WAKE-UP CALL FOR 2005 SUNRISE

One more year to go.Actually, as you read this, there's a little less time than that left before Jan. 1, 2005, the so-called 2005 Sunrise deadline declared some time ago by the Uniform Code Council, the Lawrenceville, N.J.-based keeper of bar-coding specifications and standards for North America.For those who have been ignoring technology issues over the past few years, UCC set this deadline to motivate

One more year to go.

Actually, as you read this, there's a little less time than that left before Jan. 1, 2005, the so-called 2005 Sunrise deadline declared some time ago by the Uniform Code Council, the Lawrenceville, N.J.-based keeper of bar-coding specifications and standards for North America.

For those who have been ignoring technology issues over the past few years, UCC set this deadline to motivate retailers and manufacturers to develop the ability to scan and process bar codes with 13 digits, one more than contained in the UPC bar code imprinted on most products sold in North America during the past few decades.

By taking these steps, retailers in this part of the world will be on the same footing as their counterparts elsewhere, who use a different system, based on the 13-digit (and eight-digit) EAN bar-code system. Those retailers can scan our bar codes, but we can't scan theirs. Put another way, they can sell our products without re-labeling, but we can't do the same with their products. A year from now, that will all change.

Or will it?

Certainly, many retailers and distributors, particularly larger ones, have begun gearing up for the 2005 Sunrise deadline and expect to be compliant in their point-of-sale and corporate systems by the third quarter of this year.

Yet there are still retailers, as well as manufacturers, who have delayed making changes to their systems and now face the prospect of falling into a competitive disadvantage.

Moreover, the 2005 Sunrise deadline comes with a bit of a twist. While it is only necessary to read and process 13-digit bar codes to meet the deadline's mandate for the POS, UCC is recommending that retailers and manufacturers not stop at 13 digits -- and add just one more. That's because 14-digit codes, or GTINs, represent the next step in supply chain efficiency. So while you're expanding to 13 digits, you might as well also expand to 14 for essentially the same investment.

GTINs will be necessary in two emerging areas. One is the 14-digit RSS (reduced space symbology) code, a downsized bar code designed for perishables, health and beauty items, and other products. Second, data synchronization, the EPC (electronic product code) and other new technologies will require the GTIN data format at a minimum. Case and pallet bar codes also use 14 digits.

Asked to describe the status of the retail industry in preparing for these changes, Alan Garton, UCC's director, channel management, said mass merchants and department stores are "good to go" because their product lines have forced them to be EAN-13 compliant for some time. In the food retailing segment, he said supermarkets, especially large chains, are "well on their way to adjusting their databases to accept EAN-13 in addition to the UPC."

UCC's main area of concern, noted Garton, is whether small and mid-size retailers are paying attention to this issue. "Their systems may not be as sophisticated, but this will still impact their POS systems if they're not prepared," he said. "It won't cause them to shut their doors, but it will cause them pain."

For manufacturers, the Sunrise 13-digit issue is less critical in that if they use a 12-digit UPC bar code on their products today, they can continue using it, noted Garton. Still, manufacturers who receive products from their raw material suppliers marked with EAN-13 codes will need to handle those codes, too.

Also, apart from Sunrise, many suppliers these days are addressing data synchronization through UCCnet, a division of UCC, which requires data to be GTIN-compliant. So those manufacturers also need to upgrade their systems to accommodate longer data structures.

Chris Sellers, global leader, consumer industries and retail industry practice, EDS, Plano, Texas, said some manufacturers engaged in GTIN remediation are seeing benefits in consolidating multiple databases into a "single version of the truth," as well as a reduction in invoicing errors. EDS, which does remediation work for GTIN compliance, expects considerable activity by manufacturers and retailers in the first half of the year.

In addition to encouraging retailers to scan longer bar codes for the sake of global uniformity, UCC is also slowly creating a world where North American retailers will simply have more EAN-13 bar codes to scan. For one thing, UCC plans to start issuing EAN prefixes for manufacturers, causing more EAN-13 bar codes to be used. Also, beginning next year, UCC will no longer issue UCC company prefixes to companies outside of North America. In line with these changes, manufacturers who currently use two types of bar codes will gradually favor using just the EAN codes.

