Even so, the little zebra in the white box is in no danger of becoming an endangered species. Chitra Padmanabhan traces the evolution of the barcode from its origins to recent times

Necessity is the mother of invention, they say, and no better example can be given than that of barcodes, one of the simplest but most effective inventions of our times. The emergence of barcodes—those black stripes in a small white box that you’ll find printed on the packaging of many products—has its roots in the 1970s, which saw the birth of supermarkets in America. As crowds started pouring in, and business began to boom, the supermarkets faced a new problem: handling the huge volume of transactions. Punching the prices of commodities purchased and then giving out the bill was extremely time-consuming. Managements were forced to look for solutions that could not only improve transaction speed at the point of sale (PoS) but also increase efficiency and cut down errors. This is when the barcode made its entry.

A packet of Wrigley’s chewing gum is believed to be the first American product to be barcoded and scanned at Marsh’s supermarket in Troy, Ohio, around 25 years ago. Since then the little barcode has increased and multiplied, and today one sees barcodes printed on every item in retail stores throughout the world.

Indian corporates are focusing so heavily on streamlining their internal processes that benefits of a simple technology like barcoding are completely sidelined, says Ajay Bhutani

Indian scenario
The post-liberalisation period gave a major boost to barcode technology in India. It started with the entry of MNCs, and barcodes were first used in the logistics and retail segment. Says Rajeev Nair, managing director of barcode solution provider Stallion Systems and Solutions, “Though barcoding was first introduced in India approximately 13 years ago, the initial eight years were only the concept-selling stage. This was when shop workers had to rigorously work behind the scenes to stick barcode labels on products before they put them on shop shelves—something necessary because at that time no product package had a barcode printed on it.” Incidentally, Nair was the first person to be trained in barcode technologies in India.

Adoption of the technology
Barcode adoption is still at a nascent stage, even though the past five to six years have seen a gradual increase in adoption rates across all sectors. Opines Ajay Bhutani, CEO, Barcode India, “In an age when enterprise-wide applications like ERP have been adopted quickly, India has still to leverage the complete benefits of this technology.

The reason? Indian corporates are focusing so heavily on streamlining their internal processes through deploying technologies like mail messaging systems, ERP and CRM that the benefits of a simple technology like barcoding are completely sidelined. Moreover, companies have not taken adequate measures to enhance their supply chain efficiencies. The focus has been to reduce costs through integrated systems rather than ground-level efficiencies.”
Adoption has also been slow because awareness of possible benefits is not very high. Agrees Ravi Mathur, CEO, EAN (European Article Number) India, “Lack of awareness regarding the ultimate benefits of barcoding is the most important reason for its slow adoption. Supply chain efficiencies can certainly go a long way in improving bottomlines.”

While barcode technologies compare favourably with other systems, their adoption can be further increased if custom duties are reduced. Explains Nair of Stallion, “The basic reason for the high cost of deployment is the exorbitant cost of the hardware equipment, which is subject to heavy custom duty. The hardware required for barcode technology is not manufactured in India, and the heavy duty imposed makes import of such hardware quite an expensive proposition.”

Adds Narasimha Subrama-nian, managing director of Essae Technologies, “The custom duty levied on barcode hardware is almost 40 percent of the overall cost, which has to be recovered from the customer. That’s why service providers are not in a position to lower the cost of providing the complete solution. Generally, it is a practice to keep the custom duty high in order to protect local industries. But in this case there are no hardware manufacturers in India, so there is no justification for the high rate of custom duty. If the government takes the first step and reduces the customs duty this will automatically bring down the cost, which in turn will push up the adoption rate.”

Key initiatives
With the help of organisations like EAN India, which is a nodal agency working in tandem with the Indian government, awareness regarding the usage of barcodes has grown significantly. EAN India was formed in 1998 as an affiliate of EAN International, headquartered in Brussels, Belgium. The basic function of the organisation is to develop standards used in supply chain management, barcoding IT tools, and radio frequencies to track goods. EAN organisations in over 98 countries have been responsible for administering the EAN.UCC system (an identification standard) through national numbering organisations.

In order to promote the use of barcodes in India, the national IT task force in 1998 laid down a clause, which made the use of barcodes mandatory for all products within a time frame of five years. This move from the government met with strong resistance from exporters who saw it as an additional cost to incur. “Traders and exporters need to realise that barcoding is considered an international best practice, and compliance with an international practice will automatically enhance the product’s value and the exporter’s image,” says Mathur of EAN. Extensive use of barcoding on export items also goes a long way in enhancing the country’s image. In order to ensure that it is followed, the director general of foreign trade has made barcodes mandatory for exporters. Moreover, barcoded cargo gets faster clearance worldwide by customs, freight forwarders, etc. This advantage is fast seeping into the psyche of exporters who regularly interact with customs clearance authorities.

According to Ravi Mathur, lack of awareness regarding the benefits of barcoding is the most important reason for its slow adoption

Key sectors
While one of the most frequent users of barcodes in India is the courier industry, many other industries are actively deploying this technology. Let’s take a look at some of them:

• Automotive: The automobile industry extensively uses barcoding for automatic data capture of information about its materials and supplies during receipt, storage, work-in-process (WIP), dispatch and sales operations. In retail sales of auto parts, spares and accessories, this is used to facilitate stock control, track and trace, consumption forecasting, etc. These operations are integrated with ERP/ EDI applications. One of the best examples is automobile giant Maruti Udyog, where barcodes are used at various levels for automatic data identification purposes.
• Pharma and healthcare: Barcodes can be effectively used to track distribution of drugs in the marketplace and recall them if necessary. They also assist in effectively monitoring stock and consumption in hospitals. Quality healthcare services can be provided through identification of medical supplies to track their expiry dates, patient identification and billing, hospital stock management, order replenishment, etc.
• Retail: This is one of the biggest growth areas; with the retail segment in India booming, the potential for use of this technology is enormous. The use of barcodes is already well-established and highly-visible in major retail sales institutions. Nearly every supermarket in India uses counter-mounted barcode scanners (usually called slot scanners) in combination with electronic POS terminals.

Work-in-process tracking
A manufacturing company’s inventory has three components: raw material, WIP, and finished goods. Of these, WIP is the hardest type of inventory for many companies to control. This is where the use of barcodes can make things easier. A barcode WIP tracking system can have many forms. In its simplest configuration, a computer (microcomputer/minicomputer/mainframe) is connected to a series of online readers and at least one printer. The work order has a barcoded work order number and lists all the operations that are to be performed. Each operation description has a barcode next to it that uniquely identifies the operation number.

Conclusion
While the potential of this technology is vast, the Indian barcode industry can be given a fillip if customs duties are brought down and awareness about the benefits of this technology are spread more proactively by both vendors and the government.