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Improving traceability and inventory management with 2D barcodes in retail

Increased demand for end-to-end traceability of individual products throughout the supply chain is driving an industry shift towards the adoption of 2D barcodes.

For over 50 years retailers have been using linear one-dimensional (1D) barcodes with a universal product code (UPC) at their POS. However, as technology advances and consumers expectations shift the 1D barcode could be facing extinction.

President and CEO of GS1 US, Bob Carpenter stated, “consumer expectations for rich, quality information have risen since smartphones became essential shopping tools”.[1]

Research has found that 82 per cent of retailers and 92 per cent of brand owners are supporting the transition towards using data-rich, two-dimensional (2D) barcodes, digital watermarks and/or RFID instead of the UPC.[2]  2D barcodes, such as QR codes and the GS1 DataMatrix are looking to be the most promising as the next-generation barcode for the retail sector.

Woolworths is already leading the charge introducing 2D barcodes at their POS last year. After a successful trial in August 2019, they began their transition to using the GS1 DataMatrix on their perishable products, beginning with meat and poultry.

From the retailer’s perspective there are many benefits in moving to a 2D barcode like the GS1 DataMatrix. The large amount of data the code can hold including pack date, product batch, expiry date and price will greatly improve not only traceability but also inventory management, recall management and waste prevention.

Improved traceability and recall management are highly beneficial to the brand owners and manufacturers, as it assists in protecting their brands and products perception in critical situations such as product recalls. To add to this the ability to interact dynamically with the consumer and gain new insights about their buying habits and triggers is proving very appealing to marketers.

While there are positives in moving to 2D barcodes, there will inevitably be challenges. Cost is a hurdle retailers and brand owners will have to consider. Due to the variable, dynamic data a 2D barcode can hold brand owners will have to think about how to label and/or code every product dynamically and be able to share this information accurately with the rest of the supply chain.

If they have not already, retailers will have to upgrade their POS infrastructure to allow for 2D scanning (which is backward compatible for 1D barcodes), allowing manufacturers time to transition.

Although this shift is still in the early stages an acceleration in adoption is expected. It is important for anyone in the supply chain to start discussions with their providers early. They can recommend and help guide you towards the right coding, labelling or data capture solution for your needs which will ensure a smooth transition for all involved.

If you would like to find out more about ‘data-rich’ 2D barcodes or how insignia can help you make the transition, click here.

[1] Study: Retailers ready for this new type of barcode, 2020, https://chainstoreage.com/study-retailers-ready-new-type-barcode

[2] Study: Retailers ready for this new type of barcode, 2020, https://chainstoreage.com/study-retailers-ready-new-type-barcode

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