In this article, learn about:
Different kinds of item codes
Identifying which code to use for your business
The hidden cost of inaccurate item coding
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Retailers, vendors, suppliers, and manufacturers need a common language for communicating about items as they move through the supply chain. Item codes allow companies to classify products appropriately and help them manage their merchandise effectively. This article will enable suppliers to understand how to talk about their items with each of these parties.
Item Codes
Every sector of the supply chain, from grocers to manufacturers, uses Item Codes. These codes numerically represent a service or product type relayed from the department/supplier to the customer. Each product needs to have a unique item code to ensure appropriate classification. These codes are essential for proper invoicing, item setup and maintenance, replenishment, reporting, and almost every other part of the retail sales cycle.
Vendors may have internal item codes for internal organization consistency, but there are almost always item codes used for external communication as well. Large customers (i.e., retailers) require item codes that are unique to their own systems as well. Keeping these codes together internally and separate externally is key to avoiding unnecessary revenue loss and maintaining an efficient supply chain.
Beyond the discrepancy between internal and external item codes, there are some universal code types centered around organizations and large corporations that help to create this common language.
GS1 Standards
GS1 is a non-profit international organization that works to keep international barcoding and item coding standards across a number of industries. GS1 barcoding is essential for item movement in almost any industry.
European Article Numbers (EAN)
European Article Numbers (EANs) are International Article Numbers or European Article Numbers. These create a universal standard that dictates item barcode structure. Almost all consumer packaged goods (CPGs) sold in stores have an EAN number associated with them. It is one of the oldest and most widely used item codes.
Suppliers that work with any international goods will need to utilize EANs to ensure each item has the correct item number classification. EAN is one of the most recognized item codes that suppliers and retailers use when dealing with the global market.
Barcode Standards
Barcodes are one of the most important kinds of item code in the retail industry. They are on virtually all products, and they are essential for shipping and tracking as well. Each barcode is unique and consists of different lines or bars and spaces. This pattern communicates essential item data (i.e., item price, shipping quantity).
Several different types of barcodes exist, but the most popular ones are UPC-A, UPC-B, and UPC-C. American companies usually use UPC-A, and European companies might use EAN based barcodes.
Most CPG companies selling in large retailers use software to generate barcodes for their items and shipments. Others will have a third party or logistics partner generate theirs.
Related Reading: "Barcode Compliance: Wrong Format" Defect
GTIN-14 Barcode
A GTIN-14 barcode is a 14-digit Global Trade Item Number. It is part of a group of item codes that correspond with GS1 standards. They are globally identifiable item codes that generally consist of 14 numbers. Suppliers can use them for worldwide trade. Most of the time, a barcode accompanies the GTIN-14, but it can also be used as a digital item identifier for eComm and logistics purposes.
There is also some overlap between the GTIN-14 and UPCs (see below). The two are sometimes used interchangeably.
GTIN-12 Barcode
Like GTIN-14, GTIN-12 is usually part of a barcode and is a globally identifiable item code, but instead of 14 digits, it only has 12. Although companies worldwide use them, GTIN-12 codes are used by suppliers working primarily in North America and the United States.
Universal Product Code (UPC) Item Numbers
Universal Product Code (UPC) item numbers are commonly used by CPG suppliers. UPC codes are often used in packaging, shipping, and logistics. They are composed of a 12-digit number that sometimes accompanies a barcode.
Unlike some other item codes, UPCs are not always linked with an individual vendor. Some items sold by multiple vendors will have the same UPC if they come from the same manufacturer.
CPG companies that sell lots of products from major manufacturers use UPC numbers. The product will have the same UPC number no matter where the supplier sells it. This classification helps the supplier identify how many of their products sell and from what location, and it also helps the store manage its inventory. UPCs can also be helpful for manufacturers to track the performance of the items they create.
Many times, stores will use UPC numbers in conjunction with other numbers, like Stock Keeping Units (SKUs). This way, the store can classify their merchandise two ways:
Via the UPC number that reports back to the manufacturer and is standard across all locations.
Via the SKU, which is unique to each store.
Related Reading: What is a Stock Keeping Unit (SKU)?
UPC Case Code
UPC case codes are a way for the warehouse to mark vendor packs or case packs to let retailers and warehouses know what they contain. They are essentially a UPC codes for a shipments.
The UPC case code is essential because it tells vendors precisely what’s inside of the package. This helps with tracking shipping quantities, which has an effect on supplier performance, deductions, compliance scores, and a lot more as well.
The UPC case code is an excellent way to get a birds-eye view of what each package contains without having to open it. It helps to streamline store and warehouse inventory.
Related Reading: The Ultimate Guide to OTIF
Serial Numbers
Serial numbers are a prevalent type of item code and are unique identifications that are often used to classify electronic items, like a Vehicle Identification Number (VIN) for automobiles. Stores use serial numbers to track and sell products. They are also relevant when suppliers have an issue with any of the electronic devices they’ve sold to a retailer.
Serial numbers can track who owns items and can also verify whether or not a warranty is valid. For example, if a customer purchases a laptop, the unique serial number will be on the machine’s bottom. It can be helpful to keep on hand if consumers need to identify any mechanical problems with the laptop or inquire about the warranty.
Store Keeping Units (SKUs)
Store Keeping Units or SKUs are unique to each store and allow retailers to check their inventory in real-time. Unlike UPCs, they are not universal, and they’re often used by stores to keep track of their merchandise within a category or department. Generally, retailers and suppliers assign products both a SKU and a UPC.
Related Reading: SKU Rationalization
Common Item Code Issues
When items are coded correctly, suppliers, retailers, and manufacturers gain insights into sales, supply chain, and compliance performance. Conversely, mis-coded items and cases, or a customer’s perception of a mis-coded item or case, can result in costly losses.
Some common item code issues that suppliers face are:
Using the wrong item code: Keeping all item codes discrete is essential for good business practice and tracking item performance. Confusing a UPC for a SKU or using one when the other should be used can lead to many problems.
Misplaced UPC case codes: It is essential to understand the compliance rules for each of the major retailers you sell to and to ship to each accordingly. Compliance fines can add up very quickly if your shipping method is out of compliance with a given retailer.
In Summary
There are a variety of item codes that suppliers use to identify, track, and report on their products. Some of these are:
European Article Numbers (EAN)
Item codes
Barcodes
GTIN-14s
GTIN-12s
UPC item numbers
UPC case codes
Serial numbers
Store Keeping Units (SKUs)
Some item codes are universally identifiable, while others are not. Additionally, some codes are scannable by computer systems. Suppliers of all shapes and sizes will need to use item codes so that warehouses and retailers can recognize their products quickly and track their inventory.
Getting item codes wrong can be costly for all parties involved.
Stay Ahead of Deductions with SupplyPike
Problems with item codes can snowball into massive amounts of revenue loss for suppliers. An inaccurate UPC Case Code can lead to a shortage deduction, overage deduction, and a hit to compliance performance (as well as other fines)!
SupplyPike’s software helps suppliers dispute chargebacks or deductions as they arise. SupplyPike removes the cost limit for disputing, helping suppliers dispute both simple and complicated deductions with minimal manual intervention.
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