TABLE OF CONTENTS Table of Contents

Executive Summary 3 Introduction 4 Current State of the GTIN in Produce 5 The Cost of NOT Implementing the GTIN 6 Expected Benefits of GTIN 7 Pilot Purpose / Objective 8 Pilot Scope 9 Format of Findings 9 Summary Table: Activity Titles within Workflow Phases 10 Phase 1: Assignment 11 1.1 Supplier Activities 11 1.1.1 Assign GTINs to Case Configurations 11 1.1.2 Link GTINs to Internal Supplier Codes 11 1.1.3 Create Permissible Substitutions 11 1.1.4 Update Customer Profiles with GTINs 12 1.2 Buyer Activities 12 1.2.1 Load Supplier GTINs into Buying System 12 1.2.2 Link GTINs to Internal SKUs 12 Phase 2: Identification 13 2.1 Procure Skeleton Case Labels from Label Supplier 13 2.2 Print Case GTIN onto Labels 13 2.3 Include Additional Label Information 14 2.4 Affix Label to Cases 14 Phase 3 Reference 15 3.1 Supplier 15 3.1.1 Include GTINs on Sales Materials 15 3.1.2 Use GTINs to Synchronize Data with Buyers 15 3.1.3 Receive Purchase Orders with GTINs 16 3.1.4 Advanced Ship Notice to Buyers 16 3.1.5 Use GTINs on Invoices to Buyers 16 3.1.6 Use GTINs on All Other Reference Documents 16 3.2 Buyer 17 3.2.1 Include GTINs on Purchase Orders 17 3.2.2 Ensure Third-Party Service Providers Can Receive GTINs 17 3.2.3 Process Invoices Using GTINs 17 3.2.4 Receiving Substituted Product 17 3.2.5 Synchronize Data with Sellers Using GTINs 18 3.2.6 Use GTINs on All Other Reference Documents 18

1 TABLE OF CONTENTS

Enablement of Supply Chain Tools/Practices 18 Data Standards 18 Data Synchronization 18 Electronic Commerce 19 Barcoding 19 Reduced Space Symbology (RSS) 19 Radio Frequency Identification (RFID) 20 Traceability 20 About the Participants 20 Appendix A: GTIN Case Codes Assignment Strategy 22 Appendix B: Standardized Case Label 28 Appendix C: Glossary 29

2 SECTION ONE EXECUTIVE SUMMARY Executive Summary Produce companies and retail/foodservice providers have reached a crossroads in the way they conduct business. After years of consolidation and expansion, trading partners are now finding that they must increasingly rely on boosting the efficiency and effectiveness of their supply chains to help drive continued growth. New technologies are making dramatic improvements in process automation and collaboration. While many trading partners recognize the importance of such initiatives, many are uncertain how to proceed and where their efforts could be focused to achieve optimum benefit. One inescapable fact is that the produce industry has virtually stood still in its use of supply chain tools, while other industries have embraced their use and continue to benefit from their resulting efficiencies.

The implementation of the Global Trade Item Number (GTIN) is a critical first step in solving many problems that have long plagued produce partners. The GTIN is the very foundation for electronic commerce and tools to automatically capture data (e.g. barcoding, RSS, and the much talked about RFID systems). GTINs provide an accurate, efficient, and economical means for controlling the flow of product and data using an all-numeric 14-digit identification system.

The GTIN is unique in that it is a globally recognized protocol for assigning item numbers for executing all types of trade. It is used in at least 26 different industries in more than 100 countries. As such, the protocols of the GTIN will be recognized as goods are both imported and exported. It is important to understand the GTIN is not a single number that every company uses for a specific product. Rather, it is a standard protocol that, if followed correctly by each supplier, will allow each supplier to be able to uniquely identify their products and each buyer to take advantage of tracking these products by supplier. This is especially important for the purposes of tracing and tracking products, as well as evaluating product movement by supplier.

Item information needs to be shared and synchronized accurately in order to maximize operations and effectively collaborate with partners. The adoption of the GTIN aids all segments of the supply chain by positioning the produce industry to begin using tools that the balance of the food industry has used for quite some time to help reduce errors and increase savings and efficiencies. Today’s produce partners share information through labor intensive and inconsistent methods. Critical informa- tion is often inefficiently managed and communicated between trading partners using incompatible media or formats. Improved and effective communication using the GTIN would significantly reduce time and errors and ultimately reduce long-term cost by positioning companies for additional technological improvements.

To achieve these ends, the produce industry must adopt a global numbering system. The assignment strategy document discussed in Phase I below has been adopted during this pilot project as a “Best Practice” document. This guide was developed to assist suppliers in assigning GTINs. Used effectively, the assignment strategy document will allow you to control and manage the number of GTINs issued.

In addition, this team also adopted a standardized case label to provide a guideline to follow when considering case label design. By endorsing this standardized label design, fewer errors will occur and the produce industry can rally around one case label standard, rather than numerous ones being suggested today.

3 SECTION ONE EXECUTIVE SUMMARY

Buyers and sellers need to start building improved data collection and synchronization methods, all of which start with the use of a standardized number: the GTIN. Current industry practices in the produce industry are akin to a Board meeting taking place whereby every Board member speaks a different language. It would be extremely laborious, error-prone, and confusing to attempt to communi- cate with other members. So, too, is the produce industry’s practice of assigning a non-standard, proprietary number to an item. To address this, the grocery retail community has already adopted the GTIN standards for its packaged goods segment and is now looking to begin using these same standards in the remainder of its business. The movement to incorporate the GTIN is also occurring in floral, meat, dairy/deli, turkey, pork, beef, fish, and other segments.

In this document you will learn what the current state of the industry is with regards to using a standard number for identifying products, what the benefits are, what roadblocks were encountered, the areas of impact, and a recommended methodology to help supply chain participants use the GTIN. As this important standard will be the number used to order and invoice produce (and all related business transactions), as well as being the “ante” for participating in supply chain efficiencies and technologies, it is important that the information to follow is well understood.

Simply put, the produce industry cannot effectively participate in supply chain technologies such as electronic commerce, barcoding, reduced space symbology (RSS), radio frequency identification (RFID), and data synchronization without adopting the GTIN. This document shows that the produce industry can adopt the GTIN. It is not without its challenges, but there is an answer for every challenge present- ed. Now is the time to address the wide gap that separates the produce supply chain from the pack- aged goods supply chain. The longer we wait, the wider the gap gets, the more costly and undesirable it becomes to do business in the produce industry.

4 SECTION TWO INTRODUCTION Introduction The Global Trade Item Number (GTIN) is an umbrella term to identify all products at all levels in the supply and demand cycle via the GS1 system (formerly the EAN.UCC System) of worldwide data struc- tures. There are unique GTIN numbers for individual suppliers’ selling units, brands, case levels, inner pack levels, and pallets. Each requires a unique GTIN to correctly identify product on its way to market. The GTIN itself is not a new standard. This study concerns itself specifically with the case-level issues surrounding the implementation and deployment of GTINs at the case level in the produce industry.

The produce industry is poised for industry-wide change. This growth will come from continued consoli- dation of retailers and the explosion of consumer markets in the area of organics and specialty goods. Government concerns about terrorism and tainted food supplies increase the likelihood of change. In addition, the cost of labor continues to rise throughout the food chain. This prompted leading retailers to initiate projects such as RFID, data synchronization, RSS, electronic commerce, and barcoding in an attempt to drive costs out of the supply chain. Adopting the GTIN is one of the first steps to using all of these supply chain tools.

