Beep beep. Beep. Beep beep beep. You are standing at the front of the store, scanning your items and putting them into the bag. When the scanner reads the bar code, it beeps.
That beep — part of the most widely used supply chain standards system in the world — is heard more than five billion times a day. The not-for-profit global membership organization, GS1, governs the Universal Product Code (UPC) bar code system and has 2,000 employees supporting two million companies in 150 countries. GS1 US, which controls the standards for all bar codes issued in North America, is the largest of the 111 member organizations. It brings industry communities together to solve supply-chain problems by adopting and implementing GS1 Standards.
GS1 US moved its headquarters to 1009 Lenox Drive some 15 years ago and celebrates its 40th anniversary this month. It has 150 employees nationally, including more than 80 at Princeton Pike Corporate Center plus those in Dayton and Chicago. Its clients in 25 industries include virtually all the big names, from Coca Cola and Kroger to J&J and Maidenform.
Since GS1 “owns” the bar code space, you’d think it could rest easy, but no. The retail environment is undergoing a sea change, says Bernie Hogan, senior vice president of GS1 US. “With the Internet technology and smartphones, retail is being redefined,” he says. Compared to 40 years ago, when the cash register reigned, every aspect is changing: from the on-the-floor customer experience, to point-of-sale, to back-end operations, the flows of stocking and inventory management, to how retailers interact with employees, to customer care and support. So GS1 helps industry to develop new ways to identify, capture, and share supply chain information around the world.
Bar codes are analog, one dimensional, readable by laser scanners, and will be around for a long time. They streamline the supply chain. “GS1 has done a fabulous job on standardizing UPC codes. By defining accepted symbologies, you spur the industry on, reduce fragmentation, make it easier to adopt, and remove the barriers to entry,” says Laura Marriott, president of NeoMedia, a publicly held company in Boulder, Colorado, that offers barcode management and reader solutions.
GS1 US is also driving the adoption of Electronic Product Code (EPC) enabled radio frequency identification (RFID), which can wirelessly identify and track tags attached to objects. A wave of an RFID wand can identify hundreds of products on a pallet or dresses on a rack in seconds.
But the hot new technology is two dimensional, digitally encoded, contains lots more information, and can be read by cell phone cameras. Wave your cell phone at the black and white square to get details of the product, look at reviews, and even order it online. GS1 US has begun to help companies deploy two of these two-dimensional codes: QR and Data Matrix.
“For those companies in the supply and demand chain, GS1 US has put a stake in the ground,” says Marriott. “It is great for an organization to step up and put some structure around this part of the industry. But it is still a relatively new market compared to the UPC codes.”
Helping companies comply with regulations and taking advantage of innovations in the supply chain — these are the goals of the 47,000 square foot office on Lenox Drive. GS1 US (previously called Uniform Code Council or UCC) formerly left the innovation surrounding data synchronization and product data management to another division, first known as UCCNet, then known as 1Sync.
Innovation began some 40 years ago when the first barcode was scanned, but it took several decades to develop. In 1948 a mechanical engineering student at Drexel, Norman Joseph Woodland, tried to solve the problem of how to capture information at point of sale. While lying on the beach, Woodland supposedly ran four fingers through the sand and devised a circular image that reminded him of the dots and dashes of Morse Code. He sold the patent to Philco, which sold it to RCA. IBM picked up on the idea in 1971, and in 1974 the first item with a UPC barcode — a pack of chewing gum — was scanned in Ohio. The gum and the sales slip are on display at the Smithsonian. At that point the company was named Uniform Product Code Council and had its headquarters in Dayton, Ohio.
Tom Rittenhouse took over as CEO in 1997. A Philadelphia native and a graduate of LaSalle College, he died last year at the age of 70. Rittenhouse had begun his career in retail, where customer service is a core value, and he was on the ground floor of the technology revolution. He worked at a Philadelphia department store that pioneered in price-lookup technology and credit authorization.
In 1999 Rittenhouse moved the firm (named UCC at that point) to Princeton Pike Corporate Center. A visionary and risk taker, he wanted to attract talent.
Rittenhouse set up UCCNet to work on data synchronization — helping companies share and manage product information across all channels. UCCNet had a zanily edgy design, commissioned by Paul G. Benchener, who was fresh from Silicon Valley. With crimson cantilevered walls, set at odd angles, it was supposed to look and feel like an innovative Internet company (U.S. 1, October 11, 2000).
Rittenhouse retired in 2003, followed by Miguel Lopera, who was in charge of both the national organization and the global one. Lopera is still the CEO of the global GS1, based in Belgium.
After mergers with other organizations in 2005, names changed. The standard setting side of the firm changed from UCC to GS1. UCCNet turned into 1Sync. 1Sync became a joint venture with GS1 Germany, operating under the name 1Worldsync, and it moved from its edgy office to be on the same floor with GS1 US. With 80 employees in this country, 1WorldSync is the world’s largest datapool or Global Data Synchronization Network (GDSN). Think of it as a giant catalog filled with information about an endless number of products. “If you are a retailer, you need to know what you are buying and selling, and the GDSNs give you access to that information,” says Hogan.
In 2008 GS1 US added a new initiative, GS1 Healthcare US. “Whether pharmaceutical firms are operating in the U.S. or the U.K., we are working with the industry to help them respond to global regulations,” Hogan says.
In 2009 it began to offer the Food Service GS1 Standards Initiative to enhance efficiency and satisfy consumer desire for more accurate product information.
