DISTRIBUTORS Guide to Bar Code, Common Forms and EC/EDI

1.  Introduction

If you have studied supply chains for more than a few years or even if you are a newcomer to the profession, you will observe an apparent dichotomy.  Simply put, to drive down carrying costs you want to reduce inventory levels.  However, if you want to make a profit you want to sell more product.  More sales with lower stock levels will mean more orders.  Therein lies the conflict; reduce costs by lowering inventory levels but increase costs because of procurement and handling.

Something has got to give and it has to be the cost to place an order, receive the goods, invoice and pay bills.  This is why a company must understand all the pieces of the puzzle and why all the pieces must work together. The front office activities (purchasing and accounting) at once cause and are caused by procurement, sales, logistics and material handling.  And all costs must be reduced. 

The technologies that can drive down those costs include bar code and electronic commerce (EC), especially the electronic data interchange (EDI) portion of EC.  Fundamentally, these technologies are forms of communication -- and communication requires standards.

This guide has been prepared for manufacturers, packagers and distributors of products provided through the hobby products industry supply chain.  The recommendations made are intended to provide a common method for communicating critical information throughout this distribution channel.  This includes manufacturing, distribution and retail sales.

Today’s retailers are demanding that their trading partners provide product distribution information that is timely, complete and in conformance with industry data/information communications standards.  This demand translates into both opportunity and responsibility for implementing the technologies and techniques outlined in this guide.  There are three specific areas addressed in this document, they are: Standard Forms, Bar Codes and Electronic Commerce (Electronic Data Interchange, EDI).

Your company’s data processing budget, commitment to implementing industry standards and current level of implementation will determine which sections of this document you should focus upon.  Minimum requirements for all distributors requires source marking of items and shipments with bar codes as explained in Chapter 3.  Furthermore, most commerce is still conducted with some form of hard copy documents, even those using Electronic Data Interchange. The fundamental documents are modeled in Chapter 5. We recommend that you review the entire document so you are familiar with its content.  Then, depending upon your level of involvement, you can go to a greater level of detail as appropriate.

• The rest of Chapter 1 provides an overview of standard business communications requirements.  The Information Flow Model presents the information channel, manufacturer-distributor-retailer, and the types of information utilities needed for commerce within this channel.  The Transaction Flow Model provides an overview of the primary types of transactions conducted to exchange the necessary information.  The Product Flow Model shows the flow of product within the channel and identifies the bar coding requirements for movement of product.

• Chapter 2 provides an overview that explains the benefits and business case for using bar code and standard product numbers.

• Chapter 3 explains the U.P.C. method of product identification and bar code use.

• Chapter 4 explains the most common applications for bar code use within a distribution facility.  Although some may feel it applies to distributors only, this section is also useful to distribution activities conducted by manufacturers as well.

• Chapter 5 provides sample forms containing all of the elements of information necessary to support the transactions which cause and result from the information and product flow.

• Chapter 6 identifies the EDI transaction sets that parallel the forms found in Chapter 5.

• The appendix is provided to answer questions about how bar codes work.

Below is shown the most common transaction types with widespread application for manufacturers, and distributors of hobby products. The Information Flow Model describes the communications vehicle used, by supply chain partners, to communicate commerce information.

The Transaction Flow Model below describes the primary transactions and the most common methods of communicating the information necessary to complete them. The numbers i.e. 850, 860, etc. refer to the transaction set designators found in the ANSI X.12 specification (see Chapter 6). 

The Product Flow Model identifies the key, bar coded, data elements that are to be carried on containers moving within the defined supply channels.

This is a checklist to be used when conducting a Compliance Labeling Audit

1. Can you send the right data to the label generation software?

• Do you know how many different label formats are required?

• Do you know what data needs to be sent for each different label format?

• For each label do you know what data will be:

  • keyboard entered?

  • automatically generated by the computer?

  • retrieved from data bases?

  • entered from digital scales of other ASCII devices?

  • bar code entered?

• Do you have a UCC-assigned manufacturer's ID number?

• Are your U.P.C. part numbers and SCC numbers assigned?

2. Can you create the formatted labels in the necessary quantities, that meet customer quality specifications?

• Do you know what the quality requirements are?

• Do you know how many labels of each format are needed?

• For direct printing, do you have film masters?

• For labels and hang tags, do you have label generation software?

• Do you have printers?

• Are label formats created?

• Do you have label stock?

3. Can you apply the labels properly?

• Do you know where to apply the labels?

• Do you need procedures and written instructions explaining where labels should be placed?

• Have you trained your employees to apply them properly?

• Do you need automatic label applicators?

4. Can you assign UPC numbers to new products?

• Do you have a numbering system policy for new products?

• Do you have a UPC coordinator?

5. Can you notify your customers of your number assignments?

• Do you have a procedure to update new customers?

6. Can you cross reference your old numbers to the new UPC numbers?

• Do you need to modify your database to cross-reference the new UPC numbers to your old part numbers?

7. Can you troubleshoot the system?

8. Do you have a contingency plan if your primary printing system breaks?

[1. Introduction] [2. Overview] [3. The EAN.UCC System] [4. System Preparation] [5. CHA Standard Forms Requirements] [6. Electronic Data Interchange (EDI)] [7. Appendix - How Bar Codes Work]