Preparing For Sunrise

One company taking 2005 Sunrise and GTIN compliance seriously is Associated Grocers, Baton Rouge, La., a cooperative wholesaler. "Our entire organization [at wholesale and retail] has viewed GTIN compliance as a strategic initiative," said Carl D. Marks, chief information officer, and Randy Fletcher, vice president, logistics and supply chain management. "We view this as a critically important component of competitiveness within the marketplace; and thus, we have and will continue to deploy the resources necessary to achieve compliance."

AG Baton Rouge has recently completed and distributed a brief guide for its retailer members regarding GTIN compliance. In it, technology providers completed GTIN "compliance spreadsheets" indicating the remediation strategies and requirements for their systems. The guide covered everything from scanners, POS software and back-office data management software to shelf-label printing software and scale equipment.

"Most vendors have indicated their remediation strategies, and we have shared this with our retailers with suggestions for next steps," Marks and Fletcher said in an online response to questions. Some vendors do not have a remediation strategy for 14-digit codes, though that is not a requirement for the 2005 Sunrise deadline.

AG Baton Rouge has also inventoried the retail systems it services, and has determined them to be GTIN-compliant. However, a few software upgrades have been prepared and tested, and "we are currently in the process of deploying these upgrades at retail sites that we service," said Marks and Fletcher.

The wholesaler has also reviewed all of its internal systems, both packaged equipment and software, as well as its internally developed legacy solutions. For example, warehouse management, inventory control and procurement systems have all been found to be GTIN-compliant. Among legacy applications, AG Baton Rouge has inspected billing, invoicing, retail shelf support, reporting and other systems that "include or otherwise involve SKU-level information," Marks and Fletcher said.

All told, the wholesaler has identified approximately 250 computer applications "that may require some remediation," they reported. "We have a remediation team of IT managers and programmers devising our remediation methodologies at this time." Marks and Fletcher expect to complete remediation efforts no later than the second quarter of 2004.

They said 2005 Sunrise is far less demanding than the remediation required for Y2K (the year 2000), which encompassed more than 2,300 computer applications. That remediation effort involved corrections to data as well as modifications to computer logic, they said. "For GTIN compliance, the effort is almost exclusively focused on changes to data: how data is collected, stored, and reported upon."

In large measure, AG Baton Rouge's suppliers are not planning to change their traditional UPC bar codes, leaving most products currently sold at retail unchanged, they said. Thus, apart from currently imported items, "the extent to which 13-digit codes will be introduced into the American supply chain is not clear at this time," stated Marks and Fletcher. Another cooperative wholesaler, Associated Grocers, Seattle, began including GTIN-compliance upgrades as part of normal internal enhancement activities in 2001, said Gene Puhrmann, CIO. In early 2003, the company initiated a formal project to address remaining GTIN-compliance upgrades, which are expected to be completed no later than third-quarter 2004.

AG Seattle's primary focus, said Puhrmann, has been on database tables/fields, user interfaces, templates (for tags, labels), interface files, reports, third-party packages, and retail equipment.

Like AG Baton Rouge, AG Seattle has provided its independent retail customers with detailed GTIN-compliance information. "We have shared our internal approach with ongoing status updates, provided recommendations for addressing their specific compliance efforts, and are providing ongoing technical support as needed," said Puhrmann.

As a global company that sources product from all over the world, 7-Eleven, Dallas, sees GTIN compliance as a key enabler of its business strategy. "When we find the next fantastic product for 7-Eleven, we don't want to have difficulty sourcing it or moving it through our system," said CIO Keith Morrow. Product obtained abroad often has to be re-labeled to avoid in-store interruptions. 7-Eleven is collaborating with EDS on GTIN-remediation work.

Already some of 7-Eleven's Canadian suppliers are adopting GTINs, said Morrow, adding, "We want to be prepared for when this happens on a frequent basis." He also expects the longer bar codes to provide "richer sources of information that we want to tap into," such as code dates and packaging data.

Morrow said 7-Eleven has done all of its remediation analysis. "It's been completely quantified, and we're in the middle of the physical remediation work" expected to be completed in the third quarter.