The Produce Marketing Association (PMA) engaged RCM Technologies to help guide a group of pro- duce-industry professionals in a pilot project to test the viability of using the GTIN at the case level. Time was supplied by participant companies who also extended the use of their existing supply chain infrastructure to help provide proof of concept in the adoption of this important standard. Participating companies

O Produce Marketing Association (PMA) - Gary Fleming, Alicia Calhoun and Amy Schillat O Food Marketing Institute (FMI) - Pat Walsh O International Foodservice Distributors Association (IFDA) – Steve Potter O GS1 US - Greg Rowe O Tanimura & Antle - Tom Casas and Mikelea Hailstone O BJ’s Wholesale Club - Jeff Patterson, Linda Kuchta, Susan Fancy, Jan Polivka, Cindy Paul, Mark Daniels, and Patrick Morris

O Duda Farm Fresh Foods - Alan Newton, David Best and Bill Nunziatti O L&M Companies, Inc - Mike McGee and Sandy Kabat

O Giumarra Companies - Chris Pisano, Tim Riley and Celina Perez O The Oppenheimer Group - Doug Grant, Steve Roosdahl, Harvey Lim, and Gary Tucker O Wal-Mart Stores, Inc - Michael Agostini

O SuperValu - Greg Zwanziger O FreshPoint, Sysco Inc. - Mike Comazzi

O RCM Technologies - John Belli and Ron Touretzky

5 SECTION TWO INTRODUCTION

The approach to the pilot was to pair up groups of buyers and sellers and to utilize existing information systems to order, invoice, and receive product using the GTIN, while documenting issues and concerns along the way. During the course of our project, two participant companies (Albertsons and Supervalu) merged, restricting their ability to directly participate in our study. They were thoroughly involved in our weekly meetings, however, and provided valuable insight into the role of system synchronization. Current State of the GTIN in Produce

Automation in the produce and grocery industry is not new. All of the industry leaders have various levels of electronic systems including point of sale, inventory control, replenishment solutions, and many others. Produce has for decades been left out of newer applica- A survey done by PMA in tions of these and other supply chain technologies and automated September 2005 revealed that processes for a variety of reasons. This document will highlight some of only 6% of the produce industry these issues, recognize and understand some of the problems, and rec- ommend potential solutions or alternatives. The produce industry, as a uses the GTIN to identify cases, whole, is far behind other buying sectors in using automation to reduce 36% use a proprietary number, costs from its supply chain. The first step in defining the current and 44% use nothing at all. process was to define each participant’s level of modernization. Every participating company is benefiting from some type of electronic system to help administer and control its processes. How well and how antiquated or adaptive a system was became quickly evident once we attempted integration between buyers and sellers.

The market is certainly driven by the buyers of produce. This concept was articulated, recognized, and reflected in just about every section of our study. The level of automation and integration between companies is set by the buyers’ market. However, buyers that use third-party integrators for cross-ref- erencing proprietary numbers to GTINs will be at a disadvantage as time goes on. These service providers are able to perform cross-references as business transactions (e.g., purchase orders, invoic- es, etc) are routed through their cross-reference schemes. However, for the purpose of automatically capturing data (RFID, RSS, barcodes), what is read or scanned is not routed through the third-party service providers in real-time. Therefore, it is important that the GTIN number is actually stored in your systems to allow for instant recognition of what is being scanned or read from a barcode or RFID tag. Otherwise, you will have to take additional steps to translate what was scanned or read, which defeats the purpose of near real-time access. The Cost of NOT Implementing the GTIN

Nothing worth having is without cost, and the adoption of GTINs industry-wide will have an impact in expenditures for a number of participants. However, use of the GTIN will provide companies with a foundation for gaining tremendous cost benefits beyond those obtained from having a standard “language” with which to conduct business (e.g., eliminating manual input associated with purchase orders, invoices, and ASNs as well as the manual activities to read, input, and reconcile numbers shown on cases and pallets). The impact the GTIN adoption will have on an individual company depends on its level of system automation. A company with outdated enterprise solutions could see significant cost associated with the modernization of application systems. Companies that are posi- tioned to recognize the benefits of customers demanding adoption should have minimal cost and risk. In our study, we had companies that represented both extremes and found that GTIN adoption is plau- sible. In fact, every participant could recognize some benefit. 6 SECTION TWO INTRODUCTION

What are vague are the reasons to adopt and the plans to migrate. Developing a realistic approach to implementation requires a clear understanding of where the company is today in relation to its mar- kets and customers, along with a vision that takes into account the breadth and depth of the future. These considerations become extremely important in light of the food industry already embracing vari- ous technologies that require the GTIN standard. This continues to be demonstrated in the mandates issued by the buyer community that have already seen savings associated with their use. The produce supplier community is being asked by the buying community to embrace these standards and tech- nologies in order to maximize their return on investment already made in other segments of the food industry, while catching the produce industry up on supply chain efficiencies that can significantly cut costs. If the industry does not embrace this voluntarily, even more mandates will most likely be issued. The question then changes from “How much does this cost?” to “How much will it cost if I lose this business?”

Due to the produce industry’s use of proprietary numbers and systems, the industry has strongly become reliant upon “band-aid” approaches. This strategy has increased costs, increased administra- tive workload, and reduced the industry’s ability to participate in various supply chain initiatives. It has also resulted in an industry that performs more as independent silos, rather than as a collaborative, efficient supply chain. A number of participant buyers opted to engage third-party service providers as an alternative to replacing outdated internal application solutions. Over the years, this approach has become ingrained in the industry and has ultimately diminished profitability and reduced communica- tion between buyers and their supplier trading partners. These systems have, however, provided pro- duce buyers and sellers with the ability to continue to meet requirements without a significant amount of work, but not without an associated ongoing cost.

Most managers understand the intrinsic value of synchronizing systems between buyers and sellers. But some companies still question the savings that can be recognized by implementing integrated solutions. Recognizing the risk and understanding the realities of implementation were constantly on the minds of our participants. Most recognized the strategic advantage of directly interfacing with cus- tomers and bypassing third-party integrators. Expected Benefits of GTIN

As noted above, the GTIN is a foundational standard without which we lose our ability to use proven supply chain tools and gain their accompanying benefits. Most buyers, both in retail and foodservice, recognize the benefit of deploying technologies that are supported by the GTIN in the consumer pack- aged goods (CPG) supply chain. Waiting to adapt and automate also has its benefits. Thanks to the CPG companies who have already paved the path over the last few decades, very little has not already been uncovered in the adoption of GTINs that would assist the produce industry in their adoption.

The produce industry has lagged behind other industries in embracing electronic commerce and ways to capture data automatically. In response, a number of large retailers, distributors, and even govern- mental agencies are now forcing compliance with the introduction of pilot projects and mandated timetables. The benefit, or rather the costs of not complying, is becoming very clear. In some cases, you either comply or lose the business. The decision now becomes “Am I ready to lose the business I do with this company or should I look at this as an opportunity to improve my business and increase my own efficiencies?” Doing something just because you are told to do it might be more of a cost than a benefit. Doing something and embracing the change because you can use it internally and

7 SECTION TWO INTRODUCTION

because you can position your company for the future will bring benefits. These benefits are proven in other industries that have long embraced them.

The ability of buyers and sellers to collaborate towards common goals has allowed U.S. businesses to outgrow world markets. Integrated synchronized systems electronically flag potential problems. Companies that use GTINs to communicate can expect significantly improved process flows and reduce handling costs.

Adopting the GTIN will enable the use of technologies that will give access to other valuable benefits:

Buyers Can Expect Sellers Can Expect Global item recognition Global item recognition Reduced order management handing costs Reduced product discrepancies Reduced matching problems Improved communication with buyers Improve communications with suppliers Improved cash flow Reduction in reconciliation/audit costs Improved tracking and tracing Inventory reduction Better substitution handling Improved substitution handling Improved internal communication with sales department Automated receiving and storage Simplified supply chain management Improved lot traceability Improved logistics Real time access to inventory Automated inventory management and storage Improved customer service Improved customer retention

Pilot Purpose

All of the pilot participating companies currently have competent data systems. We found that the buyer systems’ capabilities drove the effort to integrate the GTIN. If, for example, the buyers’ system would support the use of GTINs, then often the adoption of integration went smoothly. On the other hand, if the buyers’ system was dated, then the use of third-party solutions to simulate integration was common. This increased both the cost and complexity of order management. In the long term, these systems will have impact on both profitability and customer service.

