supply chain management and strategic decision making

Running head: SUPPLY CHAIN MANAGEMENT 1

Supply Chain Management and Strategic Decision Making

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SUPPLY CHAIN MANAGEMENT 2

Supply Chain Technology

The primary stakeholders of a supply chain of a manufacturing company are

manufacturers, suppliers, retailers, shippers, and distributors. The final step in this chain is,

therefore, delivery of the product to the customer. Therefore, customer satisfaction is a

significant factor in the success of a manufacturing firm. Due to the increasing changes in

customer expectations, needs, and tastes, as well as increased competition, there is a growing

need to integrate technology in supply chain management. Incorporation of information

technology in the supply chain process has become more of a necessity than a value-add

proposition for every business to build substantial customer bases because it helps integrate the

operations carried out by various players in the supply chain (Gunasekaran, Subramanian &

Papadopoulos, 2017).

The information technology achieves this by enhancing real time exchange of

information between various players in the supply chain. This enables businesses to effectively

implement procurement styles such as just-in-time procurement that have proven more effective,

as well as reduction of inventory, increase of manufacturing efficiency, thus helping businesses

meet customer needs on time. The speeding up of processes helps avoid bottlenecks in the supply

chain. This efficiency helps businesses maintain a strong customer base and improves visibility,

transparency, and accountability in the whole supply chain process, thus achieving better control

over the flow of products and information within the supply chain.

Consequently, utilization of the supply chain technology has become a crucial part of

major retail companies like Walmart. Over the past two decades, Walmart has grown to be the

largest retailer globally. Today, Walmart dominates the retailing industry in terms of its sales

revenue, its customer base, and its ability to drive down costs and deliver excellent value to its


customers. It records the highest sales per square foot, inventory turnover, and operating profit.

Currently, it operates over 11,700 stores under 59 company names, with 2.3 million employees

in 28 countries. It also manages an average of $32 billion in inventory. This growth has been

attributed to constant adoption of supply chain technology that helps the company continuously

improve efficiency in the supply chain through automating workflows so the management can

focus on minimizing the supply chain involved costs so as to lower the cost of the final

consumer product , thus enable customers save money and achieve better lives.

Identification of the Technology

One of the corporate mandate Walmart retail company has been lowering the cost

involved in the supply chain to reduce the final consumer price. In this pursuit, the company has

invested in technology to improve track inventory and the process of restocking its inventory.

Today, Walmart has the most sophisticated information technology infrastructure in the private

company sector worldwide. It allows the company to forecast demand accurately, predict

inventory levels, create efficient transportation routes and manage customer relationships. One

supply chain technology that has revolutionized the supply chain at Walmart is the Universal

Product Code (UPC). It was implemented in the company in 1983.

The Technology Concept

Universal Product Code (UPC) is a barcode labeling system technological innovation

used for retail products. It entails printing a code on a retail product packaging with the purpose

of identifying a particular item in regards to its features, such as the brand name, item, size, and

color, and tracking its motion. The bar code is made up of lines and spaces of varying

thicknesses. The scanners can only detect the codes if they are accurately printed, and there is

adequate contrast between the bars. The Scanners uses cameras and lasers to read the codes. The


code can be translated into a multiplicity of languages. The code is machine-readable, unique for

every product and it consists of 12-digit numbers.

The barcode also consists of a series of variable-width vertical bars. The easy

identification speeds up the checkout process at a store outlet. The issuance of these UPCs is

done by GS1 Global Standards Organization, the only organization authorized to issue these

codes in the United States. It is an international non-profit organization. Besides issuing the

codes, the organization also regulates and maintains the standards of the barcode. The

manufacturer has, however, to apply to have its product coded and pay a fee before issuance. If a

manufacturer decides to register more than one product for the code issuance, it has to apply and

pay for each product separately. The UPC has three parts. The organization only issues the first

part of the code, which consists of 6-digit, which automatically becomes the first six digits in the

UPC on all the company’s products. So the first six digits only identify the product

manufacturer.

