When you go to the self-checkout lane in a supermarket these days, you can swiftly pass the barcode label that is on virtually every product somewhere in the vicinity of a scanner and have the price of the product instantly recorded. The total is immediately available; you even get a handful of coupons for products similar to those you just purchased.

When you drive along the Illinois Tollway system near Chicago (as well as roadways in other states), if you have a Radio-Frequency Identification Device (RFID) mounted on your car’s window, you don’t have to stop to toss coins into baskets. You can just keep on driving along at 55 or 65 miles per hour, and when you pass under an arch every now and then, the toll is automatically deducted from an account you have set up and can monitor on the Internet.

Coding systems that can easily be read by a scanner are common today, but it still is not true in the HVACR industry - especially when you plug “easy” into the equation.

The NEWS interviewed several wholesalers and contractors (and spoke informally to a number of others) to find out why our industry is not up to speed with the swift scans of supermarkets and highways.

COMMON CONCERNS

In the broadest sense, it is believed that manufacturers - the originators of product barcodes - are focused more on internal inventory control than coming up with a code that will work throughout the supply chain. Some industry members contend that the complexity of uniformly labeling every piece and part can be a daunting and expensive proposition.

Lurking in the background is the concern that even if the entire industry gets on the same page concerning barcodes, that whole technology could be superseded by RFID devices (which are already being tried in some retail sectors). The barcode infrastructure could, however, transition fairly smoothly to RFID systems, according to those familiar with both methods.

Nevertheless, many wholesalers and contractors are working with third-party providers to come up with their own barcode systems, to expedite the flow of product from manufacturer to end user. Therein lay opportunities for better ordering, improved inventory control, faster service, and more profitability.

MARKETS AND UPCS

All of the above entered into the supermarket industry’s decision to go to barcoding and use Universal Product Codes (UPCs).

“UPCs were developed through demand for faster product placement and pricing, as well as faster checkout times,” said Talbot Gee, vice president of the Heating, Airconditioning & Refrigeration Distributors International (HARDI). “The wide array of products sold by these grocers created the need for uniformity and thus UPC codes because supermarkets had the volume to justify process adjustments by their many suppliers.”

In HVACR, “Uniformity of barcodes must be contractor-driven or it will remain fragmented, with every supplier and wholesaler applying their own coding for their own purposes,” said Gee.

“Barcoding is extremely effective for consignment and vendor-managed inventory systems, which shifts inventory management responsibilities to the supplier while the product may be in the customer’s hands.”

SUPPLY HOUSE PERSPECTIVES

Larry Haskett of Indiana Supply, Indianapolis, said his company has been using barcoding in its headquarters warehouse for five years.

“It runs our entire operation,” he said. “Everything that moves is barcoded.” Haskett said this includes working with the barcodes provided by manufacturers on its packaging whenever possible, and use of cross-referencing capabilities.

One challenge, he said, comes with a lack of standards in the industry, and the fact that items such as flat sheet metal (which has to be bended and folded) just can’t carry a barcode.

He said those in HVACR can look to the electrical industry as an area “where codes are more uniform, and manufacturers more aligned with distributors. It is more of a vertical type of relationship.”

Beau Michel, R.E. Michel Co. Inc., Glen Burnie, Md., said barcoding was a factor facilitating the company’s rapid growth, which nearly doubled the number of store locations in less than 10 years. “We could not have kept that pace without barcoding,” he said. “We use it in every aspect of the supply chain, from product reception to services at the sales counters.”

Before barcoding, he said, the company had to rely on an employee reading a parts number off a box and comparing that to information on paper, creating an opportunity for human error. Michel said the company’s distribution operation has been paperless for close to seven years.

As is often the case, barcoding was developed within the company, including cross-referencing that adapts manufacturer barcodes for Michel company needs. “If our suppliers cannot provide barcoded labels, we will apply our own upon arrival.” The technology, he said, also allows for upgrades to read new barcodes and adapt those to what is needed by the wholesaler.

CONTRACTOR'S VIEW

Richard Imfeld Jr., I.C. Refrigeration, Ceres, Calif., is one contractor who has made the barcoding work for him. He said he was motivated by his technicians “spending too much time at the part houses, creating lost opportunities due to parts not being at the jobsite.”

Furthermore, he said, “We were running out of basic material at the shop. This would prompt an overreaction by ordering everything you could think of, so you would not be short again.”

The company worked with a third party to create its own form of barcoding. “The barcodes of most vendors will work, or you can create your own. Our software allows us to use ‘aliases’ so if we bought two brands of flux, they could go under one barcode.

“To date, our purchasing people like to have their own barcodes as opposed to the vendors,’” he said. All in all, “The system is as good as the purchasing person and the warehouse personnel. This is the vital clog. Consistency must be the key.”

There are pitfalls. “I would not try it unless you are a larger contracting company ($4 million plus) and have the fortitude to follow it through to the end.”

A guide to barcodes (available through HARDI) noted, “a barcode, or any other technology for that matter, can pay for itself in three ways: increasing sales, improving gross margins, and reducing overhead.”

The report noted, “Some benefits, like keeping a customer’s business, can be easily measured. Others, like increasing sales due to improved customer service, are more difficult to predict with any certainty. But any bar code application can be analyzed by its impact on sales, gross margins and overhead.”

Publication date: 05/07/2007