Bob Carpenter replaced Lopera at GS1 US in 2009. With a history major from Middlebury (graduating magna cum laude in 1987), Carpenter has an MBA from Harvard. He had been vice president of marketing for McNeil Consumer and Specialty Pharmaceuticals, senior vice president of business and strategic development for Aramark International. He had also been president of Aramark Healthcare, which served more than 1,200 North American hospitals and had more than 13,000 employees providing food, facilities, and clinical equipment.
In addition to being in charge of GS1 US, Carpenter also participates in the oversight of the joint venture 1Worldsync to help companies share and manage product data. He is on the boards of the international organization (GS1 Global Management Board) and also of EPCGlobal which oversees standards used for radio frequency identification (RFID).
What is the business plan for GS1 US? It supervises 200,000 businesses in 25 industries, and a big part of its mission is to keep everybody happy. Like a giant chamber of commerce, it has members who compete with each other. Coca Cola and Smuckers are major sponsors of its annual conference in June, but of course Pepsi and other food suppliers also belong. One way to keep everyone content is for executives from GS1 US to keep a low personal profile. “Because we are here to serve many different companies in many different industries, we choose to focus on the industry initiatives rather than on personalities or individuals,” says Hogan.
Another area about which Hogan is close-mouthed is the company’s budget. As a not-for-profit, the firm’s tax records are a matter of public record, but he does not offer them. He does say that a large part of the revenue comes from licensing a GS1 company prefix to the barcodes. “Another revenue source is the subscription fees for 1Worldsync, the world’s largest Global Data Synchronization Network,” says Hogan. “Still another portion comes from membership in our initiatives that drive GS1 standards and adoption. Our members come from five areas: apparel and general merchandise, grocery, food service, healthcare, and fresh foods.”
Though GS1 US “owns” the 1D bar code space and gets income from licensing it, it is still uncertain as to the role the firm will play in 2D.
Also, GS1 does not control every supply chain. Most big companies, including WalMart, are GS1 US members, but other mega companies may be operating closed loop or proprietary systems.
And the biggest competitor is probably inertia. “It is a challenge to get the stakeholders to agree,” says Hogan, “but the hardest part is to get companies to change their business processes, to drive the actual implementation.”
Here’s how GS1 Standards worked for Maidenform bras: A mega retailer required the manufacturer to use Electronic Product Code-enabled RFID tags on each item. At the distribution center, an EPC RFID tag is attached to each garment and encoded with an item number that uniquely identifies it. This item number is linked to the barcode that will be scanned at the retail register. Result: Maidenform gets better and quicker visibility of items throughout its supply chain.
An example in the healthcare field: the Centers for Disease Control and Prevention need to help providers be more efficient and accurate when recording details about vaccine administration. In a pilot program it scans three numbers — the GS1 Global Trade Item Number, the lot number, and the expiration date. All three are encoded in a GS1 DataMatrix barcode. The barcode is printed on vaccine vials and syringes, so that the information automatically populates electronic medical records.
In the fresh foods arena, a large greenhouse grower, Canadian-based JemD Farms, added case-level traceability by using GS1 Standards for end-to-end visibility from greenhouse to retailer. “During harvest and packing, JemD receives precise production information about produce destined for its distribution centers, enabling it to collaborate more closely with retailers, prioritize shipping as needed, and better balance production and shipments with customer demand,” according to a press release. “Every case that is shipped — both inbound and outbound — is uniquely identified and labeled for tracking forward to the retailer and tracing back to the greenhouse.”
What direction does the company take from here? It will encourage greater use of RFID codes, especially for high value merchandise, rather than grocery items. Soap is soap when it is shipped in on pallets, and grocery stores don’t want to pay high costs for taking inventories. However RFID can be cost effective for fashion merchandising. “Barcoding is often a perfectly good solution,” says Hogan, “but when you need to count thousands of items in a short time, RFID can scan up to 1,000 tags per second.
“We will also be aggressively working with industry to help deploy 2D codes,” says Hogan.
One of the “shiny pennies,” the emerging opportunities for GS1 US, is to work with the global financial services industry. Identification standards for individual companies could improve visibility, transparency, and risk management. In retail, transparency and visibility is the norm, but in the global financial community they are severely lacking. Therefore, in a crisis, vulnerable companies cannot be identified in a consistent way. “They are not able to recognize when the next crisis is coming,” says Hogan. “When the crisis occurs, they don’t currently know which securities are exposed.”
Another potential source of contract income involves working with the defense industry to track electronic components and prevent counterfeiting.
Yet another chance to break ground is in the “trusted source of data” arena, says Michael Becker, managing director of the New York-based Mobile Marketing Association, which helps set standards for mobile technology: “When you point your smart phone at a QR code, you can get information on the product provided by the retailer. How does the consumer know that the information coming back is accurate?”
If this process of providing point of sale information, through a trusted data pool, can be standardized, the manufacturer of the product will be the source of the data, reducing the retailer’s costs. “That’s incredibly exciting,” says Becker. “It’s an insanely shiny penny.”
“The reason for these standards — we are all working to the same thing,” says Becker. “The whole point of standards is to make it easier to buy, sell, and create in a particular experience. If we can successfully, as an industry, make that stuff happen, it will reduce market friction, offer more transparency in the marketplace, and make the flow more efficient.”
GS1 US, 1009 Lenox Drive, Lawrenceville 08648; 609-620-0200. Bob Carpenter, CEO. www.gs1us.org.