The manufacturing company issues the next five digits in the code. Each company has a

department responsible for issuing the five fingers, ensuring they are unique and that numbers

assigned to discounted products are phased out. They are referred to as the item number, and

they are unique for each product and are designed to differentiate the size, flavor, color, and

other features of products. The last part consists of one digit. The product manufacturer also

issues it. It is referred to as the check digit. It is obtained from a product and summation of

several numbers within the code. During the product identification at a checkout point, the code

scanner performs these calculations to confirm the UPC is valid and rejects the code if the

estimates are incorrect. The main reason for the invention of this technology was to ensure that

each product item has a unique UPC, to avoid any potential mix-ups during retail.


History of the Development of the Universal Product Code (UPC)

Joseph Woodland conceived the barcode idea in 1949, a young engineering student. His

idea was developing a technology that could automatically capture and store information about a

product that could be easily retrieved later. Three years later, the linear bar code was born and,

Woodland received a patent on the technology. However, it was first commercialized 15 years

later in the transport sector. The application entailed placing linear codes on the sides of railroad

freight cars to identify the cars, their destination, and cargo. However, the technology failed to

attain the expected benefits; thus, businesses shied away from its adoption until it was later

advanced. The linear code developed by Woodland was in the shape of a bull’s eye, a design that

limited the data storage space, so they were not called bar codes (Kjellberg, Hagberg, & Cochoy,

2019).

In the early 1970s, engineer George Laurer redefined the design of the innovation from

bull’s-eye in to rectangular barcode. He also developed UPC complementary infrastructures such

as computers and lasers that could read the new rectangular barcodes and decode the data. This

led to the upgrading of a linear code to a bar code. The innovation was later introduced in the

consumer products industry. The adoption was in response to the need for automating the

grocery checkout process to reduce labor costs, improve inventory control, speed up the process,

and improve customer service, in the US grocery industry in the early 1970s. Consequently,

leaders from different retail organizations in the grocery industry formed a committee to find a

solution to their problems.

According to their findings, the UPC could serve their purpose, especially after the

invention of the rectangular design that could accommodate multiple data. They also argued

rectangular design could fit more code into less space and didn’t smear on the presses. They


came to that decision after two years of research.After that, the barcode was first applied in the

retail sector in 1974, when the first item marked with the Universal Product Code (UPC) was

scanned at the checkout of Troy’s Marsh Supermarket in Ohio. The product was a pack of

chewing gum — these barcodes contained product information such as weight, price, amount,

and type.

This marked the beginning of the application of UPCs in the service industry. Due to the

many benefits experienced, there has been rapid adoption of UPCs by businesses since then.

Today barcodes have become more popular, and least expensive due to their increased demand

and increased number of third party UPC vendors, who offer the technology t a cheaper price. It

is estimated that about 6 million scans are made daily worldwide. However, the revolution of the

bar codes continues, depending on the changing consumer needs. There has been a recent need to

advance bar code technology to accommodate more information in the same space. It has

resulted in the invention of Two-dimensional barcodes, which are already gaining popularity.

Examples include PDF 417 and MaxiCode. The two-dimensional bar codes carry up to 1.1

kilobytes of data in the space of a UPC barcode. The increased capacity allows the encoding of


additional information such as nutritional information of the product, user manual website

address of the manufacturer, and graphics, among others (Liu, Jiang, Baessler & Zhang, 2019).

In recent years, the barcodes design has shifted from 12 digits to 13 or 14 digits with the

aim of allowing more uniform coding, more natural data exchange between companies and

include more information about the product. There is also a current trend where many retailer

companies like Walmart are incorporating radio frequency identification (RFID) in the bar codes

to promote remote identification of the product. The most recent incremental innovations to

barcode technology have been the introduction of technology that enables barcoding of small-

sized objects like microchips and tiny medical pills. The technology entails a combination of

features of both linear and two-dimensional bar codes and is referred to as Composite

Symbology (CS).

General Business Application of UPC and its Associated Organizational Value

Despite the seemingly small size of the UPCs, they have had significant inputs in many

businesses since their invention. Today, the bar code technology has been applied in almost all

business sectors. In the transport industry, rental car companies input bar codes on the car

bumper and use them to keep track of their fleet. Airline companies also use bar codes to track


passenger luggage, thus increasing efficiency, the speed at the terminals and reducing the chance

of loss. In the healthcare industries, hospitals use bar codes to keep track of their patients,

especially in psychiatric departments where patients need close monitoring. They also use

innovation to obtain patients' past medical records for better treatment outcomes. Bar codes are

also employed in scientific research to track down animals used in medical reassert (Beier,

Bhagwan, Funk, Kaufmann, Khatchatrian, Liu & Underwood, 2017).

