PMA PANELISTS STRESS NEED FOR BETTER PRODUCT CODING

CAROLINE HELWICK

NEW ORLEANS -- Coding products to speed identification throughout the distribution channel has become an integral part of doing business. But the produce sector is still lagging behind the grocery industry, panelists said during a session of the Newark, Del.-based Produce Marketing Association's annual meeting here.

The panelists, who included retailers, industry consultants and produce experts, said that there are enough standard coding techniques available today to greatly simplify the produce business, and bring the entire segment up to speed with others in the retail environment.

"[Electronic data interchange] is the norm in the grocery industry for ordering and invoicing product," noted Mike Ross, produce sales coordinator for Kroger Co., Cincinnati. "The produce industry is running behind. When the many roadblocks are removed, EDI will provide a very efficient method of transferring information.

"Every minor retailer has some form of EDI in place, for example, so he can talk to Campbell Soup," he added. "You would be hard pressed to explain to a retailer why the produce industry is not using EDI."

Ross said incorporating a "viable, workable and long-lasting" EDI is one of the major ways to move the produce sector forward.

Doug Grant, director of information services for Vancouver, Wash.-based David Oppenheimer Group, a broker-distributor-importer, agreed that EDI would enable the produce segment to handle most aspects of business more efficiently. In the sales cycle, for example, EDI would curtail the extent of paperwork, mailings and data entry.

EDI would affect business transactions in virtually all areas: purchase orders and changes, advanced ship and billing notices, invoicing, payments, credit and debit adjustments, and item maintenance. Bar codes and EDI would work synergistically, with bar codes identifying the product and EDI transmitting product coding data, he explained.

One coding technique the industry has adopted has had a direct effect on the retail level, according to Ross: product .... look-up codes. This on-piece label has become the primary method of identification at the checkout and is now the best way to maintain checkout efficiency.

"PLUs are a wonderful tool for us," he said, since they allow retailers to increase variety, enhance efficiency, and accurately price product for the consumer. "But they are [only] a springboard to the next level."

Still, product code structure remains the biggest problem today because there are numerous variations across the industry. For example, at the retail level, different codes are used for bulk and packaged produce, and suppliers -- distributors, growers, shippers -- have their own unique proprietary structures.

Codes currently used include brand-specific Universal Product Codes, generic UPCs, industry standard price look-up codes, .... retailer-assigned standard PLUs, and chain-specific PLUs.

"There is no direct relationship between these codes," Grant said. "We need direct matching for suppliers and retailers in order to use computerized shipping."

According to Bruce Axtman, vice president of the Barrington, Ill.-based firm of Willard Bishop Consulting, there is significant variation between the "best" and "worst" usage of standard codes. He cited a survey of 30 chains, which found that while the best stores scanned 95% of items at the register, the worst chains scanned fewer than 50%.

This is "moving in the right direction" because most high-volume items are being scanned through standard codes, however, "we have a ways to go," he remarked.

"We've learned that, when chains make a change to standard codes, it has a positive impact," Axtman said.

Retailers have myriad reasons to sing the praises of product coding, Axtman pointed out. Scan file maintenance is made easier, checker accuracy is improved, and point-of-sale data integrity is enhanced because it is affected by pricing strategy.

Likewise, category management, fast becoming a necessity as the produce mix becomes more complex, is also facilitated. He sees data access and quality as the biggest hurdle to "doing it right and developing business as grocery has."

Good coding cuts time as well, he added. Initiating a category management program at retail, for example, takes 12 months under poor coding practices but only three months when better coding is implemented. Completing a full category review and plan takes only two weeks with good coding practices, but three months otherwise, he said.

The ultimate aim, he said, is for produce to achieve a sophisticated level of coding. Such a system would be able to determine the source of the product, how product is moved through the channels, and how it is performing at retail, he said.

To become more efficient in the shipping and receiving end, Grant of Oppenheimer Group said the industry should be moving toward the serialized shipping container code, an international standard. The "pallet tag," as it is more informally known, serves many purposes in vessel pallet inventory, vessel discharge, vessel dock and cold storage, shipping and receiving, "over, short and damages," quality control and inspections, and pallet splits, consolidations, transfers and returns.

"The pallet tag uniquely identifies the pallet. And any time there is movement of pallets, the pallet tag is scanned," he said. Similarly, a case code is useful for identifying the product itself, describing items in a case, including how they are configured.

Until produce surges toward the newer coding technologies, the industry will be left with "lots of different codes, all with specialized purposes," Grant said.