Product ID Technology: Stymied by Foodservice Self Interests?

John Lawn

I was moderating a panel on supply chain management at the ASHFSA conference a few weeks ago when the topic of discussion turned to efficiencies that remain to be driven at the operator level of the channel.

"How many of the foodservice directors in this room are able to employ bar code readers to check in or receive their weekly food deliveries," I said, turning to the audience. Not a hand went up.

"And what kind of a statement does that make about the foodservice manufacturers, distributors and GPOs who say they are looking for ways to drive costs out of the system and the channel? " I asked.

I believe the answer to that question is an excellent illustration of how it is self interest, rather than channel interest, that typically drives most change in the supply chain.

It would be naive to think that self interest would not be the largest motivator for most organizations when it comes time to invest in technology, systems and processes.

At the same time, I think it is an embarrassment for the foodservice industry that, after more than 20 years of lip service on this subject, it has not been able to move forward in terms of helping operators automate one of the most labor-and error-intensive aspects of daily operations.

This is particularly true in healthcare, where hospitals routinely employ barcode technology to manage inventories of med-surg supplies, pharmaceuticals and other products.

Why can't the same technology be applied in foodservice, where labor is a much larger cost component than it is in these other categories?

The reason, I believe, is that many of the players have simply found it to be in their self interest to not support this technology and have instead offered it benign neglect. (If any reader of this magazine has a better explanation, I encourage you to write, call or e-mail me and participate in a relevant dialogue on this subject).

For years, distributors have benefited from the relative ease with which they have been able to provide "substitute" products to make up for out of stocks. Standardized bar codes and UPC codes do not change this equation, but do serve to document it in a way that highlights service shortfalls and price point differences. (Ironically, during the same period, the largest distributors have demanded and taken advantage of barcode-driven efficiencies in their own pallet-load deliveries from manufacturers!)

Many national brand manufacturers have long supported bar coding. But many controlled-label providers don't, and instead see the very modest manufacturing costs that barcode registration and case imprinting entails as "savings" that give them competitive advantage.

For a technology that requires near universal participation to be practical, such laggards are a major impediment to huge cost saving opportunities across the industry.

And for the life of me, I don't see why GPOs, which are technically 100 percent vested in improving the purchasing efficiencies of their members have not tried to force this issue. They could simply require barcode-readable cases as one of many specifications they already require of manufacturers who participate in their programs, and develop member programs to take advantage of them.

Finally, there are many industry observers who are now finding it convenient to say, "Well, we missed the boat on adopting barcode technology, but very soon RFID ( radio frequency identification) will come down in cost, and that will be our opportunity."

To them I say, "Hogwash." While that is true in one sense, they are merely using that explanation as an excuse for failing to address the real issues. In fact,. once systems are put into place for automatic ID, it is a much simpler matter to adopt new technology as it comes along.

The cost of barcode readers (or RFID readers) is not the main impediment here. It is the overall channel's resistance to adopting technology that may threaten some decades-old practices. RF certainly is coming, but that is no reason not look for ways to adopt barcode identifier technology in foodservice today.

Real forward-looking players will see automatic ID systems as a continuum, and plan to enter and move along that continuum as the technology and its costs warrant.

Enough preaching from the soapbox for this month. I have written about this subject many times in the past and will be writing about it again in the August issue of FM, when we profile a progressive operator that is turning to in-house bar coding as a way of driving efficiencies in its own food production and servery operations. Stay tuned.