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‘Barcoding enables automatic data capture’

With the phasing out of the quota regime from January 1, 2005, Indian exporters need to enhance their supply chain efficiencies and standardise them in order to integrate them with other supply chain systems, says Mr Ravi Mathur, CEO, EAN India. In an interview with Sapna Dogra, he talks about the use of global supply chain standards like EAN.UCC standards, which are recognised all over the world.

Could you please tell us briefly about the EAN India?

EAN India is promoted by the ministry of commerce, Government of India and was registered in June 1996 as a non-profit society. It is a joint government-industry initiative at educating the Indian trade and industry on use of the EAN.UCC numbering system for unique identification of products/services and locations in line with international best practices. Barcodes are meant to enable automated data capture of product information with 100 per cent accuracy and at great speed through the use of barcode scanners. When used with EAN.UCC identification numbers (codes), they enable global identification of products, locations and companies. It is important to note that EAN.UCC standards have been evolved by industry itself and also endorsed by the International Standards Organisation. These standards provide unique and universal identification of each product, consignment and facilitate business documents exchange electronically using global electronic data interchange standards.

Why should EAN barcodes be implemented in garments and how will it benefit the suppliers and retailers?

The adoption of EAN barcodes by both the manufacturer and the retailer of garments is a win-win situation for both. It would lead to cost savings, especially for the retailer, as currently separate proprietary barcodes are being affixed on the same packaging of garments - one at the supplier’s end and the other at the time of receipt of the goods by the retailer for its use. This results in higher costs and higher costs in such business processes could be avoided or minimised by using standardised EAN barcodes. This is a global practice. It’s the retailers who impress upon the suppliers to adopt EAN barcodes at their end. The EAN.UCC standards are anyway the de facto standards across the world. About 7.5 billion barcodes are read everyday in the world.

While following the EAN.UCC standards, the retailers would not waste time in affixing their proprietary codes. Also, products will be shelf-ready at quicker time, which will benefit the supplier. For large retailers handling huge volumes and product variants within a big network across the country, the cost savings would be enormous and helpful in the current competitive environment. Moreover, this has a potential of becoming a non-tariff barrier and if one is not IT-enabled to exchange information electronically with external partners, it is impossible to survive in the post-MFA period.

Can you elucidate more?

Having a common bar coding enables better control at the point of sale as well as the back-end. Bar coding enables automatic data capture at the POS, enabling an efficient way of monitoring off take of products. Barcoding enables monitoring of demand at the outlets and enables players to develop more reliable sales forecasts. And it is with purpose, having a common barcode for supplies to retail outlets is beneficial. Also, the international market will be more stringent about conformation to these standards for instance, Walmart has asked its top 100 suppliers to use radio frequency tags from January 1, 2005 and from 2006 onwards all suppliers will have to use these tags, which includes India. Not only this, the Indian suppliers have been asked to synchronise their product information to align with Walmart with effect from Nov, 2003. And if they don’t comply Walmart will not be doing any business with them. Therefore, Indian industry had better wake up and start acting on this.

What is the response of industry and have you already started the process?

EAN started the dialogue with garment industry about a couple of years back and things have begun to fall in place now. We are working with organised retail chains (such as Shoppers’ Stop) to ensure that both the manufacturers/suppliers and retailers adopt the standardised EAN barcodes on the packaging of the garments that are sold within the country. Shoppers’ Stop has successfully done a pilot project with Arvind Mills on a common barcode, which will be run across all suppliers of Shoppers’ Stop. Here, it is important to note that there are quite a few suppliers who while exporting are using the EAN barcodes however when they supply their products domestically, they don’t bother. There is need to create awareness among retailers as well as manufacturers that implementation of EAN standards is beneficial for them.

So, how are you creating this awareness?

Our objective is to get retailers, manufacturers and later even freight forwarders to agree to a common way of doing business, which transcends language barriers and all other barriers by having a global language of business. Awareness is being created in collusion with apex industry forums like chambers of commerce, retail committees, FICCI, CII etc. In the beginning you need to get few key manufacturers and retailers to understand and implement it and once they do it they will direct others and also others will watch them decide to implement it. The change in the mindset will happen slowly as the benefits of barcoding is realised by the suppliers because it gives even the suppliers a better control over the movement of products across various retailers.

Could you explain why FMCG sector moved ahead in implementing EAN barcodes, but the garment sector is left behind?

Unlike FMCGs, there were no international chains in the garment sector, therefore, EAN barcoding was not implemented as part of best practices. India has taken time to ride on this bandwagon for simple reason because retail here was (and still is) very week. Moreover the organised retail in India is non-existent. And in FMCG, lot of it was retail driven. Also, retailers here don’t have the clout to demand from manufacturers to conform to standards. Thankfully, however in the last few years, the trend is changing.

Also, EAN India was set up only a few years back in 1996 promoted by the ministry of commerce and it started functioning as an autonomous body only in 1998. Ironically, garment retailing was stronger than FMCG with brands like Raymond, Arrow having their multi brands and exclusive brands. It should have taken up fast in garments however despite having a fairly strong retail it didn’t not pick up because of absence of international chains and most people were not bothered about conforming to international standards.

How much cost does one have to incur for this exercise? And how long it will take before these EAN standards become a common practice in garment industry?

Cost is not an issue because the one time EAN fee is Rs 20,000 and Rs 4,000 is the recurring amount that has to be paid annually, which I think is not a big amount for players in the garment industry. However, mindset needs to be changed. Although things are moving slowly, yet I am confident that in the next five years barcoding will become a norm in textiles just like in FMCGs.