It's Not Y2K, It's Not Even Close

December 31, 2002 - 12:47

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 may
have had the misfortune of coming across an article entitled "Bigger Bar
Code Inches Up on Retailers" this past August. This work of fear-inciting
adjectives and general misinformation discusses something called Sunrise 2005,
the name that the organization responsible for allocating bar codes to products
nationwide, the Uniform Code Council (UCC), has given to describe January 1,
2005: the date when retailers are advised to be prepared to begin accepting
13-digit bar codes, or EAN-13.

Currently, North American retailers and manufacturers
uniformly use the UPC, a 12-digit code that, while permitting seamless trade
among North American companies, has proven to be a primitive barrier to
international trade; just as the United States is one of the few nations still
operating on the English measurement system, we are also one of the few working
with 12-digit bar codes. This means that any country whose products are marked
with 13-digit codes has to create a special inventory of 12-digit-coded
products for export to the United States. Today, more than 80 countries around
the world actively use EAN-13.

According to the Times article, "the additional number
is enough to make checkout scanners seize up and make computers crash, perhaps
disrupting entire supply chains." Sounds deleterious, doesn't it? Things
are not always as they seem. In speaking about Sunrise 2005, the author also
makes repeated comparisons to the once-feared Y2K debacle, which, as anyone
aware 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 to
the details of this story is the fact that she doesn't even use the proper name
for the UCC, which she refers to throughout the article as the Universal Code
Council.

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

It's not Y2K

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

"In addition to" are the operative words here, as
the January 2005 date does not mean UPC codes will become obsolete, but simply
that retailers should be able to accept UPC and EAN-13 codes. At the heart of
this issue is the expansion of databases, nothing more. And despite the The New
York Times article's claim that upgrades and changes "will require
significant investments in time and capital," this is not necessarily
true. Says John Terwilliger, vice president of market development for the UCC,
"In most cases, scanners can be easily upgraded at little or no
expense."

Additionally, even if the entire North American supply chain
were not fully prepared for this change, there is no reason to believe that a
bigger bar code would induce system failure. "As far as the UCC goes, it
is not our belief that systems will shut down, it is not our belief that people
have to scrap their existing systems and buy something new; the Sunrise date
for January 1, 2005, is the date the UCC is recommending that companies be
prepared to scan and store the information for EAN-13 numbers."

In a letter written to The New York Times to right the wrong
information printed in the newspaper's article, Terwilliger writes, "The
suggestion that checkout scanners will seize up, computers crash or entire
systems fail after January 1, 2005, is absolutely incorrect. While companies
that are not compliant may experience problems scanning the longer EAN-13
symbols, it will not disrupt commerce in North America. Probably the biggest
and most visible issue could be the inconvenience to the consumer. The 2005
Sunrise 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 supply
chain."

Keeping up with the world

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

There has been a rumor circulating that the reason for the
transition to EAN-13 acceptance is that the UCC is "running out" of
numbers, another fallacy that the Times article put forth. Writes Terwilliger
in his letter, "While the UCC has taken steps to preserve 12-digit
capacity by assigning numbers based on the company's product identification
needs, there is not an infinite amount of 12-digit numbers. There is a
significantly larger pool of 13-digit numbers, and the 2005 harmonization
effort will allow the UCC to issue EAN-13 numbers when it becomes necessary to
do so." So at some point in the future, EAN-13 bar codes will not only
originate from foreign sources, but the UCC itself will begin to issue 13-digit
codes in place of UPCs. For those involved in retail, even small retail
businesses, this means that even if you aren't currently receiving products
from international manufacturers using EAN-13, it's very likely that you'll be
seeing 13-digit bar codes from your North American manufacturers as time goes
on, and you'll need to be ready for that. Once again, the first step leading to
all others here is to contact your database/scanning equipment provider and
check on your system's compatibility with 13-digit bar codes.

And while you're at it, it's a good idea to make sure your
system is compatible with 14-digit numbers, which are also on the horizon.
Called the Global Trade Items Number (GTIN), these bar codes will give companies
the ability to encode additional data, especially for very small products like
jewelry, produce, healthcare items -- products that companies are now not able
to bar code properly. "A GTIN is not a new number, it's not a new
standard, it's nothing more than a term to wrap around all those numbers that
are already out there. When you think of bar codes, they're not just used at
the point of sale, they're used in companies' receiving docks and in other
places to track information about those products. It's just as important for
companies to share information that happens on the back-end as it is at the
consumer level. Those are all the compelling business reasons why companies
need 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 for
mass-merchandisers that require pots and containers to be marked with their bar
codes at the growing facility? Growers are on the shipping rather than
receiving end, and unless they are storing bar codes for inventory or other
tracking purposes, it means absolutely nothing. This is primarily a retailer
issue, as retailers receive products from a number of different sources. Let's
just ask for the sake of argument, however, that in the interest of uniformity,
could a large, power-wielding mass-merchandiser mandate that all of its
suppliers provide 13-digit bar codes? Not according to Garton. "As long as
a retailer's system can store up to 14 digits, 12 goes into 14 very nicely, so
there's no reason to ask your suppliers to use a different type of symbol. You
can scan it without any effort whatsoever. It would not make good business
sense 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 to
the consumer, and the retailer knows that -- there's no business benefit to
that whatsoever," he said.

So are the retailers ready? According to Lisa Oliver,
assistant vice president of live goods at Frank's Nursery and Crafts, "Our
computers are already set. We had upgrades that have taken [the number
expansion] into consideration. Our information systems department made sure of
that." Wal-Mart spokesman Tom Williams said, "We have been preparing
for 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 that
allows us to deal with up to 20-digit bar codes. This effectively solves any
UPC issues. We had problems for some time before the upgrade since we do
occasionally bring in merchandise with EAN numbers and our software would choke
on the larger number. This is no longer the case, and we can now use both UPC
numbers as well as EAN numbers."

On the software supplier side, Robert Schmitz, owner of
Wileywood Nursery and Floral, Mill Creek, Wash., and of SimPOS!, a
point-of-sale and inventory tracking system with more than 100 installations at
garden centers, wholesale growers, landscaping companies and others across the
United States and Canada, says his company's scanning equipment is already
capable of holding up to 16-digit product codes. Software support is free
through upgrade downloads completed on a monthly basis from the manufacturer's
Web site.

The readiness standard recommended by the UCC is completely
voluntary -- the Council doesn't have a muscled enforcement team that will be
storming retail stores nationwide to ensure compliance with Sunrise 2005. It's
about voluntarily being ready, or voluntarily being left behind. Whether or not
the retailers you as a grower supply are ready for this change doesn't really
matter much for you. If they aren't, however, you could feel the reverberations
from their ill-preparedness in the form of any consequences resulting from
choosing not to keep up with the competition. But even then, chances are those
reverberations won't amount to much more than a slight ripple.

[if !supportEmptyParas] [endif]

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

About The Author

Brandi D. McNally is associate editor of GPN.

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