May 11, 2015

tED Magazine – Cooperation is Key to Clear Electronic Communication

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Cooperation is key to clear electronic communication


Cooperation Is Key to Clear Electronic Communication 

IDEA answers the question: Why should distributors accommodate larger GTIN sizes in their business systems? 

To facilitate electronic communication with trading partners, manufacturers assign unique numeric identifier codes to their products. These identifiers are then used as the structure to create a barcode symbology for each product, tying physical products in a business system to corresponding e-business information. This connection assists with logistical and warehouse management system scanning and POS transactions. The different product identifiers (see image below) are the UPC (Universal Product Code; GTIN12), a 12-digit identifier used primarily in the United States and Canada to create the UPC barcode symbology; the EAN (International Article Number; GTIN13), a 13-digit identifier used primarily outside the United States and Canada to create the EAN barcode symbology; and the GTIN (Global Trade Identification Number; GTIN14), a 14-digit identifier based on the GS1 international standards, which can be used across the globe and can accommodate all smaller identifiers (UPC or EAN). With 14 digits, the GTIN structure is large enough to house the smaller structures, and can be used to encode each type of barcode symbology. 

For individual company identification, the international standards-setting body GS1 now offers variable-length (six to 10 digits) company prefixes for these identifiers, increasing the amount of unique product identifiers available. Leading zeros can be added in older data structures already in use to convert them into 14-digit GTINs. As a result, more companies are able to identify and label their products for trade. 

IDEA’s IDW can accommodate all three types of identifiers, so manufacturers may use whichever type they have assigned to their products. Some global manufacturers have products coded with a UPC sold in the United States and Canada and other products coded with an EAN, originally sold in Europe but now sold in the United States and Canada. 

The Problem 

Although manufacturers may use any code structure, the identifier codes are not interchangeable and cannot be swapped out for one another. No single product should be identified with more than one type of code. 

However, manufacturers continue to encounter distributors that are unable or unwilling to adjust their own business systems to accept the manufacturers’ preferred code type. For example, a manufacturer may way to use a 13-digit EAN, but a distributor’s system can accommodate only a 12-digit UPC. In this example, one of the following situations may occur: 

  • The manufacturer and distributor are unable to continue doing business with each other. 
  • The distributor asks the manufacturer to recode its products to the smaller UPC to conform to the structure of its business system. The manufacturer must then maintain both a UPC and an EAN for each of its products to satisfy trading partners’ individual requirements, even though no product should have multiple identifiers. 
  • The distributor accepts the larger EAN and removes the single check digit at the end of the code to fit its existing system. However, this digit is calculated based on the code’s previous digits to ensure data integrity, so its removal invalidates the identifier. 
  • The distributor accepts the larger EAN and removes digits from the beginning, believing that to be the manufacturer prefix. However, because prefixes are of variable length, the distributor may remove the wrong numbers. Furthermore, a prefix may be the only distinguishing factor among identical product identifiers across multiple manufacturers, so now it is unclear which product belongs to which manufacturer in the distributor’s system. 

To avoid these issues, distributors should update their business systems to accommodate a 14-digit GTIN (available since GS1’s Sunrise initiative in 2005), which can also accommodate the smaller data structures. Such flexibility provides room for growth, facilitates global trade, and allows for lower cost and faster speed to market. 

Distributors that are unable or unwilling to update their systems must at least avoid shortening the product identifier code provided by a manufacturer or else run the risk of storing incorrect information. They should also not expect manufacturers to recode products or maintain multiple codes for the same product. The best plan: Work together to update business software to accommodate the 14-digit GTIN. 

The bottom line: Manufacturers want to conduct efficient and accurate global business, but they need distributor cooperation to do so.