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TECHNOLOGY: Before Sunrise

By Jan. 1, 2005 all U.S. and Canadian companies must be capable of scanning and processing EAN-8 and EAN-13 symbols, in addition to 12-digit UPC symbols, at the point of sale. It sounds easy enough, until one asks a retailer that's working toward compliance.

"Sunrise 2005 is a really simple concept," says Steve Rosenberg, director, channel management at the Uniform Code Council in Lawrenceville, N.J., who presented at FMI Marketechnics 2004 last month a session called "2005 Sunrise: Are Your Systems Ready?" "But it does have ramifications throughout the supply chain."

The benefits of Sunrise 2005 are far-reaching. U.S. and Canadian companies will be equipped to handle a greater range of global products. Multinational manufacturers will have to assign only a single Global Trade Item Number (GTIN) for a product sold around the world, eliminating redundant supply chain expenses such as having to price, mark, or relabel products heading to North America.


According to an EDS white paper, "Code Remediation for Sunrise 2005 and GTIN/GLN," GTIN is a term that describes a 14-digit data structure, which supports the various data carriers with a right-justification, zero left-fill format. By expanding the data structure to 14 digits, a GTIN can accommodate all other UPC data carrier formats worldwide, including UCC-12, EAN/UCC-13, EAN-8, and the new Reduced Space Symbology data carriers.

Although there are benefits to Sunrise remediation, the EDS white paper says that it does not by itself prepare retailers for the synchronization of data among their trading partners. Data synchronization is dependent on the GTIN. It's this further expansion to 14 digits that will enable retailers to pursue future initiatives such as RFID.

The Global Location Number (GLN) is also critical for data synchronization. The GLN is a separate number describing the various locations within your organization -- as well as those of your trading partners. It will allow trading partners to identify corporate addresses, individual distribution centers, loading docks, and more, in an electronic environment.

While the GTIN and GLN remediation are not mandated for January 2005 completion, they should be considered by any retailer looking to implement global synchronization and, eventually, RFID.

Sunrise 2005 is a natural progression that has paralleled the development of the global supply chain. "If you look back 25 years ago, we sourced product locally, we didn't travel too far, and commerce was done locally and regionalized," Rosenberg says. "Over time, with improved transportation, data communications, and telecommunications, our world has expanded. We travel a lot farther, and so does our product. We now source our products from all over the globe."

The way that UCC and EAN work to control and enhance the public supply chain, according to Rosenberg, is through the company prefix. "The company prefix is an identifier that we use to identify you and that you use to identify yourself in the supply chain," he explains. "One of the things we changed back in March 2000 was the method by which we issue company prefixes.

"Prior to March 2002, when you came to the UCC and wanted to register yourself, we automatically gave you a six-digit prefix. That has changed. Today the company prefix ranges from six to 10 digits. When you ask for membership we ask how many products you need to identify. Based on that number, we have a prefix that works for the business you're in."

Additional lead digits

What the UCC also did in March 2002 was to open up additional front end digits that are used for company prefixes, and to begin issuing new lead digits of 1, 8, and 9. "If you're parsing your UPC or GTIN to identify the manufacturer, that doesn't work anymore," Rosenberg says. "Additionally, the EAN company prefix has always been a variable number. So if you had any routines in your system where you're parsing the numbers, it won't work with these items."

Historically, with the exception of the United States and Canada, products around the world were marked with eight- and 13-digit bar code symbols. If a product from outside North America needed to come into that region, those products needed to receive a company prefix from the UCC that was relabeled on the product, creating a 12-digit UPC.

As of January 2005, however, the UCC will no longer issue company prefixes to companies headquartered outside North America. These companies will have to go to a local EAN organization to apply for a company prefix, which is what they'll use to create bar code symbols and data structures for their products. "This also means that products with eight-digit and 13-digit bar codes will be showing up on our shores a lot more often than they do today," Rosenberg notes.

Why is the UCC doing this? "By making this change and bringing North America into alignment with the rest of the world, we now have a single, seamless global standard, in which a product can be identified anywhere in the world," Rosenberg answers.

Effects of Sunrise

The impact Sunrise 2005 remediation will have on retail systems depends on the age of the equipment, and the methods used to handle the data. "From a bar code/scanning perspective, the impact will be relatively minor," Rosenberg notes. "Most bar code scanners that have been upgraded in the past three or four years have the capability to read EAN-8 and -13. The issue becomes whether the logic in the system needs to be turned on to handle recognition of these symbologies."

