It’s Not Y2K, It’s Not Even Close By Brandi D. McNally

You may have heard that UPCs are going to be archaic by 2005, and that with their demise, retailers will be panting to avert a scanning system D-Day that could squelch entire supply chains as "new" bar codes used by the rest of the world threaten disaster. As GPN has investigated, that's just not true.

If you’re a regular reader of The New York Times, you mayhave had the misfortune of coming across an article entitled “Bigger BarCode Inches Up on Retailers” this past August. This work of fear-incitingadjectives and general misinformation discusses something called Sunrise 2005,the name that the organization responsible for allocating bar codes to productsnationwide, the Uniform Code Council (UCC), has given to describe January 1,2005: the date when retailers are advised to be prepared to begin accepting13-digit bar codes, or EAN-13.

Currently, North American retailers and manufacturersuniformly use the UPC, a 12-digit code that, while permitting seamless tradeamong North American companies, has proven to be a primitive barrier tointernational trade; just as the United States is one of the few nations stilloperating on the English measurement system, we are also one of the few workingwith 12-digit bar codes. This means that any country whose products are markedwith 13-digit codes has to create a special inventory of 12-digit-codedproducts for export to the United States. Today, more than 80 countries aroundthe world actively use EAN-13.

According to the Times article, “the additional numberis enough to make checkout scanners seize up and make computers crash, perhapsdisrupting entire supply chains.” Sounds deleterious, doesn’t it? Thingsare not always as they seem. In speaking about Sunrise 2005, the author alsomakes repeated comparisons to the once-feared Y2K debacle, which, as anyoneaware of recent history can attest, turned out to be much ado about nothing.And perhaps the most telling sign that the author has not given much care tothe details of this story is the fact that she doesn’t even use the proper namefor the UCC, which she refers to throughout the article as the Universal CodeCouncil.

Many growers, unless they have expanded their businesses toinclude retail and unless they are suppliers for large retailers that requireproduct to be bar-coded prior to shipping, do not have to deal with thisbusiness of bar coding. If you are one of them, then congratulations, life asyou know it is not going to come to an end. If you aren’t one of them, chancesare that even for you, not much is going to change; but it would still behooveyou to understand the truth about this issue and know what you may need to doto prepare for it.

It’s not Y2K

Let us begin by shedding the whole comparison of bar codeexpansion to Y2K. According to Al Garton, director of general merchandise forthe UCC, “We do not view this as a Y2K, although there are companies whohave had systems in place for a long time, and they may view it that waybecause they’ve got a lot of work to do.” Just how much work and how muchmoney may need to be spent will depend on the age and complexity of yoursystems; the only way you can determine your current system’s capabilities isto contact your database equipment provider and make sure that the equipmentyou have can read and store EAN-13 bar codes in addition to UPCs.

“In addition to” are the operative words here, asthe January 2005 date does not mean UPC codes will become obsolete, but simplythat retailers should be able to accept UPC and EAN-13 codes. At the heart ofthis issue is the expansion of databases, nothing more. And despite the The NewYork Times article’s claim that upgrades and changes “will requiresignificant investments in time and capital,” this is not necessarilytrue. Says John Terwilliger, vice president of market development for the UCC,”In most cases, scanners can be easily upgraded at little or noexpense.”

Additionally, even if the entire North American supply chainwere not fully prepared for this change, there is no reason to believe that abigger bar code would induce system failure. “As far as the UCC goes, itis not our belief that systems will shut down, it is not our belief that peoplehave to scrap their existing systems and buy something new; the Sunrise datefor January 1, 2005, is the date the UCC is recommending that companies beprepared to scan and store the information for EAN-13 numbers.”

In a letter written to The New York Times to right the wronginformation printed in the newspaper’s article, Terwilliger writes, “Thesuggestion that checkout scanners will seize up, computers crash or entiresystems fail after January 1, 2005, is absolutely incorrect. While companiesthat are not compliant may experience problems scanning the longer EAN-13symbols, it will not disrupt commerce in North America. Probably the biggestand most visible issue could be the inconvenience to the consumer. The 2005Sunrise date is an important issue; but it is erroneous to make January 1,2005, a date that will produce panic and widespread disruption to the supplychain.”

Keeping up with the world

Why is there a need to change the current system? “TheEAN-13 numbers are being used everywhere else in the world today besides NorthAmerica — in other words, we would like North America to join the rest of theworld. The benefit to this is that manufacturers who send product to NorthAmerica will not have to re-label that product with a UPC, because NorthAmerican companies will then be able to read other bar codes, or other numberstructures, other than just the UPC,” Garton explained.