In order to identify issues in the adoption of the GTIN, we first defined three primary steps:

1. Assignment 2. Identification 3. Reference Each of these steps will be addressed in detail below. The assignment section addresses the steps nec- essary to create and assign a GTIN to a supplier’s various case configurations. To accomplish this, partic- ipants developed and endorsed as a “best practice” an assignment strategy for the creation of GTINs.

The identification section focuses on the physical make up and deployment of the GTIN shown on the actual cases. Pilot participants have endorsed the use of a common case label for the purpose of

8 SECTION TWO INTRODUCTION

physically showing the GTIN and its accompanying information on the case, as well as minimizing the numerous formats being proposed today.

The last section, reference, deals with using the GTIN on business transactions that can be integrated with the use of electronic commerce between buyer and seller systems.

As noted above, this pilot was focused on a proof of concept exercise. Its primary objective was to dis- cover whether participating companies could successfully deploy the use of the standardized GTIN in the produce supply chain, even using their existing systems and methods.

This pilot did not address any individual company’s issues of adoption. Nor did this pilot address tech- nology that would or could be deployed to make the implementation easier. The additional deployment of RFID or RSS in the marketplace, while discussed, was not a focus of the pilot project.

The pilot approach was determined to be a conclusive way of demonstrating that the GTIN could be used in the industry today and that there was no business case to prevent its incorporation in our industry. Pilot Scope

The scope of the pilot was to utilize the GTIN in the produce supply chain processes, from its physical display on cases to its inclusion on business transactions between trading partners.

The pilot included the development of a requirements definition for the member teams to continue the necessary improvements for implementing or adopting the GTIN standard in their organizations.

It should be noted that each of the pilot groups had their challenges in processing GTINs and that in some cases, activities were simulated to test the viability of the GTIN. These simulated steps could be automated in the future with updated or improved systems.

Scanning technology was not included in the scope of the project. RFID was also not included in as the GTIN is a prerequisite for the Electronic Product Code (EPC) number encoded in an RFID tag. Format of Findings

Workflow Phases: For the purpose of this pilot, implementing the GTIN involves tasks that fall into three distinct categories or “work flow phases”mentioned previously: “Assignment,” “Identification,” and “Reference.” Within each phase there are multiple tasks called “Activities.” This study will define and analyze the Activities involved in each of the following workflow phase.

Assignment: This involves the assignment of GTINs at the case level. The most critical issue (Activity) in this phase involved defining the level of granularity when assigning GTINs to different case configurations. A different GTIN could be used for each combination of commodity, variety, country of origin, size, grade, pack, case configuration, label, etc. Using the correct strategy in assigning GTINs to case configurations will be a critical decision that could have long-lasting reper- cussions on workflows, business practices, and systems. Other Activities included associating groups of GTINs for substitution purposes (GTIN ordered vs. GTIN shipped) as well as the impact on databases and programs pulling from those databases. With this report, PMA has issued a

9 SECTION TWO INTRODUCTION

baseline “Best Practices” assignment strategy for the creation of GTINs. This recommended posi- tion paper is meant to serve as a starting point for assigning GTINs for produce suppliers. It can be found under Appendix A.

Identification: While this involves identifying cases with a GTIN, it does not include the transport medium for GTIN. Regardless of whether the GTIN is represented in a barcode, RFID tag, or hand- written, our study was confined to the physical representation of the number on the case, as opposed to the medium in which it could be encoded. In the interest of standardization, we also addressed using an industry standard case label for human readable information when marking the case with the GTIN. A copy is included in this document.

Reference: This area has the largest potential impact on IT systems. It involved identifying all sys- tems affected by the inclusion of a GTIN for produce items and defining an approach for integrating the GTIN into these systems. We were particularly interested in our participant’s approaches to GTIN integration.

10 SECTION TWO INTRODUCTION

Summary Table: Activities within Workflow Phases GTIN Activity List Process 1.0 Assignment 1.1 SUPPLIER 1.1.1 Assign GTINs to case configurations [Use GTIN Assignment Strategy Document] 1.1.2 Link GTINs to internal supplier codes 1.1.3 Create permissible substitutions 1.1.4 Update customer profiles with GTINs 1.2 BUYER 1.2.1 Load supplier GTINs into buying system 1.2.2 Link GTINs to internal SKUs 2.0 Identification (Seller Only) 2.1 Procure skeleton case labels from label supplier 2.2 Print case GTIN onto labels 2.3 Include additional label information [Use GTIN Case Label document] 2.4 Affix label to cases 3.0 Reference 3.1 SUPPLIER 3.1.1 Include GTINs on sales materials 3.1.2 Use GTINS to synchronize data with buyers 3.1.3 Receive Purchase Orders with GTINs 3.1.4 Advance Ship Notification (ASN) to buyer 3.1.5 Use GTINs on Invoices to buyers 3.1.6 Use GTINs on all other reference documents 3.2 BUYER 3.2.1 Include GTINs on Purchase Orders 3.2.2 Ensure third-party service providers can receive GTINs 3.2.3 Process Invoices Using GTINs 3.2.4 Receiving Substituted Product 3.2.5 Synchronize data with sellers using GTINs 3.2.6 Use GTINs on all other reference documents

11 SECTION THREE PHASE 1

Phase 1: Assignment 1.1 Supplier Activities 1.1.1 Assign GTINs to Case Configurations Almost immediately, the group identified the need for a common approach to the assignment of GTINs. Potential number proliferation was a common theme during early meetings. The pilot team created and eventually adopted a methodology that could be According to pilot participant Doug Grant from used by the produce industry when assigning GTINs to case The Oppenheimer Group, “It is critical that the configurations. This document became a “best practice” industry decides on a standard set of attributes (see GTIN Assignment Strategy in Appendix A). The assign- to form the GTIN. It would be very difficult for ment strategy is immensely important to the overall success suppliers to maintain a different GTIN structure of the deployment of the GTIN. Without a guideline, it is for every retail/foodservice customer.” easy to see how number maintenance could quickly become an issue.

It is important for companies to understand that they first need to obtain a GS1 Company Prefix from GS1-US before they can begin using the GTIN. See Appendix A for the relation of a GS1 Company Prefix to a GTIN.

1.1.2 Link GTINs to Internal Supplier Codes Most of the pilot companies have internal numbers that they use to track product inside their oper- ations. Once the GTIN number is assigned, a mapping feature links internal (and sometimes exter- nal) numbers to the GTINs. Most companies in our pilot already had systems that were designed to map internal numbers to customer SKUs.

With no exceptions, all participants were able to complete this task

1.1.3 Create Permissible Substitutions Substitutions are common in the produce industry and often standard substitutions exist between buyers and sellers. One area of concern for the According to Chris Pisano at Giumarra pilot group was “the passing,” in which notification of what Companies, “Permissible substitutions would was shipped is communicated from the supplier to the help suppliers by reducing the need for elabo- buyer. The group identified the ASN as a means to alert buy- rate substitution tables. As many customers do ers of an order deviation or product substitution on route to not order by particular brand, we can easily the buyer. The primary concern for suppliers is that retailers accommodate customers with would reject shipments (and/or the invoice) if they receive one of several items.” substitute GTINs.

The group endorsed the use of the ASN as the preferred method of communicating changes not requiring verbal approvals.

1.1.4 Update Customer Profiles with GTINs Limited in scope, the pilot did not directly address this issue. Most suppliers felt that this step would be accomplished as a normal course of business and probably would add value because buyers and sellers would be utilizing the same numbers.

