What's in a Name or Number?

June 1, 2004
Arabic numerals make business commerce possible.

Stop for a moment and think about what makes modern commerce possible. Is it the Internet; computers; WMS, ERP, EDI and other application software?
No. All those things just make it possible to conduct business faster and more efficiently. So, what is it? Here's a hint; solve the following problem:
(XII x XIV) / (IV x VI) - VII = ?

Even if you do solve the problem using Roman numerals (and make your elementary school teacher very proud of you), you can't complete the equation because the answer is zero.

What is it that makes business commerce possible? One very simple thing we take for granted: Arabic numerals.

A universally recognized system of numbers is what makes it possible for us to identify quantities, values and even items in a way that everyone -- and even computers -- can understand.

Modern commerce also depends on universally accepted representations of vendor and product codes.

Perhaps the most significant contributions made by the introduction of the Universal Product Code (U.P.C.) in 1972 was not the introduction of bar codes to retail scanning but the establishment of a single, consistent code by which products could be identified.

The 12-digit U.P.C. number (vendor and product code) is the bedrock on which much of today's e-commerce was built. With the emergence of EAN, the international code became 13 digits. Finally, the addition of a packaging level indicator (by implication a "0" for U.P.C. and EAN symbols) created the 14-digit "case code" (which is now called the Global Trade Item Number or GTIN). The GTIN uniquely identifies any packaging level of any item and can be understood by anyone anywhere in the world.

So much for history and background.

Just about everyone is aware (some are even painfully aware) of the 2005 sunrise dates for the various mandates to begin radio frequency identification (RFID) labeling for Wal-Mart, Target, Albertsons and the Department of Defense (DoD). While these 2005 sunrise dates will impact thousands of suppliers and require some major changes to business processes, there is another "sunrise" slated for the same year: "2005 Sunrise." This initiative came before the RFID mandates and applies to thousands more companies and may require even more sweeping reforms than the 2005 sunrise dates for RFID.

2005 Sunrise is an initiative -- or mandate -- announced in 1997 by the UCC. It requires all companies to convert company data structures to accept the 13-digit version of U.P.C. (the 12 digits plus a leading zero) and recommends that databases be configured to use the full 14-digit GTIN.

According to A.T. Kearney, companies could realize $1 million savings per $1 billion in revenue just on synchronization of basic item information alone.
Despite these benefits, many companies are still not 2005 Sunrise compliant -- despite having had more than six years to prepare. (This fact might offer a bit of insight into why RFID mandates have much tighter sunrise dates.)

The UCC is not alone in trying to bring the benefits of data synchronization to its members.

The Healthcare e-Collaborative (HCeC) is also working to synchronize data exchange between trading partners. Here, the task is far more daunting because they're dealing with pharmaceuticals that require many fields of information to develop a complete product description. Even small discrepancies in product descriptions or the ways in which quantities are recorded can prevent efficient communications.

HCeC reported that a study by Healthcare Concepts estimated that the healthcare supply chain wastes 24 percent to 30 percent of supply administration time in correcting reducible data errors; the Efficient Healthcare Consumer Response Study estimated that $2 billion to $5 billion are lost each year due to supply chain information inefficiencies; the Cooper Group's evaluation of four facilities revealed a 30 percent error of item data in hospital material management systems.

What's the lesson here?

Quite simply this: just as Roman numerals were replaced by Arabic numerals because they were a far more efficient way of representing numeric data, so too must inconsistent (legacy) coding structures and product descriptions give way to common coding structures. Data synchronization will provide tremendous benefits to all parties in a trading relationship -- starting with identifying errors in existing material management databases.

In other words, dump the toga (except for parties) and get on board with data synchronization efforts. Do it now.

Bert Moore, contributing editor

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