It's in the systems that handle the data where problems can arise. Any system touching POS data, including databases, edit routines, algorithms, and other computations, must be able to recognize a non-12-digit number.

Other systems that may be affected include interfaces to warehouse management systems, inventory systems, and returns-processing systems. ERP systems can be impacted, also, causing a major disconnect between systems if they're not upgraded.

"There are basically three areas retailers have to examine when checking for compliance," says Rik Schrader, v.p. of strategy and services for Chicago-based AquiTec International, a provider of supply chain and demand chain solutions, including Sunrise 2005 compliance. "First, they want to make sure that item information is correct on the warehouse management system side for distribution and receiving.

"Then you want to make sure that the category management systems can handle the merchandise and purchase order activities, and, finally, you check compliance from there down to retail, so that information can pass smoothly back and forth from the scanners in the front to the warehouse management system -- and everywhere in between."

One scenario that can happen for noncompliant retailers is that when the product with an eight- or 13-digit symbology is received, it can't be processed. If the product makes it into a customer's hands, it won't scan at the checkout. "And we all know there's nothing less fun than waiting in line for the cashier to get their PLU book out to find a price or to announce a price check all over the store," Rosenberg says. "And if the cashier enters a fake number just to get the product through the system, then the retailer loses visibility of the product. They know it came in, but not that it's gone out."

Ahold USA's IS group in Landover, Md. is in the midst of its Sunrise 2005 compliance. Leslie Hand, Ahold's application development manager, who also spoke at the FMI Marketechnics Sunrise 2005 session, outlined the company's plan for its U.S. operations.

First, Ahold needed to determine exactly how it wanted to focus the project. "It was our desire to move toward GTIN and full data standardization, while trying to be reasonable in how we scope the project," Hand says. "So we made some absolute requirements -- for all of our retail systems we looked at getting into full Sunrise compliance. For our supply chain systems we needed to look at being GTIN-compliant, because we're going to be talking to external parties about GTIN. So we ended up with a mixed strategy in order to control costs."

Although Hand found it difficult to quantify exactly what kind of business benefit Ahold would receive through compliance with Sunrise 2005, she says that there are some short-term business problems related to lack of compliance. "The No. 1 reason for compliance is to stay in business in a global economy," she says. "Other reasons are preparing for global standardization, becoming a more efficient trading partner, and perhaps even becoming more efficient in our own supply chain. Also, it will help us prepare for other technologies that are right around the corner, such as RFID and EPC."

The next step was to complete internal training throughout the organization, so that everyone was aware of what they were facing. Following this, they needed to define the company's strategy in attacking the problem, by outlining the steps that were needed, such as a system portfolio review, vendor reviews, and communicating to trading partners.

Once the strategy was in place, Ahold determined the project parameters. Would there be any parsing issues? How would paper forms and online screens be affected? The company also had to determine the amount of work that would need to be done for retail technology areas such as scanning, DSD, back-room inventory, and warehouse management systems, and how the work would affect business processes.

Hand brought in a third-party global consulting firm during the assessment phase. "The assessments went out to everybody in the organization," she says. "We put together consolidated reports of all the systems at each operating company."

Hand worked with the consultant to examine these assessments and identify within the company's application portfolio the areas that would need remediation, as well as to set reasonable goals with the resources she had available.

Developing the remediation plan was no easy task. The company's retailer checklist of areas that could be affected was not short, including such disparate systems as purchasing, financial, warehouse, data warehouses for item and pricing data, EDI systems, store labeling systems, bonus cards, data mining, coupon handling and clearing systems, and pharmacy.

The majority of the work was in marketing and merchandising systems, according to Hand. "We have legacy systems in some of our operating companies that used either 10- or 11-character UPCs, so these fields needed to be expanded," she notes. "We also had two different point-of-sale systems in our stores, and one wasn't compliant."

She also had to eliminate any parsing that was done in the systems, including some online screens and reports, like item update forms. "Sometimes it's very tough to find that extra character in the screen," she points out.

Hand expects to be Sunrise-compliant in most crucial systems by January, and in all systems shortly thereafter.

Her long-term goal is to refine business processes by taking advantage of efficiencies that will be gained in the supply chain by effectively using GTIN and GLN, and to obtain a higher level of worldwide synergy by being a leader in global standardization. "GTIN is the key to the global data synchronization network," she says.

And it's one step closer to RFID.
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