The humble barcode turns 50 and continues to optimise inventory and transportation efficiency including the covid-19 era online shopping boom and economic transformation.

By Peter Stevens

How it all began
The humble ‘beep’ of a scanner on a GS1 barcode is now so embedded in the social milieu that we don’t often reflect on how it came to be ubiquitous (or indeed who made it happen). The story of how 50 years ago fierce supermarket competitors got together, adopted digital tools and transformed the global economy has not often been told.

Back in 1971 a powerful group of business leaders agreed on the first standards, that have long since become embedded in the global economy. Although the first bar code patent was as early as 1952, the cheap scanners and computers which made installation worthwhile didn’t exist.

It was not until 1974, in Ohio, that the first retail product was sold using a scanner. (It was a packet of chewing gum, now housed in a Smithsonian Museum in Washington DC.) What we now know as the humble GS1 barcode, succeeded because it took into consideration particular and practical needs, and because the group were a sufficiently large part of the industry their decision flowed on to others.

As so often happens with a technology that took years to introduce, its success exceeded expectations. Instead of the projected 10,000 companies expected to use the barcode when it was introduced – mainly in the US grocery industry, 50 years later there are over two million companies in every country in the world identifying their products with a standardised barcode – 8000 in New Zealand alone.

NZ was one of the earliest adopters of scanning globally – and remarkably done without the conflict, fear and industrial strife that bedevilled other countries. Thanks to a remarkable partnership between government agencies, business interests including our supermarkets and consumers. Independent economist Brian Easton estimated the savings from using barcodes in New Zealand in the supermarket sector alone to be over a $1 billion annually – savings to each New Zealander are around $280 per year, or over $20 a week for a family of four and representing a productivity improvement to the whole economy of over 0.5%[1].

So what’s next?

COVID-19 and the next generation of digital tools are transforming the global economy again.

TWO TRENDS are now very clear.

  1. Product supply chains are going to be made far more resilient
    New Zealand:  Retail stores had product outages through last year and shortages of items saw prices shoot up, in consequence of global shipping bottlenecks and delays, we saw ships queuing for access to Auckland Port at times, and the volume of containers handed at the border nationwide fell 7% in 2020.
  2. More and more business of every kind is going to shift online New Zealand: NZ Post research showed a 30% jump in Kiwis’ online purchasing over the year to last August – and NZ Post expects that trend to continue with online grocery shopping in particular the “new normal” for much of the country.

Obviously these two trends are driven by advances in digital technology.

NOW, there is a transformational advance occurring in digital technology in two areas:

  • a drive to step up the interoperability of computers and information systems – their ability to talk to each other – to enable supply chain visibility, and
  • peoples’ desire and expectation to use digital technologies, especially their smartphones, to ask questions and find information.

The arrival of COVID and its shock to how we all live, work and engage in the modern economy is rapidly accelerating the use of a new generation of digital tools that can

  • link people more closely with physical goods and services, and
  • form new and vastly expanded links between systems for data capture, storage and exchange across the world.

How are GS1’s Digital Tools Responding?

  1. Serving a broader audienceJust as you can purchase electronic goods and pharmaceutical goods in a supermarket and grocery items in a DIY store, GS1’s standards and tools are adopted across all sectors. Identification, automatic data capture and data sharing are universal needs.

    So too have the users broadened– from predominantly a Business-to-Business (B2B) tool, GS1’s tools are also used by farmers, government agencies and consumers:

    • The COVID-19 Tracer App – 580,000+ business locations are identified by GS1 Global Location Numbers embedded in the now-familiar QR codes, and scanned all day, every day by Kiwi citizens.
    • 828,000 Kiwi businesses use the NZ Business Number as their legal entity identifier – again another 13-digit number allocated by GS1 NZ under the NZBN Act (2016)
    • Consumers are scanning barcodes in stores asking simple questions – what is this? What is in it? Where can I buy it cheaper?
    • Athletes crossing the finishing line … unaware of the link between the RFID chip embedded in their race number and GS1’s Electronic Product Code (EPC) standards invented by the grocery industry to power hands-free automatic identification.
  2. Expanding information capture and use casesIt is a truism that ‘data is the new oil’. The way this is playing out in industry is an insatiable desire for information, and GS1’s tools are playing an active (and expanding) role.
    • Grocers wanting to capture the batch code or expiry date right at the point-of-sale (to batch trace and /or deliver automatic deductions to the consumer at the till).
    • Healthcare workers automatically recording the serial number of a medical device by scanning a 2-D barcode (a GS1 DataMatrix) before implanting it in a patient.
    • The invisible ProductRecallnz network between suppliers and individual retail stores that keeps unsafe product from being sold – powered by GS1 Global Trade Item Numbers. A service run by GS1 NZ for industry in collaboration with regulators.
    • China Customs officers receiving very detailed electronic information about a specific product from a NZ producer at the border to assist admission decision-making (rather than, as in the recent past, gross tonnages of a generic commodity)
    • Retailers are enhancing the visibility of their online offer by encoding their website with specific ‘HTML tags’ (the language that programmers use to code web pages) so that Google’s robots can reliably identify the product on page and the offer price to facilitate comparison shopping by consumers (using GS1 SmartSearch standards).

    All these use cases are powered by GS1’s standards and services – and the result of engagement by GS1 NZ’s members with new sectors and audiences.

  3. Linking to information in a context-sensitive way – the Digital Link tool

In essence, rather than barcodes being simply for business-to-business purposes, consumers and patients will be able to use 2D barcodes (such as the QR Codes used in COVID Tracing or those used on healthcare items now) to access standardised, structured information on the web- product ingredients, use-by dates, expert reviews and so on.  And, because the scanning device is your mobile phone, the information can be automatically context sensitive (e.g. directions for use for medicines available in automatically in the language you have set on your cell phone – a ‘digital label’).

Digital Link has been developed by the global GS1 supply chain management organisation, again, in collaboration with some of the world’s biggest retailers and manufacturers, and transport and logistics firms.

This all leads to more informed and efficient shopping decisions, and promotes consumer safety and satisfaction.

And, it all builds on a first generation of digital tools – the humble barcode; standards for identification and data formatting, and scannable barcodes. Leadership by private sector and government agencies led to the successful last 50 years – let’s hope that the next 50 years can drive efficiencies, safety and productivity further.

About GS1 NZ

GS1 is a global family of not-for-profit, member-owned organisations. GS1 New Zealand works together with organisations to share accurate information with their trading communities to streamline the way they work. We do this through industry collaboration and by providing a suite of GS1’s global standards and solutions, including unique identifiers, traceability tools and data sharing system. There are 8,000+ organisations that are members of GS1 NZ locally, and 2,000,000+ globally. On the GS1 NZ board are senior executives from Business NZ, Countdown, Foodstuffs, Fonterra, Fletcher Building, EBOS Group, the Ministry of Health and others.

We are most well-known for our ubiquitous barcodes and radio-frequency IDs, but also for our ProductRecallnz portal that is run in collaboration with the Ministries of Primary Industries and Business, Innovation & Employment to streamline recalls of food & grocery products, the NZ Business Number (which we operate in collaboration with MBIE) and the COVID Tracer App (where we provide location identification for 580,000+ businesses in the QR code)

Contact: Peter Stevens – GS1



28 Jun, 2021
| News

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