronic Data Interchange (EDI). Implementing EDI speeds up processes and eliminates the risk of manual errors.
To illustrate what this actually does in practice, it is helpful to walk through a best case example involving fully automated processes:
Retailers maintain stock levels based upon data from two sources – barcode scans at the checkout and the goods in/out point in the warehouse. When this level drops below a certain value, an order is automatically generated and sent to the relevant supplier.
If the order is accepted by the supplier, an order response is triggered and sent back. The products are then picked from the warehouse, and despatch advice is activated and sent by scanning the pallet at the point at which it is placed into a delivery vehicle.
This advance shipping notification (ASN) allows for the allocating of space at the receiving warehouse, and enables traceability information to be recorded in the instance of fresh foods.
Barcode scans at the point of receipt not only speeds up the receiving process, but allows comparison of goods received with the information in the despatch advice to reveal potential mismatches. At that point the retailer could issue an Electronic Proof of Delivery (ePOD) to the supplier, enabling a more accurate invoice to be raised.
Using GS1 identifiers within EDI messages in this way helps to reduce errors, commercial disputes and costs and increase service and customer satisfaction levels.
You can view a video illustration of this process here.
Encoding variable data on fresh foods
Information is everywhere, and consumers want to access it everywhere – in a store or restaurant, online or through any device they use to access the digital world.
This presents a challenge for businesses, but also the opportunity for differentiation in customer experience by ensuring information accuracy, enhancing consumer trust and creating value.
Advances in technology have led to the potential for encoding far more granular information into barcodes. This additional data may include serial numbers (to identify the specific instance of a product) or expiry date, among others. The initiative informing this evolution is Next Generation Product Identification (NGPI). The standards and solutions supporting variable data encoding have actually been around for years. Interest in adoption until now has been slow in the UK, but legislative drivers and ethical pressures around reducing food waste are creating an environment in which the benefits of implementation are becoming more immediately apparent to retailers.
Over time industry will build the capability to utilise GS1 2D barcodes (such as but certainly not limited to QR codes) on consumer packaging. This requires the roll-out of image-based scanners at the POS however, so wide-scale adoption among industry is likely to be a longer-term solution.
We will also be promoting adoption of GS1 DataBar to run alongside standard barcodes, to enable the option for providing additional, more granular information without causing any disruption to existing systems. This has already been successfully implemented in some countries including Korea, Ireland, Belgium and Poland, with case studies revealing benefits to be better fresh food management through preventing the sale of expired stock, and enabling automatic markdowns for items close to their expiry date.