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U.P.C. Reuse Is Reaching a Tipping Point

Posted By Administration, Thursday, June 9, 2016
Updated: Wednesday, June 8, 2016


During a recent open forum conference call, the topic of reusing or recycling Universal Product Codes (U.P.C.'s) was brought up, particularly in respect to the frequency of reuse. In many cases, suppliers are misinterpreting or misusing GS1 Standards for reuse. When other participants expressed similar experiences, RVCF decided to take the issue of U.P.C. reuse to a broader audience.

We reached out to a number of retailer and supplier members, GS1 US, and GXS to get a better sense of why suppliers are reusing U.P.C.'s, the problems caused by failing to comply with GS1 guidelines, why instances of U.P.C. reuse seem to be happening more frequently, and what is being done to address this issue.

A Brief Review of GS1 Guidelines for GTIN/U.P.C. Reuse
GS1 Standards govern the timeline for allowable reuse of individual Global Trade Item Numbers (GTIN's) after an item is marked as discontinued in the catalog and no longer offered. U.P.C. is one of a family of numbers that fall under the GTIN umbrella and the two terms are often used interchangeably.

According to GS1 Standards, the timeline for allowable reuse is based on the type of item. For Apparel/Fashion, an item's U.P.C. must not be reused until at least 30 months have elapsed since the last original items produced with that number have been supplied to the customer. For all other items except regulated healthcare, 48 months must elapse before U.P.C. reuse. In regulated healthcare, U.P.C.'s cannot be reused.

In the rare case in which a U.P.C. had been assigned to an item that was never actually produced, the U.P.C. can be immediately deleted from the catalog without being marked as discontinued. It can then be reused 12 months after deletion.

Before reusing a U.P.C., suppliers should consider how data associated with the original item might still be used by trading partners and third parties for statistical analysis or service records. This data may continue to be used long after the original item was last supplied. For this reason, many suppliers have extended the timeline for U.P.C. reuse.

What RVCF Members Are Saying
We spoke with a number of retailer and supplier members on the condition of anonymity to get their thoughts on the issue of U.P.C. reuse. All suppliers agree that reusing U.P.C.'s reduces costs related to licensing additional GS1 Company Prefixes and integrating them into catalogs. Larger suppliers, particularly in the apparel and footwear category, need the volume to avoid running out of U.P.C.'s during certain time periods.

We noticed an even split among suppliers who reuse and do not reuse U.P.C.'s. The most obvious obstacle to U.P.C. reuse, according to several suppliers, is the fact that some major retailers simply do not allow the practice. In this case, reusing U.P.C.'s is not an option. Some retailers do not automatically purge old U.P.C.'s, which then need to be manually removed from systems when U.P.C.'s are reused. This requires extra time and resources and slows the flow of goods through the supply chain.

According to RVCF retailer members who were interviewed, there is no advantage to reusing U.P.C.'s from the retailer's perspective, although the practice has become more common within the past two years. In some cases, GS1 Standards are not being followed, although most retailers suspect that this is the result of a disconnect between item data in the supplier's system and the retailer's system. Some retailers will issue chargebacks if guidelines aren't followed, while others do not issue chargebacks because U.P.C. reuse is viewed as a systemic issue rather than an issue related to errors with shipments.

When GS1 Standards for U.P.C. reuse are followed, a product has been properly discontinued, and changes are communicated, retailers that allow reuse experience few issues. When guidelines are violated, retailers report significant investigative work required to determine if the original item is in stock, locate that merchandise, and then determine what to do with it and how to process it. This extra work must be done manually and delays order processing, which shortens selling cycles, increases markdowns, and eats into profit margins. Some retailers allow U.P.C. reuse but have refused orders because GS1 guidelines have been violated.

We also contacted GXS to request feedback as it relates to the catalog. When GS1 Standards are not followed, the retailer will show two products with the same U.P.C. This results in incorrect orders, invoicing and payment, as well as incorrect sales reporting. The further along a product with a duplicate U.P.C. goes undetected, the more issues it creates. For example, an item with an incorrect U.P.C. could make it all the way through point-of-sale without being detected. According to GXS, communication is key. Retailers must be clear about their policies related to U.P.C. reuse and suppliers must commit to adhering GS1 Standards and notify retailers as far in advance as possible.

What GS1 US Research Has Uncovered
GS1 US has several workgroups focused on U.P.C. reuse and has facilitated GTIN management discussions for the past 18 months. In fact, GS1 Global Office is expected to release a position paper on U.P.C. reuse later this summer. Virtually all industry stakeholders agree that the current guidelines, which were developed nearly 30 years ago, must be revisited.

In the past, U.P.C. reuse was primarily about simplifying prefix management and minimizing prefix license counts. Most retailers' legacy systems weren't built with the ability to start a 30-month countdown clock when an item was discontinued, whether that update came from the supplier or a third party service. Instead, the update essentially would be dropped on the floor when it hit the retailer's system.

The more recent issue is related to the e-marketplace. "Products have a longer shelf life because they can live on any number of platforms in the e-marketplace for many years," said Melanie Nuce, Vice President, Apparel and General Merchandise, GS1 US. "Even if you adhere to the 30-month reuse guideline in apparel or the 48-month rule for non-apparel items, sellers will offer items long after they have been discontinued by the supplier."

The need to revisit U.P.C. reuse isn't as urgent in consumer packaged goods, for example, due to a significantly lower number of new product introductions. However, suppliers in the apparel/fashion category are the largest consumers of U.P.C.'s by far. Both retailers and suppliers have made it clear that U.P.C. reuse must be addressed immediately.

GS1 US believes the practice of U.P.C. reuse is less about trading partners doing something wrong and more about keeping up with the evolution of the market. "The existing practice has been somewhat tenuous because we've had supplier processes that weren't always in sync with retailer capabilities," said Patrick Javick, Industry Engagement Director, Apparel and General Merchandise, GS1 US. "The issues occurring now aren't necessarily happening because people are managing U.P.C. reuse incorrectly. The problem is that the 'correct' process isn't fully aligned with the current state of the market."

Where Do We Go from Here?
This has quickly become a hot button issue in retail. Some retailers have already prohibited the reuse of U.P.C.'s. Many have said that the practice should be eliminated across the industry, while others believe a compromise would be appropriate. At this point, this is an active conversation. RVCF and GS1 US are still asking retailers and suppliers for input.

To stay connected with the GS1 US initiatives related to GTIN/U.P.C. reuse, contact GS1 US. We look forward to hearing more about this issue from GS1 US workgroups and seeing recommendations from GS1 Global in their forthcoming position paper. RVCF also encourages members to participate in monthly open forum conference calls and continue the dialogue on our forum boards on the RVCF website. Let's take advantage of this opportunity to remove another obstacle to efficiency and profitability and achieve progress through collaboration.

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Tags:  GTIN  Reuse  Ticketing  U.P.C.  UPC 

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