Foodservice Barcode Dilemma

Despite progress, there is still not enough barcode use across the industry to achieve real supply chain efficiencies.


"When we bring a pallet in, our WMS attaches a license plate to it. The WMS then directs put-away and knows what's on the pallet, where it is and its shelf life and can tell us when it's best to pull it and ship it," says Ben E. Keith's Lavender. "Then when we pick a case, we put our own special barcode on that case."

These steps are being repeated at distributorships all across the country. "Our WMS tracks pallets by the license plates we create. We have to track everything by pallet, not barcode, because about 15 percent to 20 percent [of all products in Yancey's inventory of about 4,000 SKUs] comes in without a barcode," says Graff. "We do it for everything that comes in because it's a lot easier than trying to do it for some products and not for others. The labels are just for our use, and products probably get another set of labels at the restaurant. There's an obvious cost involved with it."

It's not incredibly expensive to do. "After all, it's just a sticker," says Lavender. "The real problem is the labor issue. All that scanning and placing labels on pallets and cases are still a lot of manual steps."

A universal barcode would eliminate the need to manually read and key information into systems, and cut the amount of time spent on correcting errors. It would also eliminate a lot of the duplication that exists now.

"There are other methods that some people are employing with their trading partners, but they're very isolated between the two companies, and then you have to go back and do it individually with all of the other companies you do business with," says Jeff Smith, vice president of marketing at Instill Corp., Redwood City, CA. "There's also some drift in the way those codes are used, so you have to go back into the system and update them every few weeks."

Mergers and acquisitions in the industry have also created havoc on those fronts. "The 50 largest foodservice distributors account for 50 percent of all foodservice sales. They continue to grow through acquisitions, and will continue to do so," says Paul Pretko, industry principal for wholesale distribution at software firm SAP. "With each acquisition, you have different software and applications that those companies could have. At the end of the day, you could have eight or 10 different software packages in one company."

Different Than Retail
Just about everyone in the foodservice industry would agree that the retail grocery industry is far more advanced in its use of barcoding, mainly because barcodes are a much more critical component of the overall sales equation. In retail, barcoding travels with the product all the way to the point of sale, providing retailers with the basis for dozens of decisions related to pricing, ordering, forecasting, demand planning, category management, shelf placement, packaging, marketing, promotions and more. That's not something that foodservice operators face to the same degree, Allen says.

"Also, in retail, with data synch and a standard barcode, there's been a tremendous benefit in cost efficiencies needed to compete against Wal-Mart," says Boyme. Most foodservice outlets do not have that kind of competition.

"There are great similarities between food service and retail, but the business processes are much more complex in food service and that can lead to much more complicated data flows," adds Smith. "There are 30 different types of trade funds programs—spending by manufacturers to boost sales—and there are all kinds of deviations to that. A deviated price is something you almost never see in retail.

"The obvious answer to overcoming that is to reduce the complexity of the way companies interact, but changing the way people do business is not something they do easily," he says.

Delays in full-out barcode implementation in food service are also being fostered by uncertainty among smaller firms about the value of investing in barcoding equipment. "Com­pan­i­es like ours would love to see it in food service, but the compelling value proposition is just not there," says SAP's Pretko.

"Food service has very much taken a wait-and-see approach. The solutions are ready to adopt it, but there needs to be a proven ability to capture ROI before the industry goes forward," Retalix's Boyme adds. "I think it will really help promote standards if companies can prove that they can effectively track products through the supply chain while removing costs and increasing accuracy beyond just scanning."

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