This was especially true for suppliers engaged with direct contact with customers’ systems in which discrepancies could be automatically flagged. According to Giumarra Companies, “Using 12 SECTION THREE PHASE 1

GTINs would allow us to simplify the customer catalog. Currently all our retailers use different num- bers to order the same item. This would eliminate confusion and improve efficiencies.” 1.2 Buyer Activities 1.2.1 Load Supplier GTINs into Buying System All of the buyers in our study were able to accept suppliers’ GTINs, either directly from the supplier or through a third-party service provider. The third-party service provider was used by the buyer to translate the supplier’s GTIN to their own SKU #. Although this could work for the deployment of electronic commerce, it will not work effectively for automated data capture such as barcoding, RSS, or RFID. One of the pilot participants was not able to store a 14-digit GTIN. As such, when they attempted to read a barcode with a 14-digit GTIN encoded in it, their system was not able to cross-reference the GTIN with the internal SKU without taking additional steps. Clearly, having the GTIN referenced on the buyer’s system allowed buyers to use the GTIN to verify that the correct product was (1) ordered, (2) received, and (3) paid for without human intervention.

1.2.2 Link GTINs to Internal SKUs Participants that were able to enter GTINs into their systems will be able to develop mapping tables that link GTINs to internal inventory, warehousing, and financial systems. Some pilot partici- pants found that some internal tracking and cross-referencing will still need to take place, desig- nating the GTIN as the common number used between trading partners (i.e., shown on all busi- ness transactions between trading partners and on the case itself), but linking internal numbers to the GTIN. This situation is a result of those companies that cannot change their existing propri- etary numbers to a GTIN without exorbitant costs and time. Their solution: set up a link or cross- reference internally. Ultimately, all trading partners should be able to communicate with the GTIN. What is done inside their own four walls is up to each company. Phase 2: Identification 2.1 Procure Skeleton Case Labels from Label Supplier For the purpose of this pilot, all of the partici- pants used existing technologies and supplies to print case labels. An attempt was made to look at other methods (preprinted corrugated boxes) once production volume increased. The amount of information proposed to be on the label negated the ability to order pre-printed cor- rugated boxes. Clearly, the method of identifica- tion was directly tied to the production process to be deployed (e.g., labels applied in the field vs. in the warehouse). One participant, L&M, used a subset of their standard 4X6 pallet tags for case labeling (due to limited real estate on the box) and recommended that companies adopt standardized media to help reduce the cost of purchasing labels.

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2.2 Print Case GTIN onto Labels In the process of defining the common case label, it was decided that even if suppliers did not have print- ing equipment, handwritten labels could be used to write product information on the label. Companies that had case label printers reported a one-time effort of about two hours of software development time to complete the task for production. Others without exist- ing technology recognized the need for investing in printers and software. Label costs were reportedly 2.2 cents per label. 2.3 Include Additional Label Information The group adopted a case labeling template that could be used to help Receiving identify the location of the GTIN and its accompanying information. Reformatting case level printers to print out the standard label took a couple of hours.

“Tanimura & Antle recognized that additional information could be included on the label to assist in product identification, tracking, and tracing. In addition, settling on a single format also provided consistent imaging which will lead to improved read rates,” according to Tom Casas of Tanimura & Antle.

2.4 Affix Label to Cases The methods of applying labels to cases vary, depending on the level of automation and the loca- tion of the labeling station. This area drew the most concern from high-volume producers. A labori- ous task when scaled, a variety of cost calculations resulted in some surprising statistics. Ten to twenty cents a carton for cold storage label and labor cost (slap and ship), the yearly labor cost alone would justify automation expenses.

Clearly, this task will require some time and study. Some suppliers label cases in the field, while others label them in the warehouse. This is an important task not just from a cost perspective, but also from a process and systems viewpoint. For those items that do not flow through a suppli- er’s warehouse, but rather are directly shipped to the customer, applying a supplier’s GTIN label will be a challenge. If the secondary suppliers that ship directly to a customer on behalf of the primary supplier are not able to label the case accordingly, an adjustment will need to be made to the buyer’s purchase order (using the ASN) to let the buyer know that they will be getting a case of product with a different GTIN than what was ordered.

14 SECTION THREE PHASE 3

Phase 3 Reference 3.1 Supplier 3.1.1 Include GTINs on Sales Materials Communication between buyer and seller is fundamental for a successful supply chain and to ensure accurate expectations are made. All the participants believe that this task would eventually be taken care of over time as the migration from a proprietary number to a GTIN takes place. This is not a new practice in the industry; the only difference would be the inclusion of the GTIN next to the product description. This important step is the start of the data synchronization process, as this information is what will constitute a new item in the buyer’s database.

3.1.2 Use GTINs to Synchronize Data with Buyers The ability to utilize one number between buyers and sellers would benefit both parties. The map- ping of internal systems that takes place creates opportunities for errors and confusion. Synchronization (the process by which trading partners have the same information on an item) today is accomplished through a series of manual or semi-automated checkpoints. Purchase order authorizations, order acknowledgements, signed purchase orders, advanced ship notices, shipping papers, packing lists, and others are used to correct information that was incorrect to begin with. Without data integrity, we allow for the transmission and reception of bad data. This sometimes leads to costly invoice deductions, mis-shipments, and strained relations. Using the standard GTIN as the common number upon which information is stored and shared will reduce the need for all the checkpoints and resulting subsequent work.

3.1.3 Receive Purchase Orders with GTINs With the exception of one buyer, all of our suppliers received purchase orders from buyers with referenced GTINs. The buyer that had difficulty had suppliers Chris Pisano of Giumarra Companies adds, engaged in vendor-managed inventory and yet the GTINs “If buyers could order using the GTIN it would were still referenced on the associated invoices. If buyers lessen the confusion for our sales staff. could be directed to buy produce using GTINs, there will be Currently they receive purchase orders with no room for misunderstanding or miscommunication as the many different SKUs for the same item.” GTIN number has a specific meaning that both parties understand without ambiguity.

3.1.4 Advanced Ship Notice to Buyers

It was quickly acknowledged by pilot participants that the Advanced Ship Notice (or ASN) should be the vehicle by which sellers can let buyers know of a change made to a purchase order. This is particularly important if a seller makes a substitution, therefore having a different GTIN on the case versus what was shown on the purchase order. This is also important when a seller cannot fulfill an item on the original purchase order and then procures product from another grower. The number on the other grower’s case will not match the GTIN number on the purchase order. The ASN will notify the buyer that a change will need to be made on their purchase order so that they will be able to reconcile the purchase order to the delivery receipt and ultimately to the invoice.

3.1.5 Use GTINs on Invoices to Buyers With buyer and seller using the same numbers to identify cases, the reconciliation between what was ordered, shipped, received, and paid for would become accurate, without confusion created by

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cross-referencing, provided proper protocols and processes are in place. The need for human inter- vention to deal with these mismatched item numbers would virtually go away. The matching process would become much more automated and streamlined, reducing errors and improving payable operations.

Almost all of the invoices that were sent to the buyers in the pilot identified the GTIN in a refer- ence field. Generally, the groups agreed that with the switch to the GTIN, internally and externally, fewer problems would occur.

3.1.6 Use GTINs on All Other Reference Documents Once adopted, having one number to communicate would improve correspondence between buyers and sellers. This is especially true for new employees who are not familiar with customer prefer- ences or ordering patterns. 3.2 Buyer 3.2.1 Include GTINs on Purchase Orders Utilizing the GTIN in the procurement process adds clarity to purchase orders and ensures expec- tations are set correctly. Each of our participant groups was able to demonstrate the use of GTINs in the procurement process. The use of the GTIN eliminated the need to use cross-reference tables that link a buyer SKU to supplier item number. Although in some cases this was simulated, participants agreed that if the GTIN became the common number used between buyer and seller, it would virtually eliminate the need to cross-reference a buyer’s internal SKU. This practice is com- monly performed through a third-party at a cost, and its elimination would help reduce the costs to operate in this supply chain.

3.2.2 Ensure Third-Party Service Providers Can Receive GTINs All of the third-party service providers used by pilot participants in this pilot could accept GTINs. This is not surprising because extending functional systems’ capabilities is the foundation of their product offering. However, as noted previously, it is important to store the 14-digit GTIN in your own system for the purpose of automatically capturing data (e.g., barcodes, RSS, and RFID) and posi- tioning your company for future technologies and benefits.

