GS1 – The global language of commerce

Sometime in the 70s, a truly innovative food manufacturer and an at least similar innovative retailer performed a magic that has slowly grown to the largest globally accepted technology stack for inter commerce world-wide. The manufacturer was Wrigley’s of Chicago, the retailer was Marsh Supermarkets of Indianapolis and the magic was the very first practical bar-code application at a cash register in a retail store.

This established UCC at the time as the maker and manager of all unique identification we still use at our cash registers today. These standards were initially developed separately by EAN in Europe and the rest of the world, while UCC developed the North American Standards. Since some aspects of our food supply chain were already global, retailers insisted on global interoperability on all elements of the bar-code. During the past decade, the names of all National and international organizations have changed to “GS1” to unify the organization to a true global standardization organization.

Part of my passion along with a couple or projects drove me again to GS1 standards. Traceability in Food as it relates to the HR.2749 and S.510 bills as well as ECCNet, a Canadian National Standard for Product and Item Synchronization, which is again mandated by retailers and food service organizations in Canada by the end of the year. Again, the driving force for technology adaption is coming from the point of sale.

The farther your business is away from the cash register, the weaker the GS1 standards get. Industry specific guidelines, as they have been introduced to the produce industry and other industries are largely driven by retailers interest not considering much of the challenges agricultural businesses are dealing with nor making it financially feasible for smaller organization to participate in these standards. This will even get worse.

A large portion of the food industry is regularly playing catch up with technology, you find some of the most out-dated systems and a lack of interest in advanced technologies. Other industries, such as computer manufacturers extended GS1 standards to what they truly needed and created their own communication standards within their supply chain, called the ‘RosettaNet’. They did this, to make internal ROI pay for the external costs of these technology adaptions.

I think there are three options for the food industry:

a) continue as they do today, and just try to address their customer’s requirements as they arise. This means that they will continue with bare-bones adaptation of these standards without ever being able to gain real payback and advantage

b) collaborate with GS1, to make sure that the standards get enriched so that these technologies can be easy adapted and provide true supply chain savings, not only down-stream, but plant internal and up-stream as well.

c) Develop their own set of standards, similar then the Rosetta Net, that makes use of the GS1 Framework and extends it to make it a great fit.

Opting out is not an option anymore. GS1 standards have the entire down-stream food supply chain from Food Service to Retail under tight control. They factually have a monopoly, and there is no way today conducting business in the food industry without these standards unless you want to give up retailers and food service distributors as your client base. With GS1′s expanding role in the food supply chain, they will become even more powerful.

They are able to establish new standards and new technologies that will generate even more fees from its users. Even though the organization is non-profit, it will have ever increasing revenue streams that will largely leverage the power of retailers beyond the cloud they already have. It is today a ‘pay-to-play’ preposition, that will help retailers and food service operators to outsource costs to manufacturers of foods.
If this adaptation in the food industry is not managed effectively, food companies will have a hard time competing with companies that do.

The ever increasing costs of technology adaptation needs to meet ROI to stay competitive. There is no other way until we get a competing standard to GS1, which most likely will not happen any time soon. Face the music and make the best out of it.

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