Part 1 of 4. So what if Amazon wants to kill the barcode?
Dissecting hype versus reality of this announcement for the broader industry:
Keywords: Label Scanning, Barcode Scanning, RFID, Intelligent OCR, Computer vision to recognize products without barcodes, NanoIoT (nIOT), Invisible inks, ESG
Immediately after the news came out from Amazon, many industry connections sent over the article to us. While it may sound like a cool innovation, attempts to eliminate label scanning isn't a new concept; several different approaches have been tried and several more are possible. But despite these possibilities, it is simply not going to happen for the wider industry.
The reason lies in value analysis of any alternate label scanning technology, associated infrastructure requirements, and the breakthrough innovation we've done with our #KoiScan technology that never misses a barcode scan irrespective of the label’s condition.
Last week we presented our viewpoint to a Supply Chain Executive Council that was attended by some of the top leaders in North America, and we are summarizing it below in a 4-part series.
What is the label scanning problem statement?
What is the current label scanning infrastructure in the industry?
How should we perform value analysis of any alternate solution?
What’s the perfect solution?
Barcodes are a widely used technology for identifying and tracking products in the supply chain. While it is possible to eliminate barcodes and use other technologies for identification and tracking, it would be difficult and expensive to do so, as barcodes have become a standard part of many supply chain systems.
There are alternative technologies that could potentially be used instead of barcodes, such as:
RFID (radio-frequency identification) tags
Machine vision to recognize products without barcodes (SKU identification)
NanoIoT (nIoT) using Nano Graphene Oxide (NanoGO) based tags
However, all these technologies also have limitations and may not be suitable for all applications and in all operational scenarios for a variety of reasons. Ultimately, the decision to eliminate barcodes in the supply chain will depend on the specific needs and goals of the organization and whether alternative technologies can meet those needs effectively.
Before we do a deeper dive, let’s review the operational issues associated with current label scanning process.
Barcode and Label scanning operations at most warehouses operate anywhere between 75 to 95% accuracy due to:
Broken, Faded, and Distorted barcodes
Missing data attributes
Print quality issues
Varying label formats due to reusable cartons with overlapping labels
Automation related anomalies
Need to scan ‘other' information (route code, color coding, etc.)
And with current label scanning solutions, even when the scanned results may appear to be correct, the label scanning system might be “guessing” in up to 25% of the scans with up to 4 potential options per label scan. This means operations might need to either solve for it by building compensating logic or might think we shipped ‘SKU a,’ but in reality ‘SKU b’ got shipped.
The last point is often not known to everyone in the supply chain, as it doesn’t discussed or get caught at the time of the scan, but its impact shows downstream.
Current label scanning technology also often limits the speed to 5 mph at which conveyer belts can move, and requires a team of operators who continuously need to provide manual intervention across multiple shifts. This leads to increased labor cost and supply chain sluggishness.
In summary, all these problems causes massive inefficiencies in supply chain that show up in various forms such as:
Increase in claims,
Poor inventory accuracy,
Increase in returns,
Increased labor cost,
Supply chain sluggishness,
Lost sales opportunities, and
Longer down times during inventory cycle counting.
Only some of the above issues can be reconciled, unfortunately, during inventory cycle counting, and that too happens after the fact that means 100s of millions of dollar in missed opportunities for a large corporation.
This is why organizations such as Amazon are trying to replace barcode, and innovative Fortune 100/500 organizations are using our KoiScan technology to solve this industry problem.
In Part 2 of 4 of this series, we will provide insights into what’s current state of infrastructure in the industry, and how should Supply Chain leaders plan for the future that is happening now!
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