Feedback of the Week: On Chargebacks Gone Mad
This is not really an issue of “Chargebacks gone mad” but an issue of innovation, communication, and reason.
Working backwards, the “lack” of reason by the department stores is not acceptable. The ITF-14 label has been around for some time, and “good” retailers have known what the code is, and how to use the code. Retailer who skipped over using that code to move directly to a GS1-128 label at the carton level can and should address any confusion by their DC staff through training and education.
Communication by the suppler to the retailer is key. If the retailer is charging, is it because the GS1-128 label is not prominent on the carton?
And the innovative solution is for the supplier to place the UCC-128 label over the ITF-14 label.
More generally, there are two schools of thought on the compliance issue.
There are the old department stores that use the compliance as what has been alleged by many to be a profit center. I think that some were just very bad at communicating what their requirements were/are to their suppliers, and to their buyers. You could argue that the worst offenders did not communicate as part of the plan, so that they could rake in more fines.
The other school of thought was the approach of Gottschalks, Stage Stores, Elder Beerman, Burlington Coat, and Pep Boys, where the goal was to change behavior. The cost recovery paid for the program, but the bigger benefit was the improved flow. I agree that the first generation of stores that did chargebacks were unfair to their suppliers. It is the second generation of stores, working with technology providers such as Compliance Networks, that are much more progressive in their thinking.
I guess that I take a more direct approach to the sortation issue. If I am sorting solid cartons of a product, I would make sure that my conveyor control system was fed the distribution based on item code and quantity. Let the scanners use the ITF to identify the product and let the sorter sort the right quantity of cartons to each lane. No additional cost for the vendor to label, no additional effort on my part to label, or to work as a compliance issue, and the programming effort is simple. Send in the file from host to CCS the product number and the number of cases by store, and forget all of the extra effort to carry the additional vendor 128 data. This scheme also lets me reallocate the quantity AFTER I have cut the PO and the product is inbound to ship. The 128 scheme makes it even harder.
As I said, I would use 128 only if there is a store specific assortment.
David K. Schneider
David K Schneider & Company, LLC
More On Chargebacks Gone Mad
I reviewed your recent article regarding the use of the ITF-14 where I was cited.
I am not aligned with your opinion that:
“This is incredible, really,” said SCDigest editor Dan Gilmore. “What’s mystifying is that it is very easy for a retailer to configure its scanners to not read the ITF-14 bar codes. There is something I am just not getting here. It’s like Chargebacks Gone Mad.”
What about retailers who utilize both ITF-14 bar codes and SSCC-18 bar codes? As I mentioned in my prior email, the ITF-14 is commonly used for casepack orders and SSCC-18 is often used for ‘pick/pack’ orders. For retailers that receive both casepack and pick/pack orders at the same receiving locations, they require their trading partners to properly identify their shipments with the appropriate symbol. Based on my experience, the problem with having both an ITF-14 and an SSCC-18 symbol on the same panel of a carton is that in some automatic scanning applications it causes ‘read conflicts’. This is why a retailer will require the ITF-14 to be blocked out on a pick/pack purchase order.
Could you please let me know of which retailer you believe is issuing chargebacks thatcould be termed as “Chargebacks Gone Mad.” I’m not sure this is an accurate depiction of what is really happening.
Bar Code Graphics, Inc.
Response from SCDigest Editor Dan Gilmore:
I can't say who, but I still think my contention is right.
First, it is just not right to me that a manufacturer that is, for example, required to put a ITF on cases for some retailers (WMT) or has chosen to use ITF internally should have to bear some heavy costs for putting this industry standard code on the cartons - the cost being the hit in labor and labels in blocking out the code.
I have asked GS1 for a reaction to this, but thus far have not had a response.
My experience is not quite the same as yours. The UCC 128 is often/usually, especially for department stores, used/required for all carton level items, whether piece pick or full case. The 128 number is what is sent on the ASN for each case. In the examples I am talking about, am nearly sure the retailers require case level UCC 128 on all cartons with a supporting ASN. They may I suppose get stuff from offshore that doesn't have this, and may relay on a case code for that.
Even where you are right (use both codes), it is still relatively trivial to address. A scanner programmer could write a routine in about 30 minutes to say, if you see an ITF and 128, use the 128.
So, I compare this small, one-time cost to the retailer with the huge on-going cost to supplier for having a standard bar code promoted by GS1 and required by other retailers on their cartons, and the incessant talk about "collaboration" (meaning, let's lower total supply chain cost") and I still stand that this is Chargebacks gone Mad, since obviously the retailers can't really be interested in lowering total supply chain costs.
Anyways, just a friendly rebuttal.
On Chinese Labor Costs:
The other significant factor is that the average Chinese worker puts in 44 to 55 hours per week at straight time pay. This is 10% to 37.5% more straight time hours than the average U.S. worker. This offers Chinese firms a tremendous capacity advantage over their American competition. To the extent that an American firm works overtime, the compensation gap widens further.
You ROCK! Although I am a seasoned executive, my experience in supply-chain/sourcing is rather limited to the past year. Your articles are an easy read, filled with great analysis and insight, and I look forward to your getting your next email in my inbox.
Director, Sales and Marketing
The Mpower Group, Inc.
On RFID Summary:
I thought Dan Gilmore's summary article "RFID 2007 - Who did what" was extremely useful. Would be interested in Dan's thoughts on where RFID is going in the coming years. How far along the adoption curve are we now?
Bent Systems Inc.
President & CEO
Editor’s Note: We’re working on it.
On Death of Pay by Touch:
I think the contactless payments industry needs to pay attention to this news. Customers like their privacy. They don't want their credit card numbers and expiration date being read by anyone with a reader, even if the card issuers claim they will refund any fraud charges.
Our company Identity Stronghold makes a Secure Sleeve for Payment cards that could be shipped with every new credit card for under a dime if bought in bulk. This sleeve blocks anyone from reading your card while it is in the sleeve. We have sold over 1 million of these sleeves without even a major ad campaign.
There is little or no security that we can tell of on these contactless payment cards. I have a reader that can read my name, number, and expiration date of my Chase Blink card while it is still in my wallet.
Federal and local governments seem to get this as they provide our sleeve with government employee ID cards, the new Passport Card, and the new Washington State Enhanced Driver's License.
If the payment industry doesn't catch on soon, VisaWave, ExpressPay, and PayPass may soon go the way of Pay by Touch.