There has been a rumor circulating that the reason for thetransition to EAN-13 acceptance is that the UCC is “running out” ofnumbers, another fallacy that the Times article put forth. Writes Terwilligerin his letter, “While the UCC has taken steps to preserve 12-digitcapacity by assigning numbers based on the company’s product identificationneeds, there is not an infinite amount of 12-digit numbers. There is asignificantly larger pool of 13-digit numbers, and the 2005 harmonizationeffort will allow the UCC to issue EAN-13 numbers when it becomes necessary todo so.” So at some point in the future, EAN-13 bar codes will not onlyoriginate from foreign sources, but the UCC itself will begin to issue 13-digitcodes in place of UPCs. For those involved in retail, even small retailbusinesses, this means that even if you aren’t currently receiving productsfrom international manufacturers using EAN-13, it’s very likely that you’ll beseeing 13-digit bar codes from your North American manufacturers as time goeson, and you’ll need to be ready for that. Once again, the first step leading toall others here is to contact your database/scanning equipment provider andcheck on your system’s compatibility with 13-digit bar codes.

And while you’re at it, it’s a good idea to make sure yoursystem is compatible with 14-digit numbers, which are also on the horizon.Called the Global Trade Items Number (GTIN), these bar codes will give companiesthe ability to encode additional data, especially for very small products likejewelry, produce, healthcare items — products that companies are now not ableto bar code properly. “A GTIN is not a new number, it’s not a newstandard, it’s nothing more than a term to wrap around all those numbers thatare already out there. When you think of bar codes, they’re not just used atthe point of sale, they’re used in companies’ receiving docks and in otherplaces to track information about those products. It’s just as important forcompanies to share information that happens on the back-end as it is at theconsumer level. Those are all the compelling business reasons why companiesneed not stop at 13, but go to 14 while they’re there,” said Garton.

Growers, relax (unless you retail)

What does this mean for growers producing formass-merchandisers that require pots and containers to be marked with their barcodes at the growing facility? Growers are on the shipping rather thanreceiving end, and unless they are storing bar codes for inventory or othertracking purposes, it means absolutely nothing. This is primarily a retailerissue, as retailers receive products from a number of different sources. Let’sjust ask for the sake of argument, however, that in the interest of uniformity,could a large, power-wielding mass-merchandiser mandate that all of itssuppliers provide 13-digit bar codes? Not according to Garton. “As long asa retailer’s system can store up to 14 digits, 12 goes into 14 very nicely, sothere’s no reason to ask your suppliers to use a different type of symbol. Youcan scan it without any effort whatsoever. It would not make good businesssense for a retailer to say to their supplier, ‘go out and put 13s on there,’because it’s going to cost that supplier money that’s going to be passed on tothe consumer, and the retailer knows that — there’s no business benefit tothat whatsoever,” he said.

So are the retailers ready? According to Lisa Oliver,assistant vice president of live goods at Frank’s Nursery and Crafts, “Ourcomputers are already set. We had upgrades that have taken [the numberexpansion] into consideration. Our information systems department made sure ofthat.” Wal-Mart spokesman Tom Williams said, “We have been preparingfor it, are prepared and will perform seamlessly through the change.”Target Corporation refused to comment. Said John Trax Jr. of Trax Farms,Finleyville, Pa., “Our software supplier installed an upgrade in 2000 thatallows us to deal with up to 20-digit bar codes. This effectively solves anyUPC issues. We had problems for some time before the upgrade since we dooccasionally bring in merchandise with EAN numbers and our software would chokeon the larger number. This is no longer the case, and we can now use both UPCnumbers as well as EAN numbers.”

On the software supplier side, Robert Schmitz, owner ofWileywood Nursery and Floral, Mill Creek, Wash., and of SimPOS!, apoint-of-sale and inventory tracking system with more than 100 installations atgarden centers, wholesale growers, landscaping companies and others across theUnited States and Canada, says his company’s scanning equipment is alreadycapable of holding up to 16-digit product codes. Software support is freethrough upgrade downloads completed on a monthly basis from the manufacturer’sWeb site.

The readiness standard recommended by the UCC is completelyvoluntary — the Council doesn’t have a muscled enforcement team that will bestorming retail stores nationwide to ensure compliance with Sunrise 2005. It’sabout voluntarily being ready, or voluntarily being left behind. Whether or notthe retailers you as a grower supply are ready for this change doesn’t reallymatter much for you. If they aren’t, however, you could feel the reverberationsfrom their ill-preparedness in the form of any consequences resulting fromchoosing not to keep up with the competition. But even then, chances are thosereverberations won’t amount to much more than a slight ripple.

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For more information regarding Sunrise 2005, visit the UCCWeb site at www.uc-council.org.



Brandi D. McNally

Brandi D. McNally is associate editor of GPN.



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