These businesses have greatly benefited from technology. Some businesses have applied

the UPC technology on retail products scanned during the checkout process. At this level, their

role includes automatically adding product information on the customers' order once the cashier,

scans the product’s barcode at the point of sale. This application has help speed up the sale

process, especially when the customer is purchasing multiple products, and whose price

calculation would be time-consuming if the process was to be conducted manually. The

technology has also eradicated the need for employee orientation regarding mastering the prices

of all retail products, which is time-consuming. This improves customer services. In the current

era, customers are more interested in the quality of services more than the prices of the product.

Keeping customers standing for long on the payment queue can drive away from the customers,


thus shrinking the businesses' customer base. Therefore, businesses that can utilize this

technology gets a competitive advantage over their competitors because of the quicker the

services, the happier the customer. A happy customer is likely to stick and make referrals.

Additionally, the fast process also improves the efficiency and productivity of employees

as more customers, and more products are served and scanned within a short period,

respectively. Moreover, the use of barcode scanning technology at the point of sale has improved

the level of accuracy. The manual process of adding up prices is associated with a high risk of

human errors that have been mitigated by the barcode innovation that has automated the process.

Such mistakes can be costly to the businesses regarding monitory losses, loss of the involved

employees, loss of the dissatisfied customer, and the cost of employee replacement. In recent

years, the cost of acquiring barcode scanners has dropped significantly due to the increased

demand for innovation and the fact that more retail products already have an installed barcode by

the manufactures. So businesses can now improve their accuracy without any financial strains.

Other businesses have utilized barcode innovation in inventory management. It has been applied

by many businesses as a substitute for the time consuming and tedious stock-taking annual

process.


In businesses that have adopted the barcode innovation, when a retailer business receives

products from the supplier, the process of counting products, checking for damaged products and

confirming product features is performed by scanning thus ensuring more products are managed

at one time. It also allows an opportunity for error identification because each product is

individually scanned, which might be impossible to detect while using the manual inspection

process. Therefore, technology has promoted efficiency in inventory management (Apiyo &

Kiarie, 2018).

The barcode system also helps in monitoring the inventory level; thus, the inventory team

can easily know when to restock, when the stock level reaches a given level. This is possible

because, through bar code scanning, it is possible to know the number of items that have been

sold; thus, the remaining stock is arrived at after analyzing the product barcodes that have not

been checked out. Therefore, the invention has facilitated accurate stock taking. Based on this

stock taking, business can easily know when more product is needed in the warehouses. It has

also improved customer service because through tracking the product UPC, businesses can now

easily locate and reach out to customers who purchase default product right in to their homes


and make the needed replacement or correction. It consequently improves the business

reputation, necessary for customer retention.

It has also been used to improve security through detecting theft and frauds on the

shelves and warehouse. The barcode allows tracking of the location of the stolen item. Secondly,

once the product has been checked in, its code can be linked to the organization's alarm security

system such that if the product leaves the premises without being scanned and cleared, it triggers

the alarm. Bar code technology has also improved Inventory Control in regards to efficiency and

reduced cost, especially in businesses that entail long distribution chains. Through this

innovation, it is possible to track the location of the product within the supply chain, thus

eliminating the cost of hiring manpower at various d terminal to track the product (Singh,

Sandhu, Metri & Kaur, 2018).

Application of UPC technology at Walmart and it Benefits

Although many businesses have adopted the UPC supply chain technology, none has

used the technology as efficiently and reaped more benefits than Wal-Mart Retail Company.

Walmart was among the earliest business to apply the UPC technology in their supply chain, in

the 1980s, intending to increase efficiency within the supply chain. The adoption has given


Walmart a competitive advantage over its competitors. The technology has allowed the company

to track in and out movement of goods in the company stores, giving them point-of-sale

information in real-time. The information is crucial in keeping the manufacturers informed about

inventory status and helping them decide the right mix of goods to stock in the shelves (Heller,

2017).

