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Raising the bar through stored bar codes. (Retail Technology: The Details are in the Data).

No longer just for productivity at the front end, scanning is the catalyst used in collecting item data for the foundation of business decisions.

SCANNING AT THE front end has become as common to the checkout process as the point-of-sale (POS) unit itself.

Yet, the use of front-end scanners has graduated beyond the front-end productivity the equipment originally offered, replacing the need for cashiers to manually key in prices. Today, the data scanners electronically collect during each transaction has become crucial to business strategy and decision-making. The foundation for all current and future business decisions--not only at store level, but also at chain level--can be found in the combination of scanning and the information locked inside a product's bar code.

Retailers are raising the bar when requiring new types of information to be stored in these lined codes, especially to better manage perishables categories. Committees are meeting these needs with new symbology and compatible technology to access this data and streamline business operations between the supplier and receiving store.

When front-end laser scanners emerged about 20 years ago, their main function was focused on front-end productivity. They electronically collected the information stored in a product's bar code, which typically identifies merchandise. They also reduced errors associated with manual entry of prices and price look-up (PLU) codes.

The bar code most familiar to consumers today is the Universal Product Code (UPC) on the proof-of-purchase label. The 12-digit, black-barred UPC code is specific to each product it identifies and stores product data like product name, description, item number and price. All merchandise is registered through the Uniform Code Council, based in Princeton, N.J., which is the same organization that issues the UPCs.

In the beginning, this collected data was simply used to create a transaction log, or file of what products and quantities were being sold by each store. Today, the two main applications retailers use this data for are "product movement, which can be applied to things as basic as replenishment and shelf space management, and understanding sales," explains Frank Riso, director of business development for retail for Holtsville, N.Y.-based Symbol Technologies.

Over the years, retailers have begun to apply their UPC data to other business operations. This data has become the framework for category management, says Bob Drury, senior vice president of logistics, manufacturing and information technology for Schnuck Markets, a regional supermarket chain based in St. Louis.

Realizing that simply buying groups of products will not satisfy customer needs, retailers are using POS data to gain a better understanding of customer demographics, what they are buying and then stock store shelves accordingly. Retailers now attempt to manage product categories as strategic business units, which leads to increased profits due to the delivery of customer value.

"This data reveals what the sales mix should be for a demographic area, and through data mining, there is a lot of work that can be done to learn how categories are responsible for merchandising initiatives and pricing," adds Drury.

With the scanning technology in place, retailers can increase the depth of available information by pulling customer-centric data associated with their loyalty programs. As magnetic striped or bar-coded loyalty cards are swept over the same scanner, each member's buying behavior is recorded.

"This data gives grocers the opportunity to understand customer buying behavior, either as individuals or in clusters," says Colin Haig, senior director of product management for Triversity Corp., based in Toronto. "This data gives great insight to item affinities, item movement, product placement and assortment mix and promotions."

Not so easy

The scanning process seems easy enough--cashiers simply slide an item's bar code across an optical laser scanner that records the item data. This data is then transmitted to an in-store processor until a dialup or high-speed network moves the file to a centralized repository. Yet, the simplest snafu can alter transaction logs or cause erroneous data.

"Inaccurate data means increased out-of-stocks, a barrier to computer-assisted ordering, distorted shrink data and even lost revenue," says Carlene Thissen, president of Naples, Fla.-based Retail Systems Consulting.

Common ways to lose data are inaccurate price files that lead to wrong data sheets and upset customers, damaged or scratched scanners that cannot read the bar codes, and keyed-in codes and prices vs. scanned bar codes, "It is a common practice for cashiers to serve a customer buying 10, 20 or 30 jars of baby food or even cat food at a time," explains Riso. "Rather than scan each one or group the different jars, cashiers will scan one and multiply the price by the remaining jars. That affects summary data."

The other culprit of inaccurate data is lost connections that are supposed to be supporting the transmission of data. "A system can lose its connection when a store loses power, a file disk crashes or there is an error in the store controller memory," says Thissen. "Any of these issues can cause POS terminals to lose access to the item file, making item tracking impossible."

If the chain's network goes down for even half an hour, store totals can be completely thrown off, says Haig. The introduction of distributed computing and high-speed connections helps keep connections secure, and transaction log data can be trickled to corporate throughout the day, he adds.

Another detriment to accurate scan data is altered or torn codes that can't be detected at the front end. As the importance of scan data has increased, scanners have been enhanced so that all codes can be recorded and executed. NCR, based in Atlanta, for example, features a patented front-end scanner that can detect missing bars. Its integrated software compensates for missing code and executes the transaction within 30 milliseconds.

Scanners such as the Magellan 9500, from Portland, Ore.-based PSC, also work with decoding software so that poor quality or truncated labels are processed immediately. This model also offers a sensitive scanning panel that improves cashier ergonomics. With six-sided, three-dimensional scanning technology, cashiers can scan bar codes on six sides of an item simultaneously, significantly speeding checkout and improving ergonomics.

POS units are also being outfitted in the next generation of scanners supported by wireless technology. Some are integrated and others are handheld scanners, adding flexibility at the front end, says Craig Maddox, director of bar code scanning for NCR. "Handheld scanners also go over the counter, helping cashiers read bar codes on products that are on the shopping cart's bottom shelf, without having to lift those bulky or heavy products," he adds.

