ECRx BARCODING IMPLEMENTATION

2. ECRx BARCODINGIMPLEMENTATION Frank Goodman Frank H. Goodman & Assoc. Ltd.

3. COMMITTEE STRUCTURE Frank H. Goodman & Assoc. Ltd.

4. Barcoding Subcommittee Members • Frank Goodman (Chair) • Maryann Crofoot - AltiMed Pharmaceutical • Alicia Duval - CACDS • Ratna Jani - ECCC • Andree Soucy - Jean Coutu • Heather Smeall - Procter & Gamble • Roman Coba - Wal-Mart • Selim Toutounji - Wyeth-Ayerst Frank H. Goodman & Assoc. Ltd.

5. Committee Mandate • Build on work done by the ECR Committee, applying the concepts to Rx, OTC and cosmetics • Agree on standards for UPC and barcodes for item and case coding • Agree on target timelines for the drug channel • Suggest use of UPC number universally - catalogues, price lists, tender documents, etc. Frank H. Goodman & Assoc. Ltd.

6. Progress in drug channel (UPC’s) • OTC’s and cosmetics are largely compliant • Sold in mass market and food channels • Rx - progress is being made • Compliance is improving • Over 87% of manufacturers are at least 40% compliant • Product is working its way through the supply chain Frank H. Goodman & Assoc. Ltd.

7. Frank H. Goodman & Assoc. Ltd.

8. Panel Members • Ratna Jani • Director, Industry Relations and Administration • Electronic Commerce Council of Canada • Heather Smeall • Efficient Consumer Response Manager • Procter & Gamble Inc. • Bill McDowell • Director, Supply Chain Technology • Loblaw Companies Ltd. Frank H. Goodman & Assoc. Ltd.

10. ECR Barcoding ImplementationA grocery perspective Bill McDowell September 1998

11. Grocery ECR Today ECR CANADA • The CEO Steering Committee was formed 5 years ago. This committee identified five Enablers that would help companies resolve inefficient business practices. • Scan data Integrity • Electronic Data Interchange (EDI) • Continuous Replenishment • Value Chain Analysis (VCA) and Activity-Based Costing (ABC) • Category Management

12. Grocery ECR Today Progress • We at Loblaws have taken up the challenge and are moving forward. Some issues require an industry direction, and this has happened in several areas. • Scan data Integrity • Item barcodes are mandatory, and new items must be certified as scannable. • Case barcodes are required and are being implemented. • UPC’s are mandatory. • Electronic Data Interchange (EDI) • The industry has adopted the VICS 4010 standard.

13. ECR in Pharmacy Progress • As a result, we have achieved efficiencies in inventory management and replenishment for grocery and most Health and Beauty products. It is also true for OTC products such as generic drugs, vitamins and so on. • Benefits: • Automated ordering and inventory management • Automated dated product management • Simpler distribution handling processes, less labour and higher accuracy, reduced distribution costs. • Reduced retail labour for receiving, handling, sales.

14. ECR in Pharmacy Implications for Pharmacy • #1 Case barcodes • Because of grocery industry efforts, case barcodes are becoming common, including expiry date on perishable products. • Therefore: • There is an opportunity for the drug industry to gain distribution efficiencies by adopting case barcodes. • There is a similar opportunity at retail on case sales (e.g. infant formula). • N.B. The largest issue here is the quality of the barcode printing.

15. ECR in Pharmacy Implications for Pharmacy • #2 Unit barcodes • In the grocery industry, new products are now expected to have a certificate of scanability before being listed. This means the barcode has been reviewed for clarity, contrast and dimensions. • Therefore: • Front-end scanning accuracy is 99%+. • Data integrity is greatly increased while front-end labour has been reduced.

16. ECR in Pharmacy Implications for Pharmacy • #3 UPC codes • Every manufacturer has an internal product numbering system. Such numbers cannot be used by your customers for automated inventory management or ordering. Duplicate numbers will occur. • Therefore: • As retailers move to automated inventory systems, products which are easy to handle and order will be preferred over competitive products.

17. ECR in Pharmacy Retail directions for barcodes • By having UPC’s, unit and case barcodes, the retailer gains several opportunities. • Automated systems for inventory and ordering. • Efficient receiving and handling of units and cases. • Dated product management. • Better data for category management.

18. ECR in Pharmacy Current Challenges • However, there are some issues with some prescription drug products and manufacturers. • The lack of UPC’s and barcodes. • The solution: • A unified Industry position • Consistent, unified industry pressure.

20. ECRx BAR CODING IMPLEMENTATION MANUFACTURER’S PERSPECTIVE PROCTER & GAMBLE Sept. 24/98

22. ECRx Bar Coding Implementation • Costs and benefits • Usage in the supply chain • Database management and UPC set up • Challenges and opportunities

23. ECRx Bar Coding Implementation Usage in the Supply Chain • Standardized data management and business analysis • Category Management/Efficient Assortment • EDI Ordering and Invoicing • ASN/UCC128 and cross docking/flow-thru • Warehouse handling; real time RF processes

24. ECRx Bar Coding Implementation Costs • Vendor code • Packaging artwork changes • Application of UPC, case and pallet codes • Codes administration • Validation certificates • Integration of bar code scanning capability throughout the supply chain

25. ECRx Bar Coding Implementation Benefitswhen fully integrated • Inventory accuracy improvements • Reduced inventory • Productivity improvements • Enables ASN/UCC128 which results in reduced unloading times, reduced deductions/ refusals, internal cross dock • Leads to reduced damage levels