The data is also crucial in information mining about customer behavior, needs,

preferences, and demand pattern, which help the retail company stay at the top in regards to

delivering the right amount and type of goods at the right time. It helps the company maintain a

rich customer base. The latest move of the Walmart company to incorporate (RFID) technology

with the UPC technology is a promising decision in terms of helping the company identify the

bestselling and the least selling products, thus decide when replenish the stores, the most safe

amount of stock and the product line to drop, in order to prevent losses.

Since the UPC has helped Walmart track all sales information, they can identify the price

that consumers are most attracted to thus liaising with manufacturers to produce products art

those acceptable prices. The UPC technology has given Walmart an upper hand in its


relationship with manufacturers, in that Walmart gets to decide when the supplier will deliver

items, at what quantity and at what price, depending on the customer preferences.

UPC Complementary Technology

The barcode is designed to work within a systems environment. Therefore, without

peripheral infrastructure, Barcode labels in themselves are useless. This partially explains why

the popularity and application of the Barcode technology rose in the late 1980s, just as

complimentary equipment like computers became more affordable and computer expertise

increased. The UPC complementary technologies include; a scanner, a decoder, a computer, a

printer, software, a USD cable, a monitors, and networks.

The scanner reads the coded information on the item label using a given symbology. The

decoder then receives this data, interprets and interprets it, making it easier for the monitor to

display the data. The scanners can be handheld or hands-free. Some require physical contact with

the barcode label to read, and those that do not require any contact to function. The attenders in

the retail shop need the training to operate the scanners properly. Scanning the barcode label too

slowly, or starting the scan outside the quiet zones can result in an error in the scan results.


Symbiology refers to configurations, and they are unique for each industry. Factors that

determine the time of symbiology adopted by a company include the level of accuracy of the

symbology, whether the symbology allows for the creation and printing of a label, and whether

the symbology has specifications that make it intolerant to particular circumstances. Another

equipment is a USB cable. The cable connects the scanner to the computer, to download the

information encoded from the bar code. The other equipment is a computer monitor. It displays

the data downloaded from the scanner.

Another complementary equipment is the printer. Choosing the appropriate printer is

heavily dependent on the application industry. They are necessary for printing barcode labels on

the items. The quality of the printer determines the quality of the barcode label, and therefore it

readability and durability. In recent years, technology inventions have introduced barcode

labeling programs that are installed in the printers. An example is the Bartender program,

developed by Seagull Scientific. Communications technology is also a crucial complementary

infrastructure. These include the radio frequency data capture (RFDC) that uses the

electromagnetic spectrum to enable wireless scanning of barcodes on items, and Local area

networks (LANs).


Businesses that currently use the Universal Product Code (UPC)

Amazon Retail Company is one of the leading global distribution companies in us with a

complex and challenging distribution chain. It one of the major competitors of Walmart retailers.

One of the features that have enabled Amazon to remain relevant in the highly competitive retail

business is readily availability of products on order by customers, because it has a huge stock in

in in- house warehouse stores. It, therefore, maintains a vast area of the warehouse, in which it

can be challenging to identify a single product. However, Amazon has adopted UPC in inventory

management. When the stock is delivered to the company premises, items are checked, sorted

before, and scanned into the system using handheld scanners. Once items are scanned, their

location within the warehouse can be instantly tacked, thus facilitating fast sales. The inventory

scanners provide pickers with the shortest route to each product within the warehouse, thus

increasing efficiency.

Another company that has adopted the UPC technology is Home Depot Inc., a US-based

home improvement Retailer Company. It supplies construction tools and services. At Home

Depot, the barcode system is used to determine the amount currently in stock, thus making

restocking decisions on time. Additionally, once the item has been scanned, the item information


is available on the Home Depot consumer portal; therefore the customer can remotely check the

prices and video tutorials of the product before making the purchase decision. Package delivery

and supply chain management companies like United Parcel Service and postal service also use

UPC barcodes for mail sortation and to track packages

Compare the Key Vendors of this Technology

The global standard 1 is the only legitimate producer and supplier of UPCs globally. The

organization issues unique prefixes to manufacturers to enable them to create their own unique

barcodes. The organization charges between $250 to $10,000 depending on the type of products

(Junger & Prellwitz, 2017). This is a significantly high price that discourages businesses from

purchasing barcodes. However, recent years have seen the emergence of third party barcode

vendors, who sell barcodes at lower prices compared to GS 1.business owners can now obtain

barcodes from 3rd party barcode vendor at a relatively lower price. However, this transaction can

lead to legal issues and impact the legitimacy of the brand's supply chain. Therefore,

Manufacturers who wish to establish a legitimate long-term brand may want to consider official

barcodes because retailers can shy away from contracting with manufactures using third party

codes.