3.2.3 Process Invoices Using GTINs The process of including a GTIN on all invoices was simulated by pilot participants. While the GTINs were referenced on the invoice documentation, existing internal item numbers were utilized to process payments, adjust inventory levels, and adjust accounting records. This was because it would have taken too long to change internal enterprise systems to make this change for this pilot. All of the buyers agreed that incorporating the GTIN on invoices would not present a problem for his pilot GTIN implementation.

3.2.4 Receiving Substituted Product It is not an uncommon practice for sellers to substitute product that cannot be fulfilled with a similar product that they sell or a similar product procured from another grower. In either case, the number that actually shows on the case that is shipped could be different than the number shown on the purchase order. It was agreed to by pilot participants that the ASN should be used (see Section 3.1.4) when communicating a change such as the ones mentioned above. The buyer

16 SECTION THREE PHASE 3

should then use the information on the ASN to change their purchase order. This will allow receiv- ing to receive in the shipment according to a revised purchase order. It will also allow the invoice to be properly reconciled to the revised purchase order. It is imperative that each buyer let their suppliers know of any deviations to this procedure to ensure that product is not rejected nor invoices not paid.

3.2.5 Synchronize Data with Sellers Using GTINs Each pilot participant had a different version of what “synchronization” meant. The context by which this pilot agreed to refers to “synchronization” as the method in which to synchronize foun- dational product specifications between buyer and seller. Some used elaborate forms of synchro- nization, such as 1Synch (formerly UCCnet), while others used 3rd Party Service providers to cross reference items or to share catalogs, while others used nothing at all. It was clear that in all cases, synchronization in the context defined above for all items was not attainable without the use of the GTIN.

3.2.6 Use GTINs on All Other Reference Documents This section, while identified for adoption, was not addressed during the pilot. Members believed that reference documents would be immediately produced for front line personnel and replenished as needed for reference materials such as product brochures and order management materials.

17 SECTION FOUR TOOLS/PRACTICES

Enablement of Supply Chain Tools/Practices

As mentioned previously, the GTIN has a monumental role in various supply chain technologies and practices. Using automated data capture for GTIN-encoded cases will make it substantially easier to track products through the supply chain and all of the way to the store level. This level of accessibility would be invaluable in the event of a recall or other situation requiring traceability. The following sec- tion gives a brief preview of what each of these supply chain technologies and practices are, as well as the role the GTIN plays in each. Data Standards

If every company used a proprietary way to identify and reference products, our industry would be ham- pered by numerous cross references, extra labor to maintain these cross references, and their result- ing errors and inefficiencies. Based upon a recent survey done by PMA, only 4% of produce industry suppliers use a standard for the pallet level, only 6% at the case level, and only 30% at the item level. Every supply chain initiative hinges upon the use of data standards. In North America, the most widely used data standards are the GS1 standards. The GTIN is part of the GS1 standard. These standards are also used by over 1.3 million companies in 103 countries. These standards have to be applied before participating in any of the supply chain initiatives to follow. Data Synchronization

Once a “global language” has been created in the form of data standards, companies will then be able to effectively synchronize their data. This ensures the data that resides in the seller’s database (e.g., item information, pricing information, promotional information, etc.) is the same data that is entered in the buyer’s database. The key to synchronizing data is the GTIN, as that will be the number recognized by both the buyer and seller. The seller will use the GTIN and its accompanying specifica- tions to send to the buyer. The buyer will then store the GTIN and its accompanying specifications in their database. Once this occurs, purchase orders pulling information from this synchronized database can be assured to have accurate data, thereby minimizing invoice deductions resulting from bad data. The balance of supply chain initiatives involves some form of automation.

Remember, if your data is bad to begin with, you are simply automating the transmission and recep- tion of bad data. This will only serve to stop the automation process and require manual intervention to fix the bad data. Note that in some “data synchronization” models, the GTIN is a mandatory require- ment (e.g., 1SYNC [formerly UCCnet]). Electronic Commerce

Once your company has incorporated the use of the GTIN and you have synchronized your data, you can use some form of electronic commerce to automate the transmission of the data. Various companies have identified a savings of almost $10.00 per transaction (i.e., purchase orders or invoices) by using some form of electronic commerce rather than manually keying in the data from these transactions. The most widely known form of Electronic Commerce is EDI (or Electronic Data Interchange). EDI, and its counterpart XML, are simply ways of structuring the data so that the receiver of that transaction can know what and where each piece of information resides in the transaction. This will enable the receiver

18 SECTION FOUR TOOLS/PRACTICES

to integrate (automatically feed) the transaction into their systems, thereby eliminating the manual entry of these transactions and the high error rate and costs associated with manual input. The GTIN serves as the standard number for a case of product, and as the case is the most common unit of measure for ordering, this number will be used on virtually every business transaction between trading partners (purchase orders, invoices, advanced ship notices, price changes, item maintenance, etc.). Barcoding Once you have incorporated the use of the GTIN in your organization, you are ready to begin the use of barcodes. Barcodes simply allow the receiver to automatically capture the information contained in the barcode by scanning; hence, barcodes are referred to as a type of “automated data capture.” There are applications of this at all levels of packaging, including the pallet, case, and item. The de facto industry standard for identifying cases in the food industry has always been the 14-digit GTIN. The use of the GTIN inside barcodes at the case level is so widely used in the food industry that many buyers have automated their receiving process, saving them warehouse labor and congestion at the dock. As the large majority of produce cases do not have barcodes with the GTIN encoded, produce cases have to be treated as an exception to this automated process, thereby requiring the receiver to perform manual activities to handle the produce. This is a very burdensome and costly activity to the receiver. Reduced Space Symbology (RSS) RSS is a type of barcode designed to be used on items without a lot of space to affix a typical Universal Product Code (UPC) barcode. Its application is specific to the item level. There is a move- ment afoot in the produce industry to pilot the use of RSS on produce items that could change the way we use Price Look-Up (PLU) codes and code produce items in the future. The required data encod- ed in the RSS barcode is the GTIN. The RSS that would be used for produce is the RSS-14 Stacked Omni Directional barcode, which encodes a 14-digit data structure. Radio Frequency Identification (RFID) A lot of attention has been given to RFID because of large retailer and governmental mandates. RFID is simply another form of “automated data capture,” as are barcodes and RSS. RFID, however, is not without its challenges or costs. A big misperception as it is being used in North America is around the data contained in an RFID tag. Although it does have the ability to store a lot of information, this is not how the tag is being implemented in the industry. The RFID tag holds a number called the EPC, analo- gous to the UPC seen on items that are sold directly to the consumer. The EPC number has four major parts. Without going into a great amount of detail, one of these parts is the GTIN. Simply put, without a GTIN, you cannot use an EPC. Without an EPC, you cannot participate in RFID applications. Traceability Because of the Bio-Terrorism Act, a lot of attention and press has been given to the importance of companies in the produce industry to be able to track and trace product one step up and one step down the supply chain. With the incorporation of the GTIN, one number can be used to reference the product from harvest all the way to the buyer. Without the GTIN, companies will wrestle with the vari- ous cross-reference tables that have been set up to handle their proprietary numbers.

