bar codes – The OM Blog by Heizer, Render, & Munson

OM in the News: Where Did Your Steak Come From?

Consumers around the world are demanding to know where their food comes from and how it was produced, increasing the pressure on processors to invest in new technology to stay ahead of the game, report The Herald (Sept. 3, 2018) and The Wall Street Journal (Oct. 3, 2018) With customer expectation for quality and value increasing, supply chains are expanding, and this is making them less transparent and harder to control.

Silicon dioxide particles are sprayed onto meat as it is packed. It is scanned at the point of sale to confirm the product’s authenticity.

Remember the scandal of 2013 when frozen beef products being sold in the UK and Ireland were found to contain traces of horse DNA? That same year it was revealed that a parmesan cheese being sold to Australian customers didn’t actually contain parmesan, but did include wood pulp. In 2015, $483 million of smuggled meat was seized by Chinese authorities, some of it was found to be up to 40 years old!

In a world-first for the food sector, PwC has developed an electronic etching procedure that creates an invisible, trackable barcode for beef based on edible, non-toxic silicon dioxide. Soon, it will be possible to point your smart-phone at a cut of beef to reveal the meat’s entire history including where it was raised, what it ate and when and where it was processed. The revolutionary beef-tagging technology is expected to be launched this year.

The procedure starts when sides of beef are sprayed with particles of silicon dioxide as fine as sugar. This natural, edible fingerprint, forms a crypto anchor that can be scanned using a hyper-spectrum gun. This shines a light onto the micro particles of silicon dioxide and refracts back a wavelength signature, or what PwC calls “a unique serial number on a piece of steak”.

Classroom discussion questions:

Why is this a supply chain issue?
How does this technology differ from blockchain?

OM in the News: The Barcode’s Intelligent New Rival

In June 1974 history was made at a supermarket in Troy, Ohio, with a ten-pack of Wrigley’s Juicy Fruit chewing gum. It was the first time a commercial item bearing a Universal Product Code was scanned by a cashier at the checkout. Forty years on, the barcode has transformed the world of commerce by providing reliable product identification, tracking and pricing. Nearly everything now comes with a barcode.

As revolutionary as it was, the barcode has limited abilities, reports The Economist (March 8, 2014). It can impart only the information it was printed with and that can be read by an optical device. The next generation of labeling contains tiny printable electronics able to generate, store and share information. The technology behind “smart labels” is a flexible film of electronics that can be printed like a barcode. The memory circuits which can be used by smart labels to store information are printed as a film of ferroelectric polymer sandwiched between two electrodes. A tiny 20-bit memory label can store over 1 million combinations.

Yet another advancement is called Near Field Communication (NFC). This allows a user to tap an NFC tag with a portable device, like a smartphone, to send or receive data. NFC is a more sophisticated version of RFID and is already used by some contactless payment systems. By incorporating NFC, smart labels will be able to communicate wirelessly. Besides conveying product codes, applications include recording storage times and temperatures for perishable goods like food and pharmaceuticals. Smart labels might even be programmed to automatically discount their prices in response to marketing campaigns. To gain widespread use, smart labels will need to be cheap. Basic printed-memory labels can be produced for around 2 cents. Printed sensor-labels cost 50 cents, compared with $10 or more for a system using conventional microelectronics.

Classroom discussion questions:

1. How do RFID tags differ from barcodes?

2. Why are smart labels a major new OM tool?

OM in the News: J.C. Penny Loses Control of its Inventory

Shoppers are buying more at J.C.Penny after a disastrous overhaul under former CEO Ron Johnson, who drove customers away when he did away with promotions and eliminated in-house brands. But the problem is that customers are also stealing more, reports The Wall Street Journal (Nov.21, 2013). As the chain is learning, its extensive inventory makes inventory management crucial. We note in Chapter 12 the importance of controlling pilferage through RFID and bar codes.

Theft spiked last quarter after Penny removed sensor security tags from merchandise while it shifted to a new inventory-tracking system that uses radio tags. Shoplifting took a full percentage point off Penny’s profit margins. That was just one more weight that dragged the 1,100-store chain down to a loss of half a billion dollars. The need to liquidate old inventory did further damage to profits.

The shoplifting. Penney unveiled plans in 2012 to add RFID tags to every item in its stores. The tags are more expensive than traditional bar codes, but they promise to make it easier to manage inventory. Sensor tags designed to prevent theft were removed from merchandise, because they would have interfered with the radio frequency. At the same time, Penney had switched to a friendlier return policy that did not require customers to present a receipt. The combination gave people the opportunity to grab armloads of merchandise off store shelves, walk over to a cash register and return the goods on the spot. New CEO Mike Ullman says “the move away from sensors actually encouraged thieves to come to Penney. Competitors were still using the devices, so most of the theft comes to our place.”

The company is now retagging items on the sales floors with sensors, as well as tagging those that it is bringing in. It also recently tightened its return policy by giving store credit, rather than a refund, to customers who return goods without a receipt and are unable to produce the credit card used for purchase.

Classroom discussion questions:

1. What else can Penny do to eliminate pilferage?

2. Why is inventory control crucial is service industries like retailers?