INDUSTRY VIEWPOINT: Taking the first steps on the road to standards and technology
- by Gary Fleming | November 19, 2006
Electronic commerce provides the highest level of accuracy, speed and cost containment. Transactions integrated into the system automatically further eliminate or, at the very least, greatly reduce errors and costs associated with manual input.
We know this because several companies which are leading the way on the road to standards and technology are seeing savings of almost $10 per transaction on such common transactions as purchase orders, invoices, advanced ship notices, price and item changes.
The benefits, however, will be significantly greater once proprietary numbers are replaced with industrywide standards. Doing this is the first step that will enable the produce and floral industries to participate in and benefit from supply chain initiatives.
We know the limits of proprietary systems: identifying and referencing products requires numerous cross references, extra labor is needed to maintain the cross references and human error results in errors and inefficiencies. An industrywide system would eliminate these inefficiencies.
We have the motivation -- increased profit, decreased loss, reduced labor, increased automation, the need for effective and efficient traceability and tracking -- and we have the means. The technology is readily available. What we lack, however, is a clearly articulated and, most important, unbiased roadmap of how to get the produce and floral supply chain where we need it to be.
Today's supply chain is riddled with the inefficiencies and inaccuracies of having multiple proprietary numbers representing the exact same item. Adopting one set of data standards is absolutely the first step to ensure an effective and efficient supply chain that is accurate and eliminates costly invoice deductions stemming from mis-shipments, cross-referencing proprietary numbers between supply chain trading partners and failed expectations.
Currently, in North America and in more than 1.3 million companies in 103 countries, the set of standards most widely used are of the organization known as GS1. Nevertheless, based upon a recent survey commissioned by the Produce Marketing Association, only 4 percent of produce industry suppliers use a standard at the pallet level, only 6 percent at the case level and only 30 percent at the item level.
Adopting one universal set of data standards provides the industry with a common language.
Every piece of information that needs to be communicated, such as item, pricing and promotional information, is contained in a 14-digit code. This code, the Global Trade Item Number, can be used on individual items, on cases and on pallets.
Using just one set of standards and communicating via this 14-digit number allows companies to synchronize, or "talk to" one another, and to track, report and invoice electronically.
Using only one set of data standards along with the Global Trade Item Number makes electronic transmission within the produce and floral industries possible and much more profitable.
Radio Frequency Identification is a form of automated data capture as are bar codes and Reduced Space Symbology. Each RFID tag contains an Electronic Product Code, which is analogous to the Universal Product Code used on items that are sold directly to consumers.
One advantage of RFID over other forms of automatic data capture is its capacity to relay information faster than others. However, because the EPC must contain the 14-digit Global Trade Item Number, RFID cannot be used without it.
A bar code is a form of automated data capture just as RFID and RSS are. Bar codes are used at all levels of packaging, including the pallet, case and item. Bar codes that contain the 14-digit Global Trade Item Number allow many companies to automate the receiving process and save warehouse labor dollars and congestion at the dock. A large majority of cases, however, do not have the GTIN in their bar codes. This requires the receiver to manually handle those cases and results in added cost.
Reduced Space Symbology is a type of bar code that was designed to be used in spaces too small to affix a typical UPC bar code. The application of RSS is specific to the item level. However, there is a movement to pilot the use of RSS on produce items that could change the way we use PLU codes and code produce and floral items in the future. Again, the GTIN is required for RSS. The RSS that could be used for produce holds up to 14 digits. It is expected that the 14-digit GTIN would be used in this type of bar code.
Clearly, everyone in the floral and produce supply chains, including the end consumer, will benefit once the industry adopts one set of data standards and utilizes readily available technology from harvest to consumer.
[Gary Fleming, vice president of industry technologies and standards for the Produce Marketing Association, has worked in various segments of the supply chain. He has written numerous documents now being used as standards in both the grocery and foodservice segments of the food industry and is a regular speaker at trade organization events. Before joining PMA, Mr. Fleming was with GS1-US (formerly the Uniform Code Council), General Mills, Fort James and Commerce One. He is active in over 11 different industrywide committees aimed at identifying best practices within the produce and floral industries and has taken a leading role in the incorporation of standards and supply chain technologies for the remaining fresh food categories and the floral industry. This is the first in a series by Mr. Fleming that will appear over the next few months.]