The Supply Chain Implementation Series, Guide #1: Using Industry-Compliant Bar Codes

Implementation Path 

The only way to take advantage of a trend is to use it. One of the goals of this guide is to help you decide if this trend is for you. Certainly part of that decision is based on what it takes to actually make it happen. There is a difference between knowing what is involved and knowing how to do it. This section provides the steps along the implementation path that a company will follow when seeking to have suppliers comply with industry bar code guidelines and then to start benefiting from their use.

If you are planning to use bar codes and the U.P.C. system with your customers, you will find that much of what you ask of from your suppliers, you will need to provide to your customers.  Keep this in mind so your company does not waste human resources by developing a U.P.C. team related to your suppliers and a different, unrelated U.P.C. team related to your customers.  Compliance programs are much more successful when they are developed and promoted properly.

Overview of a program to get suppliers to provide bar codes and to get your company to use them

• Establish a supplier and customer contact and monitoring program with milestones.

• Add the U.P.C. number to your computer files.

• Identify your labeling requirements (there will always be a need to label some items internally) and produce a label, printer, and consumables procurement document.

• Evaluate possible improvements.

• Discuss the addition of bar code equipment like bar code readers, printers, and handling systems with either your computer system supplier or other systems integrators.

Detailed Implementation Path for Manufacturers

1.Establish a supplier contact.  You may obtain items labeled by suppliers or items that should be labeled before you assemble or package them.  This will require some evaluation.  Do not wait until your company is using bar codes before taking this step.  Although you will request and then require bar code compliance from all suppliers, you should start by identifying which suppliers are most critical to you.

• Contact your suppliers.  Tell them that you are now evaluating bar codes.  Tell them you intend to use the U.P.C. Guidelines and you would like to know about their capabilities and/or plans.  Use the letter to suppliers (Appendix 1.2) and include with it the Bar Code Policy (Appendix 1.1) and Progress Form (Appendix 1.3)

• Realize that some suppliers may need to become familiar with the U.P.C., you need to tell them what you expect in the way of bar codes on (use the Bar Code Policy, Appendix 1.1):

  • Shipping labels

  • Items

  • Other

• Include the U.P.C. Program Progress Form (Appendix 1.3)

  • Identify your bar code coordinator.

  • Identify your implementation plans.

• Find out if they are using other bar code guidelines (Appendix 1.5).  If the customer uses guidelines other than U.P.C., the differences must be identified and accommodations must be considered.

• Monitor the progress of your suppliers by using follow-up letters to check on their progress and update the U.P.C. Program Progress Form in Appendix 1.3.

2.  Establish a customer contact either to respond to those who have asked that your company comply, or to promote the fact that you are now moving to compliance.

• The letter in Appendix 1.4 can be sent to those requesting compliance.  It can be modified slightly to notify those who have not yet requested compliance.

• Realize that some customers may need to become familiar with the U.P.C., you need to tell them what you will provide in the way of bar codes on (use the Bar Code Policy, Appendix 1.1):

  • Shipping labels

  • Items

  • Other

• Monitor your own progress by keeping Appendix 1.3 up to date and every time something changes, tell your customers.

NOTE: The rest of the implementation path is identical for both manufacturers and distributors.  Please move to the section titled “Detailed Implementation Path for Both Manufacturers and Wholesaler-Distributors” to continue your path.

Detailed Implementation Path for Wholesaler-Distributors

1. Establish a supplier contact.  Do not wait until your company is using bar codes before taking this step.  Although you will request and then require bar code compliance from all suppliers, you should start by identifying which suppliers are most critical to you.  It’s the old “80 - 20” rule at work again.  Eighty percent of your volume is with twenty percent of your suppliers.  And the same holds true for the number (not just dollar amount) of purchase orders shipped to you in error.  “Critical” can be defined several ways, but any one of them results in money lost.  Rank the companies by:

• Dollar amount spent with them

• Number of purchase orders sent to them each month

• Number of invoicing or shipping errors.

With this insight, you can decide whether to go after the highest dollars to impact inventory costs, the highest number of transactions to impact procurement costs, or the most errors to affect needless overhead. As you can imagine, they are all related.