19 SECTION FIVE PARTICIPANTS About the Participants PMA – The Produce Marketing Association, founded in 1949, is a not-for-profit global trade association serving more than 2,100 members. The association exists to sustain and enhance an environment that advances the marketing of produce and related products and services for its members who are involved in the production, distribution, retail, and foodservice sectors of the industry. www.pma.com

IFDA – The International Foodservice Distributors Association (IFDA) is a Washington, D.C.-based trade organization representing foodservice distributors throughout the U.S. and Canada and internationally. IFDA provides education and research opportunities to the $207 billion foodservice distribution indus- try. IFDA’s 140+ members include broadline, systems, and specialty foodservice distributors that sup- ply food and related products to restaurants, institutions, and other food away from home foodservice operations. IFDA members operate more than 600 facilities and sell more than $83 billion in food and related products to the fastest growing sector in the food industry. www.ifdaonline.org

GS1 US – More than 250,000 U.S.-based member companies rely on the standards and services of GS1 US (formerly the Uniform Code Council) for the effective management and control of their supply chains. Its global standards guarantee that products, assets, services, and locations can be uniquely identified virtually anywhere in the world. The GS1 system is a global system that standardizes identifi- cation numbers, creating a common language to rapidly and accurately communicate information across the supply chain to any company or industry in any part of the world. GS1 US is a member organization of GS1 (www.gs1.org), a fully integrated global standards organization with 104 member organizations representing 145 countries worldwide. A part of GS1 US, BarCodes and eCom is the organization dedicated to supporting the adoption and implementation of the GS1 System (formerly the EAN.UCC System) in the United States. The Barcodes and eCom organization supports implemen- tation of standardized identification numbers for use in barcodes and e-commerce messaging stan- dards such as Electronic Data Interchange (EDI) and Business Message Standards using Extensible Markup Language (XML). GS1 US is a not-for-profit organization. http://barcodes.gs1us.org

FMI – Representing food retailers and wholesalers, the Food Marketing Institute develops and pro- motes policies, programs, and forums supporting its members, and their customers, in the areas of government relations, food safety and security, public and consumer information, research and educa- tion, and industry cooperation. www.fmi.org

RCM Technologies – Since 1971, RCM Technologies has helped clients leverage technology innova- tion to enhance business performance in the global marketplace. Today, RCM harnesses the power of information technology, business process, and engineered solutions to drive competitive advantage and create opportunity. From optimizing supply chains to restarting nuclear power plants, RCM has the technology muscle and industry expertise to deliver innovative solutions for 21st century businesses. www.rcmt.com

Duda Farm Fresh Foods, Inc – Duda Farm Fresh Foods, Inc. is owned and operated by the A. Duda & Sons, Inc. and is a grower, shipper, packer, and marketer of fresh fruits and vegetables. Primary agri- cultural production and shipping locations are in California, Florida, Texas, Arizona, Georgia, and Michigan with additional locations in seven other states and Mexico. www.duda.com

20 SECTION FIVE PARTICIPANTS

¤ Wal-Mart – The company Sam built has become the world’s number one retailer. Diversification into grocery (Wal-Mart Supercenters and Neighborhood Markets), international operations, and membership warehouse clubs (SAM’S CLUBS), has created greater opportunities for growth. Wal-Mart operates more than 6,500 stores in 15 countries and serves more than 176 million customers around the globe each week. www.walmart.com

The Giumarra Companies – The Giumarra Companies is an international network of growers and mar- keters offering a year-round supply of most fruits and vegetables. It is one of the world’s largest grow- ers of grapes with 12,000 acres in California. Since its inception in 1922, the Giumarra Companies has prided itself on a longstanding commitment and tradition of quality, reliability, and innovation to feed the world in a healthy way. www.giumarra.com

The Oppenheimer Group – Based in Vancouver, British Columbia, The Oppenheimer Group reaches around the globe to source over 100 varieties of fruits and vegetables from more than 25 countries, and delivers them to the retail, wholesale, and foodservice sectors across the U.S. and Canada. With 15 offices throughout North and South America, the full-service marketer also specializes in custom packaging, category management, quality assurance, e-commerce, and logistics solutions. www.oppyproduce.com

L&M Companies, Inc. – L&M Companies, Inc. is one of the L&M Family of Companies, a fully integrat- ed year-round supplier of fresh fruits and vegetables, under the Nature’s Delight®label. They are grow- ers, packers, shippers, and marketers offering a full range of services including warehousing, distribu- tion, transportation, information technology, corporate account programs, category management, ven- dor-managed inventory, and more. www.lmcompanies.com

FreshPoint, Sysco Inc. – From its headquarters in Houston, Texas, FreshPoint, Inc., a subsidiary of Sysco Inc., serves thousands of customers daily from 31 distribution facilities and with a team of more than 3,300 dedicated employees. Many of the operating companies that make up FreshPoint have been serving their local markets faithfully for many years, as far back as 1865. FreshPoint deliv- ers products, services and systems that allow its customers the ability to procure, handle, and pre- pare fresh produce in the most efficient and cost-effective manner. www.freshpoint.com

BJ’s Wholesale Club – BJ’s Wholesale Club first introduced the warehouse club concept to the north- eastern United States in 1984. Since then, the chain has expanded its operations to serve East Coast communities stretching from Maine to Florida, as well as west into Ohio. Today, BJ’s operates more than 165 Clubs in 16 states located in the eastern United States. BJ’s is dedicated to providing its members with high-quality, brand-name merchandise at prices that are significantly lower. www.bjs.com

Tanimura & Antle – For three generations, the Tanimura & Antle families have made growing the very best produce their life’s work. Combining technology, logistics, and industry-driving innovation, Tanimura & Antle’s unrelenting focus is on premium quality. www.taproduce.com

21 SECTION SIX APPENDIX A

Appendix A: GTIN Case Codes Assignment Strategy

Find below a strategy recommended by PMA for produce companies to assign GTIN numbers at the case level. The examples used are fairly simplistic, to allow for clarity and understanding of the basic concept. If you follow the basic concept of this strategy, it should address the majority of your prod- ucts. Please note, however, that as with most strategies, it does not address every situation or excep- tion that arises. As is the case today, you have to plan for exceptions and this strategy offers a method to deal with these as well. The ultimate goal of this strategy is to minimize the exceptions not covered by this strategy; thus, minimizing the work to handle the exceptions. Assumptions for Example A

A GTIN number is 14 digits long (see example below) - The first digit is the packaging indicator, which in this example will be a “0” - The second digit in this GTIN is a ”0” which is used for filler - The supplier has a 6-digit GS1 Company Prefix = 123456 - Because of this supplier having a 6-digit Company Prefix, the supplier has 5 digits left over to assign an item reference # for that product - The last digit is a single “check digit” Example A: Packaging Filler Comp Item Check Indicator Prefix Ref # Digit 0 + 0 + 123456 + 55555 + 3 = 14 digits

[00123456555553] = 14 digits Buyer Database

In the current process, buyers typically order loose/bulk produce from a more macro view than how the supplier actually stores information for that product. For example, most buyers would order Fuji Apples using the following attributes of the product:

Example B: PLU Code Commodity Variety Size Pack Type 4129 Apple Fuji Small Volume Fill Supplier Database

Following the same example, the supplier might include several additional attributes when storing infor- mation on that item that the buyer would not care to have distinguished. These additional attributes we will call “Secondary attributes”, as they are not considered “important” from the standpoint of the buyer when ordering an item. In the example below, ‘LABEL’ is a secondary attribute that would still remain on the supplier’s database, but would not be used to define the GTIN case code given to the buyer. Those attributes used to define the primary GTIN case codes are named “Core Attributes”.

