What's The Big Delay With GS1 Databar All About?

Ann Grackin is CEO of ChainLink Research.

On Monday (Sept. 10), two supply-chain standards organizations (GS1 US and VICS) said they would merge. For retail IT execs this merger is robustly inconsequential, because the next-generation barcode plans are still being pushed by the GS1 folk. VICS has pretty much been on life support. But this week's announcement does remind us to ask: "What the heck ever happened to GS1?"

Back when I started tracking such matters in 1995, the goal of the key players was that GS1 would be almost ubiquitous by about 2000. Today, some 12 years later, ubiquitous is hardly the move. And I'd conservatively project that 2017 is much more likely. Now we have 2D and GS1 DataBar for the new world of mobile coupons. So what's been the slowdown? Quite a bit, it turns out.

  • First, the retailers themselves. Target or Walmart may have power over their tens of thousands of suppliers to dictate changes, but it seems they can't get five retailers in the room to agree on something as simple as the placement of the barcode label on the carton. (Yes, each has their own dock door and receiving set up, and equipment from different vendors and the physicality of the situation turns out to be hard to change.)

  • From there, it's on to the Tier 1 brand manufacturers. They serve all. And they push back on the retailers, because they are looking for a unity of methodology. Multiple compliance models cost more money to execute.

  • Multitier manufacturing chains are next. Manufacturing tends to be a bit more collaborative, so these companies all want to upgrade more or less together. Though the Tier 1s may be better financed to adopt the next big thing, they are very sensitive to the issues and the cost on the supply chain, as a whole, and how it affects the final ticket price to the consumer.

    Equipping the supply chain with interoperable devices—and paying for them—is also a long road, it seems. Examples: Third-party logistics providers are generally the thinnest margin players in the supply chain, carry a large burden of the packing and shipping, and step up to the plate for financial risk management and services for the supplier (such as EDI, etc.). All these things cost money. And most manufacturers won't move unless they are dictated to. Their constant question is, "Who will pay for this?" If they serve many suppliers, they have that added burden on multiple compliance methods.

  • In the last two decades, offshoring has had an impact. Although many U.S. manufacturing and logistics companies have embraced scanning, warehouse and EDI systems, this is not the case in China. This year's low-cost manufacturer may be passed over for another next year. These are not the environments where technology investments are going to be made. In fact, engaging China has been stated in the standards crowd as a challenge.

    In spite of the decades of technology we have all lived with, the fact is that EDI and barcoding at scale can be clunky and challenging to implement. It takes time and money to reach this point. It's not the most difficult thing you will ever do, but it just takes some time and dedication to get it done. Newer technology from the cloud and managed services for smaller manufacturers help a great deal, and these services are available at modest prices. But China has not been penetrated too deeply.

    Ironically, a whole industry of compliance has grown up—including the conferences, the memberships, the handbooks, the Webinars, the compliance validation services, the testers and the software, all of which are designed to help you figure out how to comply. And we all agree that richer, more standards-based information in digital, scannable and readable formats are of value across the retail chain. Proclamations on the billions of dollars of savings and waste reduction have been studied and accepted as goals to eliminate.

    Yet at each new rev of a standard—barcode to GS1 Databar and RFID—the promise and reality in terms of cost and time to implement in the industry are far different. And the seemingly simple thing we desire just seems to drag on, decade after decade.

    If you want to discuss this further, I'd love to hear from you.

  • Suggested Articles

    Costco changes up its menu items, and Alibaba and Guess partner for a physical store.

    Janey Whiteside, Walmart's new chief customer officer, is well acquainted with the importance of customer service in modern retail.

    Whole Foods will offer deals on Amazon's Prime Day, and tariffs against China are causing pricing hikes.