• Contact your suppliers.  Tell them that you are now evaluating bar codes.  Tell them you intend to use the U.P.C. Guidelines and you would like to know about their capabilities and/or plans.  Use the letter to suppliers (Appendix 1.2) and include with it the Bar Code Policy (Appendix 1.1) and Progress Form (Appendix 1.3)

• Realize that some manufacturers may have trading partners that are not using U.P.C.  You need to tell them what you expect in the way of bar codes on (use the Bar Code Policy, Appendix 1.1):

  • Shipping labels

  • Items

  • Other

• Include the U.P.C. Program Progress Form (Appendix 1.3)

  • Identify their bar code coordinator and yours.

  • Request their implementation plans.

  • Find out if they are using other bar code guidelines.  If the customer uses guidelines other than U.P.C., the differences must be identified and accommodations must be considered.

  • If they are using bar codes, ask them for a sample and an explanation of the information contained in the bar code.

• Send follow-up letters telling them where they fit into your plans, and monitor their progress:

  • when you plan to implement

  • whether they comply with your requirements

  • what they need to do to comply:

    • what industry guidelines

    • the date by which you expect compliance

• Monitor the progress of your suppliers by using follow-up letters to check on their progress and update the U.P.C. Program Progress Form in Appendix 1.3.

NOTE: The rest of the implementation path is identical for both manufacturers and distributors.  Please move to the section titled “Detailed Implementation Path for Both Manufacturers and Wholesaler-Distributors” to continue your path.

Detailed Implementation Path for Both Manufacturers and Wholesaler-Distributors

1. Add the U.P.C. number to your computer files.  This cannot be overlooked.  Your company will need to match the U.P.C. base number bar codes found on inbound shipments to your product master file, inventory, or purchasing records.  This is often referred to as matching or file synchronization.  Your company may also need to add U.P.C. numbers to other files used on the selling and shipping side of the operation.  Make sure that your company is prepared to answer these questions:

• How will you add bar code numbers to your records?

• Can your software work with an alternate part number (the U.P.C.) if it is added to the record?

• If you would like to use other information provided in a bar code (e.g. serial number, lot number, purchase order number), how will your system tell the different elements of information apart, and where will it store them?

• Is a data warehouse, pricing service, or electronic catalog available to your company?  Will it provide a listing of bar code numbers, catalog numbers, and descriptions for various suppliers within your industry?

Some supply chains are using the information contained in the ANSI X12 document 832 Price Page Update.  The same information can be provided in a flat file containing the data elements necessary to add the U.P.C. to your records.

2. Identify your labeling requirements. Since you will need to produce labels, you will need to identify the number, size, and layout. You will also need to identify the source (computer file) of the information.

• This information will need to be “mapped” from internal systems (see the Label Information Map, Appendix 1.7).
• You will also need to buy label stock and consumables.  You should have a document based on your Bar Code Policy that describes your label and label printer needs (Functional Specification, Appendix 2).

3. Evaluate possible improvements and establish a sequence for installation. Until now, everything has been done to ensure that bar codes are on the items that flow through the facilities.  Now your company can determine the benefits of bar code use and identify several fundamental applications.

• Bar codes pay for themselves by reducing errors and lag time between an event, like receiving or shipping goods at the door, and when the information is entered into the computer.  The Error Cost Worksheet in Appendix 4 will help identify some of the costs of errors.  Below are some of the applications that generally hold the greatest promise.
  • Using bar code to take a physical inventory
  • Using bar code to verify receipts (when appropriate)
  • Using bar code to reduce inventory, verify, and price items as they are shipped, or during counter transactions, as appropriate.
• Review the Bar Code Benefits and rank the benefits to your company or your trading partner (Appendix 3).
• Decide what you would like to do and document it using the Project Description worksheet found in Appendix 5.
• Now review the 10 activities outlined in the What You Must Do section of the guide.  Make sure you can provide the documents identified and prepare to talk to technology providers.
• The documents you have produced in Appendix 1, 2, 3, 4, and 5 will help you communicate effectively within your own company, with your trading partners, and your “technology partners.”

4. Discuss the addition of bar code equipment, like bar code readers, printers, and handling systems, with either your computer system supplier or other systems integrators.

• Use the forms in Appendix 1 through 5 to explain your system needs to a technology provider (see list in Appendix 9)
• Use the Technology Partner Snapshot (Appendix 7) to make a first cut, then use the Technology Partner Selection Worksheet (Appendix 8) to narrow the field.
• The Equipment Cost Estimator (Appendix 6) will help you with ballpark pricing.

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