22 SECTION SIX APPENDIX A

NOTE: In the example to follow, a PLU sticker would still be applied to all of the items INSIDE the case, as 80-count, 90-count and 100-count are all considered “Small” and they would therefore have the same PLU sticker applied to the items inside all three case configurations. However, as the case config- urations are different (i.e. 80 apples in one case, 90 apples in one case and 100 apples in one case), their corresponding GTIN case codes would be different:

Example C: For 80 count, GTIN = 0 0 123456 00001 4 For 90 count, GTIN = 0 0 123456 00002 7 For 100 count, GTIN = 0 0 123456 00003 2

CORE ATTRIBUTES SECONDARY ATTRIBUTES

GTIN Case Code Origin Com Var Size Pack Label 00123456000014 Wa Apple Fuji 080 12/3lb Sierra 00123456000014 Wa Apple Fuji 080 12/3lb Lucky 00123456000014 Wa Apple Fuji 080 12/3lb Primo 00123456000014 Wa Apple Fuji 080 12/3lb Gold

00123456000027 Wa Apple Fuji 090 12/3lb Sierra 00123456000027 Wa Apple Fuji 090 12/3lb Lucky 00123456000027 Wa Apple Fuji 090 12/3lb Primo 00123456000027 Wa Apple Fuji 090 12/3lb Gold

00123456000032 Wa Apple Fuji 100 12/3lb Sierra 00123456000032 Wa Apple Fuji 100 12/3lb Lucky 00123456000032 Wa Apple Fuji 100 12/3lb Primo 00123456000032 Wa Apple Fuji 100 12/3lb Gold

In Example C above, only three primary GTIN case codes need to be communicated to the buyer (provided they do not care about ‘label’), as opposed to 12 GTIN case codes if they were assigned sequentially (as per the traditional method of product ID assignment). These three primary GTIN case codes were created using the following “CORE” attributes: Commodity, Variety, Size, Origin, and Pack.

*NOTE that the supplier could potentially have hundreds of product codes, with several attributes beyond ‘label,’ yet only three primary GTIN case codes would be required to be used by the buyer in Example C.

23 SECTION SIX APPENDIX A

WHAT ARE THE RECOMMENDED “CORE ATTRIBUTES”? Based upon this pilot, participants agreed that the cumulative list of CORE attributes needed to sort produce items for the purpose of GTIN assignment are as follows: 1. Commodity 7. Shipping Container 2. Variety 8. Inner Pack Style 3. Origin 9. Inner Pack Quantity 4. Grade 10. Inner Pack Size 5. Size 11. Inner Pack UOM 6. Count 12. Growing Method

NOTE: With few exceptions (e.g. contract prices), if there is a different price point between two similar cases of product, each case should have a different GTIN.

The CORE attributes above should be used to sort your item information in a fashion similar to Example C. Once this is done, determinations can be made as to which products have similar core attributes and can then share the same primary GTIN number. IDENTIFYING PRODUCTS WITH SECONDARY ATTRIBUTES

A logical question at this point should be: If the GTIN takes care of items with similar core attributes, how do I identify those products that have the same core attributes (and thus same primary GTIN), but different secondary attributes?

In order to minimize the number of GTINs created (and thus its accompanying maintenance), the GTIN methodology above was created with a way to handle items with secondary attributes without creating even more GTIN numbers that would need to be shared between buyer and seller.

In Example C above, three GTIN numbers were created: For 80 count, GTIN = 00123456000014 For 90 count, GTIN = 00123456000027 For 100 count, GTIN = 00123456000032 Although most buyers would most likely order product using the core attributes, some buyers want more specificity when ordering. For example, what if a buyer wanted to order a specific variation of GTIN 00123456000014, specifically a “Sierra”version of this GTIN? Rather than creating yet another GTIN number, we can incorporate the use of “Exception codes” that are used internally to differentiate items sharing the same primary GTIN number, yet having a different secondary attribute. This would allow the same primary GTIN to be communicated to all of your buyers, while managing a “profile” of preferences internally within the suppliers system to handle buyer-specific requests.

To illustrate, let’s look at an example:

In Example C above, the secondary attribute was “LABEL”. If a supplier were to assign “Exception codes” to these secondary attributes, such as LABEL, it would look something like this:

24 SECTION SIX APPENDIX A

Exception Code Label 001 = Sierra 002 = Gold 003 = Lucky The supplier can now attribute an Exception code to each primary GTIN that has “Sierra” or “Gold” or “Lucky” as a LABEL by adding some separator between the primary GTIN and its accompanying Exception code. 00123456000014_001 = Washington Fuji Apples 80 count 12/3lb Sierra 00123456000014_002 = Washington Fuji Apples 80 count 12/3lb Gold 00123456000014_003 = Washington Fuji Apples 80 count 12/3lb Lucky

A “profile” would be created for each buyer that indicates any pertinent Exception codes required by the buyer. This process is actually already done in the produce industry and is called “the sales repre- sentative”. If an item is not available, they call the sales rep and ask them “what product should I substitute?”. They would also call the sales rep to find out if a “special” pack should be shipped in lieu of the “generic” pack. “Profiling” does the same thing as the sales rep, but rather stores these preferences in a profile so that systems can use this in an automated fashion.

Once an order comes in from a specific buyer, your system can recognize who the buyer is (when using a form of Electronic Commerce, this is done using the Global Location Number (GLN) or the Dun & Bradstreet number). Your system can then go to that buyer’s profile to determine if there are any Exception codes for that buyer or for that item being ordered by the buyer. The profile is typically creat- ed by the sales representative and then maintained as preferences for the buyer change. NOTE: You can also configure your profile to indicate permissible substitutions for this buyer as well.

*The profile would look something like this:

Buyer: Jack’s Grocer Buyer Number: 0001234561111 GTIN Exception Code 00123456000014 001 00123456000027 002 00123456000032 002 *NOTE: The profile above is one example of how a profile might look. Pilot participants had different solutions employing the same methodology.

Therefore, any order that comes in from Jack’s Grocer having any of the GTINs indicated in their profile, will have the corresponding Exception codes added to the primary GTIN when routed to the suppliers shipping facility. The added Exception code is only used internally and will therefore be stripped off prior to the invoice being generated. In addition, only the primary GTIN number will appear on the case to ensure what is shown on the invoice will also be shown on the case itself.

SUMMARY OF SCENARIO:

Step 1: Jack’s Grocer submits a Purchase Order with GTIN 00123456000014 Step 2: Supplier receives Purchase Order and determines the buyer to be Jack’s Grocer Step 3: The system searches for the profile for Jack’s Grocer Step 4: The profile determines that for GTIN 00123456000014, Jack’s Grocer wants the Exception code of 001 added (or in this example, “Sierra”). 25 SECTION SIX APPENDIX A

Step 5: Supplier routes order to shipping facility with the Exception code of 001 added to the GTIN (00123456000014_001) Step 6: Shipping facility notes that the “Sierra” LABEL of Fuji Apples should be shipped. Step 7: After product is shipped, supplier strips Exception code off of product Step 8: Invoice is generated with just the primary GTIN 00123456000014 (thus matching what was on the purchase order) Step 9: Jack’s Grocer receives case with GTIN 00123456000014 appearing on the case Step 10: Receipt of product matches Purchase Order

NOTE: If an item does not require any Exception codes, there is no need to include it in the buyer’s profile. BUYER: Which GTIN to Store The buyer would have to store the GTIN case code as follows:

Buyer Option 1: If the buyer wants a specific count of apples (e.g. 80 vs. 90 vs. 100), then the buyer would have to store the corresponding three GTIN case codes as follows:

GTIN Case Code = PLU Code Commodity Variety Size Count 00123456000014 4129 Apple Fuji Small 080 00123456000027 4129 Apple Fuji Small 090 00123456000032 4129 Apple Fuji Small 100 NOTE: This is for one supplier. If the buyer uses multiple suppliers for Fuji Apples, they would have to store their additional sup- pliers’ GTINs for Small, Fuji, Apples as well.

Buyer Option 2: If the buyer does not care about the specific size of Fuji Apples (e.g. 80 vs. 90 vs. 100) and only wants “SMALL”, then the buyer needs to store only one of the possible three “SMALL” Fuji Apple case configurations. The buyer or the seller can determine which GTIN should be stored:

GTIN Case Code = PLU Code Commodity Variety Size 00123456000014 4129 Apple Fuji Small OR 00123456000027 OR 0012345600032 SUPPLIER: Which GTIN to share with the Buyer

The supplier has the following options:

Supplier Option 1: The supplier could provide an item list with the following choices and ask the buyer to choose a GTIN. If the buyer does not care about the count (e.g. in the example below), the number chosen by the

26 SECTION SIX APPENDIX A

buyer would be the primary item shipped to the buyer, and the remaining two case configurations can be set up as “possible substitutions” for the primary item. The primary number will become the num- ber the buyer uses to order, synchronize data, expect on an invoice and reference.

