YOUOU11 billion

reasons to say thank youto barcodes

Copyright GS1 France - Fotolia, Istockphoto. Printed 09/11

INTRODUCTION

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On the importance of standards A standard represents an agreement that structures companies’ activities. It can involve rules or recommendations

that everyone applies, and it can involve a method of measuring, describing or classifying products or services.

GS1 standards are a set of rules on usage and a common language that enable the efficient management of supply

chains globally by identifying products uniquely, shipping units, sites and services and by making the exchange of

information between independent partners more reliable.

The international and multisector GS1 standards can thus help companies meet the challenges of a globalized supply

chain and make them more efficient and more profitable.

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GS1 standards- benefi tting company performance

Barcodes lead to 11 billion euros in annual savings in France

Business processes that are too often based on manual

exchanges (paper, fax, telephone) are affecting the

performance of companies on increasingly competitive

markets. They generate additional costs due both to

dealing with paper, archiving data and managing

claims as well as to the lack of reliable information.

Thousands of documents throughout the supply chain are

exchanged daily between business partners to deal with the

design, production, distribution and sale of manufactured

products. From the product sheet to the notice of payment,

and including vital messages like orders, shipping notices

and invoices, the efficiency of the supply chain depends

on the smooth and secure flow of a great deal of reliable

information.

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u From the barcode …

Manufacturers mark their products with a barcode and retailers equip

their stores with optical readers. Automatic product identification

thus facilitates the checkout process by reducing data entry

errors and waiting time. Use of the barcode is the basis for an

automatic resupply system and leads to an improvement of

the onshelf product availability. The use of barcodes is now

being extended to logistics and is helping optimize inventory and

stock management while ensuring product traceability.

u ... to EDI

Half of manufacturers and 100% of FMCG retailers automate the

exchange of data by using Electronic Data Interchange (EDI).

They electronically send and receive the documents forming the

basis of their transactions in a predefined format. This automation

has resulted, among other things, in the elimination of the

costs related to paper, in more reliable data and in the

reduction of manual inputting.

* 2010 survey conducted among members of GS1 France.

Savings proved by 30 years experience

In France, 28 million orders are exchanged every year in the commercial sector

Annual savings of 5.69% of annual retail revenue through the use of barcodes

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u Savings achieved through the use of barcodes

Barcodes lead to an annual savings of 5.69% of retail revenue.*

The direct, concrete and quantifiable savings from the use of

barcodes amounts to 2.8% of sales. These savings are related

to the reduction in time at the checkout, fewer errors and the

better use of the cashier operators’ time.

The indirect savings come to 2.89% of sales, which is

related to the increase in sales due to better customer service,

better tracking of stocks and store flows and the reduction of

unknown markdowns.

Economic impact of standards on the supply chain

* According to the study “17 billion reasons to say thanks”, PWC (Vineet Garg, Charles Jones & Christopher Sheedy)

EDI leads 794 million euros in annual savings in France

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Electronic messages Number % Savings in euros

Orders 24 352 003 87% 449 816 684

Shipping notices 10 318 303 37% 191 301 348

Electronic invoices 9 860 295 35% 139 030 159

Synchronized product data sheets

320 000 10% 13 440 000

Savings for the members

793 588 191

Study methodology: The savings shown were calculated based on information gathered from manufacturers and

retailers and are totaled for the entire supply chain. The study was conducted among 98% of generalist retailers

on their warehouse flows and on a sample that was representative - in terms of business sectors and sales - from

their suppliers (2009/2010).

u Savings due to the use of EDI

The implementation of EDI by retailers is considered

as strategic since all of them use EDI orders, representing

87% of all orders sent by this means.

Every year, 794 million euros in savings are realized

through the use of GS1 EDI standards for ordering, shipping

notices, invoices and product data sheets (see table below).

In all, about 1.56 billion euros could be saved if all current transaction messages (order - shipping notice - invoice) were dematerialized.

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EDI order: a savings of €18.5 per message

The order is the message that initiates the business transaction. The reliability of this process

depends on the way it is handled: the administrative costs and the order-to-delivery period.

A manually processed order generates additional administrative costs and leads to more claims

than an order that is integrated directly into the information system of whoever receives it.

No need to send a fax Elimination of manual order entry Elimination of errors related to

automated shipments Fewer claims due to errors in manual input One day less of stock

needed

The integration of EDI adds real value to the company’s business strategy and offers a

competitive advantage thanks to the simplification of the interaction between partners and

the greater capacity for flow management, and because a smaller team can now handle

a larger volume of business.

The savings transaction by transaction

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Savings for

everyone in the

supply chain

GS1’s ROI Simulatoru How are savings due to the use of GS1 standards calculated?The savings matrix developed by GS1 France enables company managers

to calculate the return on investment (ROI) associated with the use of GS1

standards in the supply chain.

