How the UPC BarCode began and changed the world!

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UPC CodeTo launch this column on technology and business for L&L Magazine, I thought I’d give you a little of my own personal history, as it relates to what I feel is one of the most important technologies ever to be conceived, a kind of business/technology legend and legacy.

My retail background is extensive. I worked in a supermarket while in high school, stocking shelves and re-ordering merchandise (when there were no barcodes, or shelf tags) at the great Atlantic and Pacific Tea Company in Rockford, Illinois, 75 miles West of Chicago. At the time it was the second largest city in Illinois.

Later, I had the unique opportunity, right out of college, to participate with two organizations (FMI- Food Marketing Institute and GMA-Grocery Manufacturers of America) as they formed a committee to develop an industry standard for product identification that resulted in the adoption of the UPC barcode. These two facts may sound, at first unrelated or uninteresting to you, but both experiences have had a great impact on all the rest of my business success, as they taught me many lessons about how important information is, and how, the way we run a business or use technology are both guided by the natural human inclination to make life better.

At my high school job, I would have a preprinted order book that listed the product description and SKU (short for stock keeping unit) with a 13 week quantity column. I would mark the quantity, order, tear off the column, and mail it to the A&P Distribution Center in Chicago.

It would take three days to arrive, the order would be picked and arrive by truck four days from the time I mailed the order. This was a problem, because store managers would need to order and receive products daily due to the rapid turnover of the items. Therefore, in order to accommodate enough product on the shelves, 25% of the store was dedicated to storage in the backroom for fast moving items. Many times the product that arrived at the store was not what I ordered – Why? The key-punch operator transposed the item number. I will never forget receiving an order of beach balls in the middle of winter at the A&P in Rockford, Illinois when it was 10 degrees below zero!

At the time, the mighty A&P was a feared competitor and the largest supermarket chain, with stores coast to coast. The same was true of FW Woolworths and Ben Franklin, the Five and Dime stores, along with True Valu, the hardware store, and the local Pharmacy. They were in every town in the USA and VERY successful.

The 1960’s were the start of the era of the Hippie Movement, Free Love, Haight-Ashbury, Vietnam, JFK, the Beatles, Rolling Stones, Muscle Cars, and Fast Times at Ridgemont High.  Companies like Walgreen’s, Walmart, Target, Home Depot and Lowes began to appear.

What caused this? Why did A&P, TrueValu, Ben Franklin and FW Woolworths disappear or become much smaller? They made one of the biggest mistakes in retail. They did not listen to the customer, and did not change when the needs of the consumer did!

In today’s fast paced environment, we take many things for granted that make our lives easier. Can you imagine how different life would be if there was no capability of scanning barcodes? How long would it take to check out at the supermarket if you had to ring up every item manually? What if the clerk neglected to put the price on an item?

When I worked at the local supermarket there were no barcodes. One of my duties was to stock shelves and “price mark” each individual item.

I spent a large part of my day responding to the cashier shouting over the store intercom “Price check,” for a particular item. As a stock clerk it was my duty to find the item, run to the front and bring the appropriate item that was price marked for the cashier to ring up.

With what seemed like continuous trips back and forth, I often wondered how the store could stay in business! Why would I reflect on this issue?

Because, it is an indication of what most retailers are going through. A supermarket needs significant volume of sales to make a profit in a very low margin business.

Theft was not a big issue. Life was different growing up as a teenager in the early 1960’s. Coming from a lower middle-class family myself, my sister, and my brother all had jobs at twelve years old – delivering papers, mowing lawns, shoveling snow, painting curbside house numbers, collecting range golf balls, and many other odd jobs.

Our parents instilled the values of hard work, honesty, and integrity.

At night we left our home unlocked and keys in the car.

So what was the solution to this identification problem?  The answer was the barcode. The barcode was developed in 1949 by a man names Bernard Silver. He was a graduate student at Drexel Institute of Technology, in Philadelphia.

The idea came from a conversation overheard between the president of a local food chain and one of the deans of research of a system to automatically read product information during checkout.

Silver then told his friend Norman Woodland and together they started working on a variety of systems. His idea came from Morse code and he formed his first barcode from sand on the beach by extending the dots and dashes downwards and made narrow and wide lines out of them.

Bernard adopted technology from optical soundtracks in movies using a light shining thru paper onto a tube from a movie projector on the far side. He decided it would work better if it were printed as a circle instead of a line, allowing it to be scanned omni-directionally, and named it the “bull’s-eye.” The patent was issued in 1952 and Woodland moved to IBM and tried to interest them in developing the system.  IBM researched the idea and concluded it was possible, but processing the information would require computing power that was off in the future.

Philco purchased the patent in 1962 and then sold it to RCA later.

What do you think was the first industry that adopted the technology and why? The Railroads! One of the biggest problems for the Railroads was having rail cars interspersed in yards owned by different railroads. It was next to impossible to sort out the intermingled rail car inventory.  David Collins at Pennsylvania Railroad became aware of the need to automatically identify railroad cars. He developed a system called KarTrak using reflective stripes attached to the side of the railcars, comprised of a six-digit company identifier and a four-digit car number.  The Association of American Railroads adopted it as a standard for Automatic Car Identification in 1967 across the entire North American fleet and the problem was solved – Not so fast!

Because of the economic downturn and railroad bankruptcies, it was not until

1974 that 95% of the fleet was labeled.

Unfortunately, because proper testing was not performed, the system failed, and this was after spending significant dollars to implement the technology.

Why did it fail? Mother Nature! The system was easily fooled by dirt, which greatly affected the accuracy of the system.

Please stay tuned for my next entry in L&L Magazine, as we continue our dialogue regarding the barcode.

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Steve Galvanoni About Steve Galvanoni

With a successful 30 year career in Sales, Marketing, and Executive Management in the field of technology, specifically software and mobile/wireless handheld computers, Steve Galvanoni has been active in Real Estate Development for the last 25 years, and is also co-founder of EcoSpan.