Unlocking the value of supply chain data across industries

The memories of product shortages and supply-chain delays caused by the global COVID-19 pandemic are still vivid. Both consumers and industries worry that future geopolitical climate events might lead to similar disruptions. Amidst evolving regulations, manufacturers are taking precautions to counteract potential scarcity, uneasy customers, and reduced profit margins.

For supply chain experts, establishing a "phygital" information flow, which combines physical and digital data, is crucial for building resilience and efficiency. As physical items traverse supply chains, they generate a wealth of data about their attributes and journey – from raw materials and manufacturing conditions to expiration dates – offering improved visibility and identifying bottlenecks.

This integration of phygital information flow offers notable benefits, enhancing the capacity to create immersive customer experiences while fulfilling environmental, social, and corporate governance (ESG) objectives. In a 2022 global survey conducted by EY, 70% of respondents affirmed that a sustainable supply chain would boost their company's revenue.

Efficient exchange of product information among disparate parties demands a shared framework and universally understood language. Data standards act as the foundation within the supply chain community. These standards aid in precise identification, accurate data capture, and automated sharing of crucial product, location, and asset information across trading networks.

The Drive for Digital Standards

The potency of supply chain data lies in its uniformity, accuracy, and seamless sharing, fueling analytical insights into operations. Standards facilitate precise descriptions of physical and digital components within a supply chain, tracking their journey from production to delivery. This heightened visibility is underscored by a McKinsey and Company survey from 2022, revealing that over 90% of respondents from various sectors had invested in digital supply chain technologies in the previous year.

These standards rely on numbering and attribution systems, which can be encoded into data carriers attached to products, providing unique identification of assets at every stage. When data is captured, it grants digital access to product information and their movement through the supply chain.

Numbering and attribution systems, like the Global Trade Item Number (GTIN), distinguish traded items and products, while Serial Shipping Container Codes (SSCCs) identify logistical units. Global Location Numbers (GLNs) serve for business data, such as invoice addresses or delivery locations. Global Product Classification (GPC) codes employ a hierarchical structure to categorize items based on their characteristics.

Data carriers encompass Universal Product Code (UPC) barcodes, recognizable one-dimensional (1D) barcodes frequently scanned during North American sales. Beyond North America, the European Article Number (EAN) barcode is employed. These barcodes encode GTIN identifier data.

In recent times, more intricate and robust data carriers have emerged, including radio-frequency identification (RFID) tags and two-dimensional (2D) barcodes like QR codes. These codes contain significantly more data compared to simple 1D barcodes.

These identification and data capture standards complement other sharing standards encompassing master data, business transaction data, physical event data, and communication standards for information exchange between applications and partners. Phygital information needs to satisfy diverse requirements, including regulatory compliance, protection of consumer and patient engagement, and fulfillment of supply chain and trading partner needs, such as procurement, production, marketing, and ESG reporting.

Regulation plays a pivotal role in the industry, ensuring the chain of custody and authentication of products and trading partners to uphold secure and safe supply chains. Siobhan O’Bara, Senior Vice President of Community Engagement for GS1 US, a global nonprofit supply chain standards organization, states, "Governments and regulatory agencies have harnessed the widespread adoption of standards to advance global objectives of food, product, and consumer safety."

Emerging Standards Developments Across Industries

Global standards and unique identifiers not only steer today's supply chain evolution but also offer robust applications across diverse industries. Consider a few examples:

Healthcare: Healthcare organizations today are under pressure to enhance patient outcomes, prevent errors, and manage costs. Identification systems can empower patients by providing information that aids adherence to medical protocols.

O’Bara provides an instance of a home nebulizer, a device delivering respiratory medicine. By incorporating an RFID chip, patients can track their adherence to prescribed treatment. If a filter is used, the chip sends a signal when it's consumed, providing patients and healthcare practitioners with essential information.

Retail: Knowledge of product origins can prevent losses and enhance public safety. In case of a product recall due to contamination, a unique identifier improves the speed, accuracy, and traceability of recalls, benefiting both safety and cost-efficiency.

Consumer Goods: A 2D barcode on a product can offer consumers data about its origin, ingredients, certifications, and more. For industry, unique identifiers guide warehouse management, inform distributors about potentially hazardous ingredients, and alert retailers about age restrictions.

Manufacturing: ESG compliance hinges on supply chain visibility. Standards provide structured sustainability data to ensure ESG regulation compliance and sharing with partners.

The Next Phase

Standards enable seamless identification, capture, and sharing of information, fostering a common language supporting business processes. Forward-thinking organizations are taking an additional step by providing customers direct access to supply chain and valuable data. According to Gartner's 2023 research, customers with supply chain visibility are more likely to return, though only 23% of supply chains currently offer this.

O’Bara envisions digital labeling as a prime example of the supply chain's future. Digital labels accessible via 2D barcodes could provide consumers with extensive product information, including nutritional data and sustainability attributes. This approach could drive long-term consumer engagement and business growth.

"Once you've unlocked value from unique identifiers, countless creative and cross-functional possibilities arise for unifying standards along the supply chain. This can enhance commercial functions and consumer engagement, driving substantial revenue," O’Bara explains.