Supply chain management expert, Jane Fazzalari, discusses the impact and advantages of the new, global supply chain labelling on retailers and their suppliers
Supply chain management expert, Jane Fazzalari, discusses the impact and advantages of the new, global supply chain labelling on retailers and their suppliers
Since the global standards organisation, GS1, first announced its plans for DataBar — a new labelling system that stores massive amounts of product data — retailers and their suppliers have been discussing its potential impacts.
Capable of holding 14 Global Trade Item Numbers (GTINs) and up to 74 application identifiers, DataBar labels can carry much more information than traditional European Article Number (EAN) or Universal Product Code (UPC) labels, including serial and batch numbers, processing facility of origin, manufacturing standards, expiration dates and other details.
All this information is encoded in a small, flexible format that can be resized for many specific product applications. As such, Jane Fazzalari, JDA vice president of retail industry strategy, said DataBar labels could be of particular use for a range of product types for which labelling is notoriously difficult, such as dairy, fresh produce and other perishables that have short expiration dates; products that are manufactured according to kosher requirements and other strict standards; or small products like jewellery, where an EAN/UPC label might be precluded by size.
However, before retailers and their suppliers fully embrace the DataBar concept, Fazzalari said it is critical they ask: “Are we prepared to manage this new volume of granular product data? How can it help our supply chain operate more efficiently, improve customer service, protect margins and accomplish other key strategic goals?”
More data: an obvious benefit for retailers
She continued: “As anyone who works in retail is aware, store level point-of-sale (PoS) data is often filled with inaccuracies because of shrinkage, expired products, damaged packaging and other issues. Manual corrections consume precious time and money, while throwing off the accuracy of the entire supply chain.
“By maximising item traceability, DataBar labels can help minimise errors and provide a highly accurate picture of actual store-level sales and on-hand, sellable inventories. Retailers can maximise their profits by displaying and selling items according to expiration date, instead of having consumers reject expired products, or products approaching their sell-by date, in favour of newer items. While DataBar labels can’t stop consumers from ‘shopping from the back of the shelf,’ the freshness information encoded in the label helps retailers understand the impact of this behaviour on their inventories.”
Fazzalari added that DataBar should also help with issues such as stock-outs in that, by tracking individual items, DataBar labelling systems can provide a powerful benefit by tracking store-level inventories at the single product and shelf level. “Replenishment capabilities become much more effective when retailers know exactly how many items are on each retail shelf, at any given time,” she added. “This capability can also help manage retail shrinkage issues.
Getting maximum benefit from DataBar
Of course, new volumes of item and shelf-level information are only beneficial if the supply chain is equipped to manage and apply this data. “Advanced demand and replenishment solutions can help retailers leverage the huge volumes of PoS data enabled by DataBar by transforming granular information into strategic insights that can impact the most important financial and profitability goals,” she said.
“For example, advanced supply chain solutions can help plan shelf-level replenishments with a new level of accuracy by basing decisions not only on how much inventory is on a particular shelf, but also on the characteristics of individual products, such as expiration dates. While traditional EAN/ UPC codes don’t distinguish between items that expire in six months and those with a sell by date of tomorrow, DataBar labels do make this distinction - and advanced solutions can use this data to make more informed replenishment choices.
“In demand planning, DataBar can also make an impact, by revealing additional causal factors that can affect sales. For example, high-quality produce (such as very red strawberries) can be tagged differently than lower-quality produce (unripe strawberries). Based on the relationship between these item- and shelf-level characteristics and consumer purchasing patterns, demographics, store clusters and other factors, buyers can project demand more accurately, as well as allocate merchandise among channels and stores in a much more strategic fashion.”
Fazzalari concluded: “While it remains to be seen whether DataBar will truly be embraced by the worldwide retail industry, the new level of information it provides has the potential to deliver significant benefits for many manufacturers and retailers - but only they can decide if DataBar is the right choice for their business.”
