‘Showdowns’ expected as bar-code deadline nears

Many North American retailers are preparing to comply with an approaching Jan. 1, 2005, “Sunrise” deadline that requires them to be able to process one more digit than they’re accustomed to when scanning bar codes.

But one retail analyst predicted that there will also be “a dramatic number of showdowns” during the next few months, as some large retailers try to “strong-arm” suppliers into delaying the shipment to them of products with EAN-8 and EAN-13 symbols.

“There is an extremely disturbing trend emerging,” said Scott Langdoc, an analyst at Boston-based AMR Research Inc. He said some large grocery, drug and convenience store chains believe they have negotiating leverage and plan to “push back” on their suppliers.

Under the Sunrise directive established by Trenton, N.J.-based Uniform Code Council Inc. (UCC), systems and applications must be able to scan and process EAN-8 and EAN-13 symbols in addition to the 12-digit universal product code (UPC) at the point of sale. EAN-8 and EAN-13 symbols are currently used outside North America. In the U.S. and Canada, the 12-digit UPC has been the bar-code standard.

Langdoc said he expects that, on an overall basis, compliance with the 2005 Sunrise directive will be over 50 per cent. “But we won’t be 100 percent compliant,” he added.

Based on recent discussions with large companies, Al Garton, director of channel management for general merchandise at the UCC, said he thinks most large retailers and manufacturers will be compliant with the Sunrise requirements. “The one part of the industry that concerns me a bit is the small and midsize retailers,” Garton said. “They might not be as aware of this initiative as they should be.”

Andrew White, an analyst at Gartner Inc. in Stamford, Conn., said he doubts that many retailers will try to get suppliers to back off shipping products with EAN symbols, since many still use UPC. White predicted only “minor disruption.” He said some items won’t be scannable at the point of sale but played down the possibility of any major disruptions.

Some technology-savvy mass-merchandise retailers have been Sunrise-compliant for years, since they have been importing international products carrying EAN symbols.

But some large retailers have been preoccupied with other projects such as merchandising, pricing and supplier connectivity systems, Langdoc said. Making sure their point-of-sale scanners are ready for the 2005 Sunrise deadline hasn’t been a top priority, he said.

Some companies may have delayed compliance because they didn’t know about the deadline or because they were confused about specifics. Sources at several companies told Computerworld (U.S. online) that they learned of Sunrise only in the past year — even though the UCC issued the directive seven years ago.

“There did not seem to be much pressure or talk about it among the retail industry,” said one IT manager who asked not to be named. He said he began hearing detailed information at a UCC-sponsored conference in 2003.

White said he has found a mixed level of understanding among Gartner’s clients. He said that because other prominent initiatives such as global data synchronization weren’t “as rounded out,” the marketing of Sunrise was very poor.

“The result was that many IT leaders were not even aware of the problem,” White said, adding that he has been busy taking calls as the “final rush of retailers” moves to comply.

Doing so generally means more than ensuring that point-of-scale scanners can read EAN symbols. Richfield, Minn.-based Best Buy Co., for instance, systematically scanned all of its applications for search strings such as “UPC” and “bar code,” according to Rejesh Kannan, a project manager at the retailer. Wherever Best Buy found attributes with a field size of 12 characters, it expanded the field to 14 digits.

Like many companies, Best Buy is expanding the field size to prepare for the 14-digit Global Trade Item Number (GTIN), which is expected to gain wider use as more companies begin data-synchronization efforts. Best Buy applications that already accepted 13-digit EANs weren’t changed to accommodate 14 digits, Kannan said.

Best Buy now expects to reach compliance in October, 15 months after beginning its initiative, Kannan said. He noted that Best Buy workers will have spent 25,000 hours dealing with the UPC issue alone, although other needed changes were made at the same time.

“Vendor-facing applications (such as electronic data interchange) and core legacy applications were the technologies primarily impacted,” Kannan said. He added that the Retek Inc. ERP system was already compliant, so Best Buy didn’t have to touch that system.

An e-commerce director at a grocery chain, who asked not to be named, said his company’s Sunrise effort required more than 2,000 man-hours to identify, modify and test about 100 applications. The grocer reached compliance last year.

Piggly Wiggly Carolina Co., another grocer, didn’t begin its Sunrise systems work until last month. Rachel Bolt, assistant director of information services, said she first learned of the directive last year. Currently, if the Charleston, S.C.-based vendor buys products from outside the U.S., it relabels them with the 12-digit UPC.

As part of its Sunrise project, Piggly Wiggly plans to upgrade to a new release of its JDA Software Group Inc. buyer-forecasting software and will customize existing applications to be able to store the full GTIN, Bolt said.

The goal is to finish the Sunrise work by September, which Piggly Wiggly views as the first step in a larger data-synchronization project that will extend past this year, according to Kathy Davis, lead systems analyst. Davis said GTIN compliance opens up additional possibilities, such as using radio frequency identification (RFID) technology or Reduced Space Symbology, which is aimed at small products that can’t accommodate full bar codes and items where there had previously been no machine-readable marking.

“The further along you get, the more benefit you see from all of this,” Davis said. “2005 Sunrise in and of itself probably isn’t a huge benefit, other than you’re going to save customers hassles because EAN-13 won’t scan.”

Data synchronization, however, will mean fewer errors, and RFID will mean better inventory tracking and a reduction in out-of-stock products, Davis said.

Even so, some companies are opting for an “expensive Band-Aid” approach, according to Langdoc. Rather than change internal systems to handle 14 digits, they purchase middleware that can translate EAN-13 to the 12 digits that their systems accept, he said.

UCC recommends that as part of their Sunrise compliance projects, companies inventory their point-of-sale software and hardware as well as systems associated with inventory devices, distribution and receiving, ordering, order fulfillment, accounts receivable, accounts payable and product catalogues.

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