PREPARING FOR THE 2005 SUNRISE DATE

By Cristina N. Wolff*

January 1, 2005, promises to be a very important date for anyone working with supply chain technologies.  Anyone in the retail and consumer goods sector, as well as in other commercial, industrial, or even government sectors, that uses the 12-digit Universal Product Code (UPC) symbol to identify goods, should be aware of the changes that will be coming to this vital but often overlooked commercial technology

Attending to the needs of global commerce, the Uniform Code Council (UCC) and its counterpart organization, the European Article Numbering Association (EAN), have joined forces. They will require by January 1, 2005-the 2005 Sunrise Date-that all retailers and trading partners in the United States and Canada that presently scan the 12-digit UPC symbol be capable of scanning the EAN-13 symbol instead.

The challenge that North American companies face is to update and expand their databases, systems, and applications to accept the new data structures.

Currently, the various data structures that exist are as follows:

• UCC-12-UPC: 12-digit number used in the United States and Canada
  
• EAN/UCC-13: 13-digit number used outside of the United States and Canada
  
• EAN/UCC-14: 14-digit number used to identify various trade items
  
• EAN/UCC-8: 8-digit number used predominantly outside of the United States and Canada.

This family of data structures, called the Global Trade Item Number (GTIN), requires that databases currently built on 12 digits be updated and expanded to comply with the new 13-digit requirement.  Furthermore, the UCC recommends enhancing systems to accept data structures of up to 14 digits while updating the systems and applications to meet the current requirements.

History

In Revolution at the Checkout Counter, authors John Dunlop and Jan Rivkin state, "When coupled with information and communication technologies, the UPC sparked a revolution that started at the supermarket checkout counter, spread throughout domestic retailing, moved around the globe, and is now taking place in sectors far removed from retailing."

The early 1970s were marked by rapid inflation and low profitability in food retailing, creating urgency to achieve greater productivity. A committee was formed by top executives of major companies, representing six grocery trade associations, one manufacturing trade association, and five retail trade associations. The timing was right for the project that would become the UPC code; the 1960s and early 1970s were marked with significant advances in electronics, optical technology, and computing.  It was these advances that made bar code scanning a feasible and economical practice. The outcome was the creation of the UPC, whose benefits were first employed by the food industry.

Following the introduction of this 12 digit bar code, department stores such as Kmart and Wal-Mart recognized the product identification code's value and demanded that their vendors adopt the coding for all of the items they sold. Soon after, though at a much slower pace, supermarkets and retail chain stores began installing scanners capable of reading the packages' new bar code labels.

A Simple Process

In the simple identification process, the bar code scanner reads the package's UPC symbol, with the point-of-sale register looking up the current price from a computer database, either on-site or elsewhere.

Simultaneously, this information is communicated to management for inventory tracking and sales analysis. This process enables retailers to collect and process information about consumer demand, which in turn helps companies to make appropriate purchasing decisions to maintain adequate inventory.

Then as now, the most efficient use of this technology is the integration of systems between manufacturers and retailers. When the scanner processes the sale of an item, the separate systems exchange information, allowing the manufacturer to start the inventory replenishment process.

Europe.Soon after its introduction in the U.S. market, news of the bar code's success spread to European markets, and they pursued a similar project. Within two years, the EAN was created. It was designed to accommodate the UPC used in the United States. In order to accomplish this task, the EAN added an extra digit at the beginning of the code.  Consequently, products exported by European countries to the United States and Canada required UPC labels containing the 12-digit code. It has been common practice for overseas manufacturers to pass the additional packaging specifications' cost to their North American customers.  Conversely, it has not been a problem for U.S. and Canadian companies to export their products to countries that read EAN 13-digit codes, because 12-digit codes are easily accepted by that system.

Current Bar Code Developments

The disparity in the identification process has caused some concern; the fact that everyone else in the world uses 13-digit bar codes, coupled with a possible shortage of 12-digit UPC numbers, has presented a need for action.

The UCC and the EAN have played an important role in ensuring the proper identification of products or services under their systems. Many companies now recognize the need for a global system. The current focus is on implementing a correctly structured GTIN.  Experts believe that using a 14-digit field will ensure unique identification of products around the world.

Preparing for the 2005 SunriseDate

In order to plan for their systems' adaptation, North American companies should evaluate their current external and internal system configurations.

One immediate course of action for all companies that use bar code technology could be the following:

• Contact equipment providers to review and understand system specifications.
  
• Contact suppliers to notify them that the company is expanding its capability to process the new data structures that comprise the GTIN.
  
• Request that suppliers review their project compliance timetables.

Following is the adapted version of the "2005 Sunrise Compliance Checklist" as presented by the UCC. The complete list can be found at http://www.uc-council.org.

U.S. and Canadian companies that have not begun analyzing GTIN's impact on their systems have no time to lose. It is imperative that companies revamp their internal and external systems with scanning hardware upgrades and database storage and application updates.  Failure to update systems could cause serious problems in the marketing, distribution, and sales of products and services. The process of testing and updating to make systems compliant should begin now; the cost of waiting may be too great.

2005 Sunrise Checklist

1. Inform
I have informed everyone I work with of potential GTIN issues.
2. Assess
I have inventoried all hardware and software applications in my company related to product and service identification. If it uses a GTIN, I have listed it. I have inventoried and checked all systems.
3. Contact
I have asked the manufacturers of all the hardware for written confirmation that my equipment is GTIN-capable. If the device is not GTIN capable, I have asked the manufacturer how to make it conform to GTIN standards.
4. Upgrade and Repairs
I have set priorities for making all noncompliant hardware and software GTIN-capable. I have identified software and hardware that is critical to my operation and designated these items to be addressed first.
5. Testing
I have included enough time for hardware and software testing to prove that my systems are GTIN-capable or have been repaired and replaced.  My systems will accommodate the 14-digit GTIN, continue to accommodate the 8-, 12-, or 13-digit numbers, and be fully tested and operational six months prior to the January 1, 2005, deadline.