This new approach makes it possible, for each standard broken down by

process (product reference, resupply, shipping, reception, billing, etc.) to

identify the potential savings that could be realized if the standard were used.

u How does the tool work?Based on its profile as a manufacturer or retailer, the user enters its data into

a matrix (number of pallets shipped or received, number of product sheets,

pay of an operator, etc.) and the ROI Simulator then computes the potential

gains for each stage in the supply chain.

The ROI Simulator is a powerful tool for making decisions about the use of

standards and is available by request by emailing:

cassi.belazouz@gs1fr.org

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The electronic shipping notice and the shipping label: a savings of €0.5 per pallet

The joint use of the electronic shipping notice and the marking of shipping units using the

GS1-128 shipping label helps optimize logistics operations throughout the supply chain: goods

receipt, order preparation and the stocking and shipping of the goods. The automatic capture

of information on the packages / pallets together with the electronic submission of additional

information relating to these packages / pallets improves the reliability of the operations and

leads to significant productivity gains. It also guarantees control over product traceability.

Elimination of the cost of printing and attaching storage labels Better circulation of trucks

Automating the logistics processes has led to greater reliability with respect to order

preparation, shipping and billing, and it has also improved logistics productivity, accelerated

the reception process, and reduced the number of claims. The resulting improvements in

traceability, quality and security all go to the benefit of the consumer.

Logistics excellence: a savings of €1 per pallet

Simplified reception is a process that helps expedite reception by reducing checks on quantity

and quality while improving the reliability of information concerning reception. It is the result of

collaboration between the manufacturer and retailer based on mutual trust and on the successful

use of the electronic shipping notice and the shipping label.

Elimination of the cost of printing and attaching storage labels Better circulation of trucks

Reduction of time for checks upon reception Elimination of claims about reception Fewer

staff needed on the unloading dock Elimination of quality checks Elimination of claims

about reception

The GS1 standards allow to reduce the time spent receiving products by more than 50%.

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Savings for

everyone in the

supply chain

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Savings for

everyone in the

supply chain

A savings of €14

per electronic invoice and of €42 per product data sheet

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The electronic invoice: a savings of €14 per message

The invoice is a fundamental element in the business relationship. Whether an accounting record

or evidence for legal purposes, the speed and quality with which it is processed are crucial for

triggering payment. The dematerialization of the invoice consists in eliminating the sending of

the paper invoice and involves the computer-to-computer exchange of invoices using EDI or an

electronic signature.

Elimination of mail handling costs Reduction of sending costs Reduction of costs for checks

Reduction of accounts reconciliation Elimination of inputting costs Reduction of data

storage costs Reduction of the time to process claims

This has a number of advantages in terms of reducing administrative costs and storage

costs as well as automating and streamlining processes (processing speed, data integration,

accounts reconciliation, etc.). The result is better access to information and a better business

relationship.

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Savings for

everyone in the

supply chain

2 200 suppliers of retail products dematerialize their product data sheets

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The synchronization of product information: a savings of €42 per product data sheet

The electronic catalog is indispensable for the supplier to provide reliable and up-to-date product

information to its various partners. The partners can thus be informed in real time, without

technology being a barrier. The synchronization of product information thus ensures that the

manufacturer (who holds the information) and the retailer (who receives the information) have

“mirror” images of the product information in their systems.

Reduction in the time to input information in the product reference Better productivity in

the management of product data sheets Fewer disputes with suppliers Acceleration of the

introduction of new products Increased productivity in order processing

Administrative costs are lower due to the elimination of re-entries of product data sheets,

to the use of a single exchange format and to a fall in commercial claims. Logistics and

shipping operations are optimized; the trucks are fuller; warehouse deliveries are faster and

more accurate, with as a result a decrease in logistics disputes. The shelving of new products

is speeded up.

Finally, the availability of products on the shelves is improved (less stockout, greater product

range, fresher products).

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Savings for

everyone in the

supply chain

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u An annual study conducted by the Consumer Goods Forum has established

a link between the use of GS1 standards and improvements in business

performance.

Achieve operational excellence with GS1 standards

Difference - 52%

Difference - 44%

7,8%

8,9%

3,8%

5%

No use of SSCC

and of ORDERS messages

Use of GDSN

1 - 50%

Use of SSCC

and of ORDERS messages

Use of GDSN

> 50%

Reduction in the out-of-stock percentage due to the use of SSCC and EDI order transmission

Reduction of distribution costs due to the use of GDSN

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The tables are taken from the publication, Improving business performance and competitive advantage through the implementation of standards (Findings of the Consumer Goods Forum Global Compliance Survey - January 2011).