26. ECRx Bar Coding ImplementationDatabase Management and Set up • Purchase a vendor code purchase • Assign a central administrator • Define the process for requesting and assigning UPC codes • Expand product data base to include UPC code (including vendor code) • Randomly assign codes as requested • Follow ECCC UPC guidelines

27. ECRx Bar Coding Implementation Challenges and Opportunities • small items • zero suppressed codes • scan accuracy • lack of use/critical mass • change management

29. ECRx ~ Standards for Product Identification and Barcoding Ratna Jani Director, Industry Relations & Admin ECCC

30. Agenda At-A-Glance • About ECCC • Globalization of Product I.D • Standardization Issues • Future trends • Available resources

31. Electronic Commerce Council Mission Statement The Mission of ECCC is to take a Leadership Role in Establishing and Promoting Multi-Industry Standards for Product Identification and related Electronic Commerce Communications

32. ECCC’s Role in Product Identification • Accurate assignment of U.P.C. Manufacturer I.D. numbers • Maintain data base of assigned numbers • Provide education on standards to all industries • Industry Specific Workshops • Customized Sessions to meet individual needs • Developing an Electronic Product Catalogue • ECCC Net

33. Developing Global partnership through Global Policy Committee The UCC /EAN System Provides an Integrated Suite of Standardized Tools that Enable Effective Management of Supply Chains • In Any Company • In Any Industry • Anywhere in the World IDENTIFICATION CODES BAR CODES SUPPLY CHAIN MANAGEMENT ELECTRONIC DATA INTERCHANGE

34. U.P.C. standards are globally compatible and harmonized • Uniform Code Council (UCC) and International Article Numbering Association (EAN) establish the standards jointly • Canada adopts the established standards • The standards are endorsed by ISO and IEC

35. Standards vs Guidelines • Standards are established by the American National Standards in the U.S. and adopted by the UCC and ECCC • Standards undergo a six year review process and cannot be changed. • Guidelines are established based on the business needs and within the confines of the standards.

36. Inconsistencies identified in standards application • Lack of understanding the standards • Ignorance to compliance factors • Poor quality compliance • Technology unable to meet the symbol quality demands • Internal resources lacked expertise • Lack of information integrity • Data unusable to monitor industry performance

37. Product identification codes serve as keys to information • Unlock information about the manufacturer, item, description, price • This supports the many-to-many relationship between buyers and suppliers • Ability to track products from manufacturing to delivery in any industry, market sector, or geographic region

38. Why Standard Product Identification? • One number used to reference the item by all members of the supply chain • No more storing proprietary numbers • No more cross referencing • What you see is what you get BROKER MFCTR Same # RTLR DIST.

39. Global migration to an expanded number structure • Need identified to increase number capacity to fulfill rate of growth • New industry sectors coming on board • Unlimited use of application: • Returnable asset number • Individual asset number • Location number • Service relation number

40. 14 Digit Global Structure & Data base alignment 14 13 12 11 10 9 8 7 6 5 4 3 2 1 C N3 N4 N5 N6 N7 N8 N9 N10 N11 N12 U.P.C. 0 0 N2 N2 N3 N4 N5 N11 N12 C 0 N1 N6 N7 N8 N9 N10 EAN-13 N9 N11 N12 C PI N1 N2 N3 N4 N5 N6 N7 N8 N10 SCC-14

41. U.P.C. Version A is a 12-Digit number ASSIGNED BY ECCC CONTROLLED BY MANUFACTURER 7 71234 10001 8 NUMBER SYSTEM CHARACTER ITEM NUMBER MANUFACTURER ID NUMBER CHECK DIGIT

42. Number System Characters 0,6,7 Regular U.P.C. coded products 2 Random weight products (meat, produce, cheese, fish) 3 National Drug Codes or National Health Related Items (US only) 4 Used for in-store marking 5 For use on Coupons 1,8,9 Reserved for future assignment by UCC

43. Manufacturer Identification Code • Normally one Manufacturer ID number is assigned per company • Company may request separate IDs for divisions • Company may request more than one ID if company manufacturers more than 100,000 products

44. Item Numbering • Item code is a 5 digit number • 100,000 item numbers allowed ranging from 00000 to 99999 per Manufacturer ID • Each product variation must have its own unique item code (flavor, weight, quantity) • Maintain a record of all the item numbers to avoid duplication

45. U.P.C. Item Number Changes Guideline # 27 • A weight or count change in a product requires a new U.P.C. item number • Minor formulation, packaging or graphics changes replacing an existing product do not require change in item number • Provide a minimum of 30 day advance notice to your trading partner • A U.P.C. should not be reused for 4 years after the last shipment

46. Maintaining Print Quality • U.P.C. Symbol must be tested and verified at each stage of production • Design • Artwork and film production • Print • Final filled package must be submitted to a 3rd party validation company to provide a conformity report

47. May 1996 Overall Pass 659 Overall Fail 341 OVERALL POS test 1st pass scan rate 91.1% January 1998 Overall Pass 791 Overall Fail 209 OVERALL POS test 1st pass scan rate 98.8% Overall improvement in Quality compliance per 1000 evaluations

48. Reasons for failures Overall Fails out of 1000 May 1996 January 1998 • Truncation 22% 13.1% • ANSI grade 16% 8.5% • Location 1.3% 0.2% • Modulo check 2.6% 1.8% • Margins 9.3% 1.7% • Encodation 2.7% 0.6% • Database 0.8% 1.6% • Magnification 6.0% 2.1%

49. Truncation Reduces The Scannability of a U.P.C LASER BEAM LASER BEAM

50. Example of a truncated symbol