Symbology on steroids

Retailers have long yearned for a way to incorporate better data collection among their respective perishables departments. After retailers approached the UCC with this concern in 1995, the organization has worked with retailers and hardware and software vendors to create guidelines for a new bar code called Reduced Space Symbology (RSS).

The nickel-sized bar code can store tip to 74 digits and 41 alphanumeric characters that refer to encoded information such as product manufacturer name, trade identification numbers, item name, product weight and lot number, says Maddox.

Dorothy Lane, an independent grocery chain headquartered in Dayton, Ohio, is heralded as the first retailer to use the new symbology for tracking random weight meat. The grocer's Centerville, Ohio store began applying the bar codes onto its meat in April 2001 as a way to trace cuts from the supplier to their meat displays.

Typically a case of meat is coded with an EAN 128 code. However, once the meat is cut into individual retail units at store level, retailers can lose accountability of the original case's contents and movement out of the store.

Dorothy Lane has added scales from Hobart, based in Troy, Ohio, that print and read the new symbology placed on freshly cut meat. By adding a computer chip to its NCR 7875 POS scanners, all POS units now electronically read RSS tags during checkout. According to UCC's Greg Rowe, manager of industry initiatives and project manager for RSS, Dorothy Lane is using this symbology to code meat cut in all three stores. The retailer could not be reached for comment.

RSS tags also show promise in produce, as they help grocers to distinguish different varieties and manufacturers of fruits and vegetables, as opposed to standard PLU codes that define only the type of produce. Dorothy Lane began applying the bar codes onto its produce in March 2001, but discontinued the pilot due to the cumbersome manual process to fasten labels to produce.

However, a large Canadian retailer will meet this challenge head on and test RSS in the produce department of three stores beginning in June. "This retailer owns its own produce warehouse and gets product shipped directly from the suppliers," explains Rowe, though he declined to reveal the retailer. "The supplier will label the produce and ship directly to the retailer. Based on positive results, the retailer eventually plans to roll out this technology to the entire chain."

Sources expect RSS to reduce shrink in produce due to misidentifications. "I know of a retailer that lost at least $27,000 per year in misidentified tomatoes," says Rock Wight, director of solutions marketing for NCR. "It was the difference between hothouse tomatoes that sell for approximately $3.99 a pound, and regular tomatoes that sell for 59 cents a pound. Cashiers were ringing up all tomatoes as 59 cents per pound. This would have been avoided if they could scan the tomatoes."

The RSS code also has the capability of tracking food safety and product quality through encoded expiration dates. "In the future, it will also he easy to correlate this bar code data with the shopper's loyalty card," says David Latimer, vice president, business development for PSC. "Products can he traced to the lot number and packing house. If there is a product recall, this is a streamlined way to remove product from shelves and know who purchased it."

Many hardware vendors are ready for the RSS explosion and have been manufacturing RSS compatible scanners for at least a year. "Retailers will need scanners that are designed to read RSS codes. The pattern is much more dense than a common bar code, and there are optical systems designed to capture this symbology," says Latimer.

PSC's Magellan 9500 is one example of a scanner with RSS capability, supporting the transmission of weight, expiration dates and prices of meat and produce. While the bar code and POS equipment are necessary to process this symbology, retailers should not fret about retrofitting existing infrastructure. "Most new scanning equipment is already RSS-compatible," says UCC's Rowe.

RELATED ARTICLE: Scanning the near future

Reduced Space Symbology (RSS) is only one version of the new face of bar codes. A slowly approaching deadline calls for the revamping of Universal Product Codes's (UPC) specifications to make room for RSS and other new bar code initiatives.

Retailers have been warned about "Sunrise 2005," but similar to the Y2K epidemic, now is the time for the supermarket industry to seriously prepare. Sunrise 2005 refers to the January 1, 2005 deadline that requires American retailers and trading partners to establish an infrastructure to scan a minimum of a 14-digit UPC symbol. This requires all trading partners to update and expand their databases, systems and applications to accept and support these new data structures.

Thanks to companies such as NCR and PSC, this transition should be painless, since their newest generation scanners already fit the bill to process these codes. With this capability, other coding initiatives, like radio-frequency identification (RFID) tags, will have a smoother evolution, as well.

RFID is already familiar to drivers that use RFID-based tags to automatically pay bridge, tunnel and turnpike fees, or buy gasoline at the pump. For retailers, this technology is a mainstay in warehouses and distribution centers. By scanning a shelf tag's bar code with an RE-ready handheld unit, retailers can instantly create an order necessary to replenish store shelves. The next generation of RFID will appear as smart tags, which will rival the standard bar code.

While the technology carries an expensive price tag, experts still await the technology's proliferation within the supermarket industry. Yet, implementation will take time, and until it arrives on the scene, observers urge retailers not to give up on standard bar codes just yet.

"There will be an overlap, retailers using both bar codes and REID tags," says Craig Maddox, NCR's director of bar code scanning. "While the Auto-ID Center at MIT is optimistic and expects this overlap only lasting between 10 and 12 years, I think it may be more realistic to see this overlap last 20 years."
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Author:Amato-McCoy, Deena M.
Publication:Grocery Headquarters
Date:Feb 1, 2003
Previous Article:Retail technology: the details are in the data. (Special Report).
Next Article:Dial-up is dead. (Retail Technology: The Details are in the Data).

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