More competitive

Efficiency Customer satisfaction

Quality enhancement

Sustainability

business relations

relations

satisfaction

information

invoicing

Level of supplier service 8 Out-of-stock level 7 Quality of invoicing 8 Distribution costs 7

crates (for the suppliers)

data by GDSN

Level of store service 8Duration of order --> delivery cycle 7

Annual growth rate of sales 8

standards (E401)

#

IBM Global Technology Services 9

As seen in Figure 6, the top-right quadrant represents organizations with 6-10 standards implemented that have an average minimum implementation level of 51percent. Companies in this group reported lower distribution costs in comparison to their peers with fewer standards adopted and lower average implementation levels. Industry leaders (companies that have implemented at least six standards at an average implementation level of above 50 percent—manufacturer as well as retailer and wholesaler) profit from reduced distribution costs.

Figure 6. Distribution costs and the usage of standards

Figure 7 illustrates that there are many beneficial relationships between the usage of standards and business measures.

Efficiency Customer satisfaction Improved quality SustainabilityCompetitive advantage

Time savingCost reductionImproved supply chain operationsImproved visibility Increased understanding of retailers needs and become preferred collaboration partnerIncreased sales

Improved client relationshipImproved customer satisfactionBetter information availability Improved data qualityewer invoice-disputes Improved Image & BrandLess WasteOptimized usage of resourcesBetter overview of inventory

Supplier Service Level� GTIN on consumer units� GTIN on cases/cartons/innersStore Service Level�

� � � �

��

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SSCC� EDI for orders� EDI despatch advise � Sales with syn master dataAnnual Revenue Growth Rate� Roll out and full implementationof Trading partner performance standards (E401)

Out of stocks� GTIN on cases/cartons/inners� SSCC� EDI for orders� EDI for despatch advice Invoice accuracy� EDI for invoices (manufacturers) Distribution costs� GTIN on consumer units � GTIN on cases/ca/s/ rtons/inners � EDI for orders � Sales with synchronized masterdata via GDSNOrder to delivery rer cycle time� GTIN on consumer units � GTIN on cases/ca/ rtons/inners

100% Industry leadersdustry leader

1 5 6 10Number of standards implemented

1%50%5

1%

Average im

AAplemen

tation level o

fstanda

rds impleme

nted

Distribution costs:11.4% 11.4%

Distribution costs:6.5% -43%

Figure 7. Competitive advantage chart

As shown in Figure 8, the out-of-stock rate (the extent to which the product is available when the consumer wants to buy it) is much lower among companies who have implemented the Serial Shipping Container Code (SSCC) standard or used EDI for orders. Both actions could lead to better serve consumers who benefit from fewer out-of-stocks and earlier access to new products. It is essential that consumer value and satisfaction are met to maintain shopper loyalty, not only for the brands, but also to the retail store in order to increase sales and category profitability.

Figure 8. Lower out-of-stock rate with the use of SSCC

On-Shelf/POS out-of-stocks with the use of SSCC

3,8%

7,8%

Implementation of SSCC

No Implementation ofSSCC Difference: -52%

The completion of the “order - shipping notice - acknowledgment of receipt of goods - payment notice” flows using GS1 standards leads to a savings of €50 per order

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Since its inception, the mission of GS1 has been to facilitate commercial exchanges between

businesses by developing multisector communication standards.

GS1 has a vision of a world where objects and the information related to them circulate

efficiently and safely. We do this for the benefit of companies and to improve the daily lives

of everyone.

Our mission is to be a neutral leader that enables communities of users to develop and

implement international standards by providing the tools and building the confidence

needed to achieve our vision.

Identify, capture, share – the 3 key stages in GS1 standards

The GS1 system is built around two main elements: automatic identification standards

and communication standards.

The automatic identification standards are based on identifiers (e.g. a product reference,

a use-by date, a batch number, etc.) and bar codes and / or RFID chips that can «carry» these

identifiers and capture them automatically at any point in the supply chain.

The communication standards are used to exchange data about transactions (order, invoice,

shipping notice), stable master data (product sheet data) and visibility data (related to

events).

GS1 standards are a component of the company’s Social and Environmental Responsibility

86% of companies continue to send and receive paper documents or use their phones

to conduct their daily transactions.

At a time when companies are all making commitments to sustainable development,

this figure raises questions.

The implementation of GS1 standards is part of a responsible development policy.

Eliminating paper shipments through the dematerialization of flows and optimizing the

filling of trucks through the improved synchronization of product information are some

examples of ways that GS1 standards contribute to a better environment.

GS1 France is contributing to companies’ digital development

GSGS

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2, rue Maurice Hartmann92137 Issy-les-Moulineaux cedexT +33 (0)1 40 95 54 10F +33 (0)1 40 95 54 49E infos@gs1fr.org

www.gs1.fr