Barcodes mania is one of the third-party barcode vendors in the US. The vendor provides

a barcode for $180 for 1,000 barcodes. Upon purchase, the vendor also gives the buyer EAN and

UPC numbers, Excel spreadsheet and PDF, Barcode artwork in EPS and JPG formats, Certificate

of Authenticity, and free label template.

Bar codes talk is also another supplier that offers barcodes at $220 for every 1,000

barcodes. Upon purchase, the buyer receives EAN and UPC numbers with purchase, Certificate

of GTIN Assignment, EPS and JPG images, Excel, and PDF spreadsheet of numbers.Just UPC

offers bar codes at $175 for every 1,000 UPCs. Upon purchase, the buyer receives UPC and

EAN barcodes, Certificate of Issuance and Printable labels.Nationwide barcodes offer barcodes

at $280 for every 1,000 barcodes. Upon purchase, the buyer receives a Certificate of

Authenticity, UPC and EAN numbers, Ownership documents, Barcode graphics, and Excel

spreadsheet of numbers.

Instant UPC Codes offers barcodes at $220 for every 1,000 UPCs. The buyer is given

Free barcode image tools with EPS, JPG, GIF, and PNG formats, UPC and EAN numbers


SPEEDY BARCODES offers barcodes at $230, for every 1000 UPCs. The buyer also gets a

Certificate of Authenticity, UPC and EAN numbers, Excel, and PDF spreadsheet of your

barcodes and Digital barcode artwork (Junger & Prellwitz, 2017).

What are the Risks or Challenges in Implementing the Universal Product Code (UPC?)

Although the Universal Product Code has yielded undeniable benefits in supply chain

management, it has some drawbacks. One technical limitation is that once set up; it cannot be

reprogramed. Once the barcode has been printed, it cannot be updated to include more or correct

product information. Due to the complementary infrastructure required to operate UPCs and

manpower training, installing adopting the UPC technology can be an extensive process which

might not meet the expected return on investment.

The accuracy of the barcode can be easily affected by the quality of the printer, the age of

the barcode label, the number of times the label has been scanned, the quality of packaging

material, the color contrast between the bar code and the paper’s color is too close, and

environmental conditions. Additionally, the technology is subject to breach as anyone with

access to the right scanner can read a barcode and decode it effortlessly. The scanner technology


is significantly expensive because the accuracy of the scanner increases with the scanner level of

advancement, which increases with the cost.

The technology is labor-intensive as each h item has to be individually scanned, and it requires

trained manpower to operate; therefore, it is prone to human error.

UPCs also have a limited memory thus can only old limited information. When UPCs are

employed without incorporating RFID, Barcode scanners need a direct line of sight to the

barcode to be able to read; therefore, their functionality is affected by the distance between the

scanner and the item. Barcodes do not contain any added information such as expiry date;

therefore, it is difficult to prove their authenticity.

What are the Competing Technologies?

One competing technology of UPC is the Radio Frequency Identification (RFID). It uses

magnetic radio waves to detect items wirelessly. Although recently retailers are incorporating

RFID beside UPCS, RFID can be independently used as a UPC substitute. Once the RFID chips

are attached to the product, business owners can easily track their inventory (Shin & Eksioglu,

2015).While some businesses have adopted this technology as a UPC substitute, wall mat has

adopted it to complement UPCs.


Another competing technology is Order Fulfillment Optimization Technology, such as

Pick-by-Light and Put-by-Light. These technologies help automate warehouse processes, offer a

more efficient and lower cost solution over manual picking methods by directing the warehouse

operators to product locations (Neiser, 2016).There is also a recent development in Warehouse

Robotics Technology. It entail customized robots that monitor movement, storage and sorting of

warehouse inventory. They help promote accuracy and speed, as well as employee productivity.

References

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