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Shaping Grocery Supply

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With increased regulatory requirements for product and consumer safety, the need for well-integrated grocery supply chains becomes critical.

Matching consumer demand with supply is the core task of grocery retailers and a key lever for increasing efficiency. Consumers demand high product availability and low prices, whereas retailers increase product variety and expand their field of logistical activities. These developments increase the complexity of the grocery retail supply chains and management of retail businesses as well. Moreover, due to increased regulatory requirements for product and consumer safety and consumer concern for the same, the need for well-integrated grocery supply chains rapidly becomes critical.

A supply chain consists of organisations, people, technology, activities, information and resources involved in moving a product or service from supply side, that is, the supplier/manufacturer to the demand side, that is, the buyer/ consumer. Therefore, any supply chain operation involves physical flow of goods and related information flow. It is important to link these two for maintaining a well-integrated supply chain. For the purpose of this linking, the item or event associated with physical movement must first be identified, its activity captured, and the information shared in a common way so that all who need information about the item or event can understand it.

End-to-end integration and alignment of supply chain processes are possible using suitable technologies. Developments in RFID, bar code and other Automatic Identification and Data Capture (AIDC) technologies and communications technologies like cloud computing, mobile computing, wireless communication, streamline the processes involved in ‘identification-capture-share’ of data. Adoption of these supply chain technologies will enable grocery supply chain partners to streamline the physical flow of goods by linking the related information flow across the supply chains.

The technologies and processes used to identify, capture and share information vary considerably, but these core elements are present in all successful supply chain integration. There can be no integration until there is a standard way for all stakeholders in the supply chain to identify, capture and share information about supply chain elements using suitable technologies. A global standards based framework to ‘identify-capture-share’ provides organisations with the what, when, where and why of an item’s movement, enabling them to make more-informed business decisions.

At the core of the framework, global standards for unique and universal Identification provide the link between a product and the information pertaining to it. A company can assign to a product, for example, a unique and universal identification code called a GS1 Identification Key, in accordance to allocation rules determined by GS1, the global supply chain standards body, in collaboration with the industry. Using suitable GS1 identification keys, organisations around the world are able to uniquely identify physical things such as trade items, physical locations, assets, and logistic units, as well as logical things like a service relationship between a regular buyer and a grocery retailer through loyalty cards, etc.

By scanning a bar code or reading an RFID tag, the unique identification number it carries is automatically captured and provides access to the information related to the item stored in a database. This offers an automated way of identifying things as they move along the supply chain and providing data related to them as needed. To ensure interoperability, industries have agreed on the use of GS1 Standards for Automatic Identification and Data Capture (AIDC) technologies, which define how the unique GS1 identification keys are used in approved barcodes and RFID tags for different business applications. This is the basis for visibility, allowing billions of transactions to be made every day.

The captured data can then be shared among supply chain partners in a variety of ways using standards and technologies that the standard visibility framework supports. When this powerful automated identification system is combined with master data synchronisation and sharing methods, transactional messaging standards such as electronic data interchange (EDI), and/or physical event information, a connection is made between physical or logical things and the information the supply chain needs about them and ensure full chain visibility.

Adoption of global standards in supply chain technologies will enable grocery supply chain partners to maintain well-integrated supply chains with greater visibility and efficiency.

In grocery retail, visibility at item-level allows the manufacturers and retailers to better manage and track their inventory – it can help achieve stock accuracy and ensure no lost sales or surplus stock, reduce shrink, identify counterfeits and better manage returns or recalls.

Global standards based visibility framework makes it possible for grocery retailers to comply with varied regulatory requirement for product and consumer safety by enhancing product traceability and safety, sharing accurate product information, and improving product recalls. This in turn helps in building consumer confidence.

Moreover, well-integrated supply chains with greater visibility, could provide a competitive edge to the Indian grocery retailers by introducing new ways for consumers to buy. In the future, the most successful businesses in the grocery retail industry will be those which can manage their supply chains most effectively.

The author is Manager, Corporate Communication, GS1 India – a not-for-profit standards body set up by the Ministry of Commerce, Govt of India and Apex trade organisations CII, FICCI, ASSOCHAM, IMC, FIEO, BIS, IIP, Spices Board and APEDA. It is affiliated to GS1, Brussels, which oversees over 110 GS1 organisations worldwide.