GTIN Case Code = PLU Code Commodity Variety Size Count 00123456000014 4129 Apple Fuji Small 080 00123456000027 4129 Apple Fuji Small 090 00123456000032 4129 Apple Fuji Small 100

Example: If BUYER A chooses GTIN 10012345000014, then the supplier could store the following: For Buyer A: Primary GTIN 00123456000014 Possible Substitute 00123456000027 Possible Substitute 00123456000032 Supplier Option 2: The supplier could choose a GTIN for the buyer and only send them that particular GTIN. The remaining two item numbers could be stored internally as possible substitutions. The GTIN given to the buyer would become the number the buyer uses to order, synchronize data, expect on an invoice and reference.

NOTE: Unless the purchase order is changed to reflect the substituted item, it is important to note that the GTIN that appears on the purchase order must be the same as the GTIN that appears on the invoice. Otherwise, the invoice will not reconcile with the purchase order, thereby causing a possible invoice deduction. This utility would have to be dealt with systematically or manually. OTHER SCENARIOS

Scenario A: Buyer orders product using ‘primary GTIN’ and supplier has no inventory.

Option 1: Supplier notifies buyer to revise Purchase Order with new GTIN. This is the cleanest option, but also the most time-consuming and difficult.

Option 2: Supplier substitutes GTIN B for GTIN A The invoice will have to reflect what is on the purchase order, otherwise at the time of recon- ciliation, the items will not match and most likely will result in an invoice deduction. Although this will allow the invoice to match the purchase order, it will not address the GTIN that actually appears on the case. If receiving is using the GTIN that physically appears on the case to match against the purchase order, there will be a mis-match.

Option 3: Supplier procures product from another grower/shipper

Same scenario as in Option 2 above. The supplier can use the same GTIN as what was shown on the purchase order, but the GTIN appearing on the case itself will not match the purchase order.

NOTE: If an ASN (Advanced Ship Notice) is used, the problem of substitution in Options 1 and 2 above will be solved as the supplier will be letting the buyer know of a change. That change could then be applied to the purchase order before receiving the product. This will not, however, address Option 3 above as the supplier will not always have the opportunity to control what GTIN appears on the case procured by an outside source.

27 SECTION SIX APPENDIX B Appendix B: Standardized Case Label

The primary purposes of adopting the case label template were:

O To help standardize human readable information shown on a case O To have consistent information on case

O To accurately identify case and case contents O To assist in effective traceability

28 SECTION SIX APPENDIX C Appendix C: Glossary

Advance Ship Notice (ASN) The Electronic Data Interchange (EDI) transaction that provides the receiving company with notice of shipping details

Barcode A precise arrangement of parallel lines (bars) and spaces that vary in width to represent data

BarCodes and eCom The organization dedicated to supporting the adoption and implementation of the GS1 System (formerly the EAN.UCC System) in the United States for use in barcodes and e-commerce messaging standards such as Electronic Data Interchange (EDI) and Business Message Standards using Extensible Markup Language (XML); a part of GS1 US

Bill of Lading A legal contract between a carrier and a shipper that provides shipment details for the movement of freight

Consumer Packaged Goods (CPG) Consumable goods such as food and beverages, footwear and apparel, tobacco, and cleaning products

Electronic Data Interchange (EDI) The conversion of business transaction data to and from an electronic format.

Electronic Product Code (EPC) Represents the data encoded in an RFID tag and comprises a GTIN and Serial Number

Enterprise Resource Planning (ERP) Packaged software systems using database technology and a single interface to control all the infor- mation related to a company’s business, including customer, product, employee, and financial data

Global Location Number (GLN) A 13-digit data structure to identify physical, functional, or legal entities; supply-side trading partner locations generally include corporate headquarters, regional offices, warehouses, plants, and distribu- tion centers; demand-side (retail) trading partner locations generally include corporate headquarters, divisional offices, stores, and distribution center

Global Trade Item Number (GTIN) A new term, not a standards change; umbrella term used to describe the family of GS1 data struc- tures for trade items (products and services) identification, includes GTIN-8, GTIN-12, GTIN-13, and GTIN-14; products at every level of product configuration (consumer selling unit, case level, inner pack level, pallet shipper, etc.) require a unique GTIN; the EPC also encodes a GTIN

GS1 Brussels, Belgium-based organization of GS1 Member Organizations that manages the GS1 System and Global Standards Management Process (GSMP)

29 SECTION SIX GLOSSARY

GS1 Global Registry™ The global directory of the Global Data Synchronization Network (GDSN) for the registration of items and parties that validates registered data and ensures the uniqueness of items and parties based on their GTINs and GLNs and facilitates the subscription process between retailers and suppliers

GS1 System Formerly the EAN-UCC System, a global system that standardizes identification numbers, creating a common language to rapidly and accurately communicate information across the supply chain to any company or industry in any part of the world

GS1 US A not-for-profit member organization of GS1; the U.S. implementation organization for the GS1 System

Identification Number A numerical designation that uniquely identifies an object in the supply chain; used to retrieve information previously exchanged between trading partners and stored in their database files

Just-In-Time (JIT) The concept of reducing inventories by working closely with one’s suppliers to coordinate delivery of materials just before their use in the manufacturing process

Line-of-sight technology Technology that requires an item to be “seen” to be identified by a machine; barcodes and optical character recognition are two line-of-sight technologies

Object Name Service (ONS) An Auto-ID Center designed system for looking up unique EPCs and pointing computers to information about the item associated with the code; similar to the Domain Name System, which points to sites on the Internet

Physical Markup Language (PML) Server A dedicated computer that will respond to requests for Physical Markup Language (PML) files/related to individual EPCs; the manufacturer of the item may maintain the PML files and server

Point of Sales Refers to a retail checkout where barcode symbols are normally scanned.

Radio Frequency Identification (RFID) A method of identifying unique items using radio waves; does not require line of sight and can pass through materials such as cardboard and plastic

Savant Distributed network software that manages and moves data related to EPCs

Supply Chain Management The delivery of customer and economic value through integrated management of the flow of physical goods and associated information, from raw materials sourcing to delivery of finished products to consumers

Trading Partner A party to transactions in the supply chain, such as a supplier (seller) or a customer (buyer)

Universal Product Code (UPC) The barcode standard used in North America, administered by the GS1 US. 30 SECTION SIX GLOSSARY

31 Copyright & Disclaimer for use with the GTIN REPORT:

This file has been prepared by the Produce Marketing Association (PMA), the International Foodservice Distributors Association (IFDA), GS1 BarCodes and eCom, and the Food Marketing Institute (FMI) as a service to its members and its cus- tomers. The information provided herein is offered in good faith and is believed to be accurate when prepared, but is offered without warranty as to fitness for a particular purpose or any other matter. PMA, IFDA, GS1 BarCodes and eCom, and FMI, their members, and contributors, disclaim all responsibility for any loss or damage arising from reliance on such information by any party. This file is not intended to be all-inclusive on any subject covered.

Copyright © November 2006 PMA, IFDA, GS1 BarCodes and eCom, and FMI

All rights reserved.

The person using this material may view, reproduce or store copies provided the information is for their individual or internal company use. The customer may not change the contents of the file, printed or electronic; this includes modifying, transla- tion, or disassembling the file in any manner. The customer may not translate or create derivative works based on the file or merge it with another file.

This file may not be reproduced, presented, transmitted in any form or by any means, electronic, mechanical, recording, or stored in a retrieval system, without written consent of one of the following: PMA, IFDA, GS1 BarCodes and eCom, or FMI except as outlined in this copyright agreement. To do so is an infringement of the copyright law.

The copyright and all other rights in the material shall remain with PMA, IFDA, GS1 BarCodes and eCom, and FMI.

32

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