Moving data through the supply chain with unprecedented speed

Product information is a powerful commodity in today's digital economy. Making it accessible can let consumers know if an item contains allergens, help retailers respond swiftly to product recalls, and enable suppliers to track real-time inventory levels. But data can become siloed and inaccessible if organizations fail to make it easy to connect with. This means shifting away from legacy processes and using a phygital" approach, which brings together data from physical objects and connected digital sources.

The phygital creates a link between the actual physical good and its digital representation, which can unlock vast volumes of information for consumers-data they haven't been able to access in the past because it has been tied up in proprietary systems," says Carrie Wilkie, senior vice president at GS1 US, a member of GS1, a global not-for-profit supply chain standards organization.

Driving adoption of this phygital connection are technological enablement and standards for interoperability. Standards define a common language between technologies and can make data more technology agnostic. These standards, along with evolving data carriers such as two-dimensional (2D) barcodes and Radio Frequency Identification (RFID), are boosting supply chain visibility in an era of uncertainty, and are transforming how consumers select and interact with products.

Next-generation barcodes

Among the best-known global standards for classifying products are Global Trade Item Numbers (GTINs), which are used for identifying products, and Global Location Numbers (GLNs) for location. These unique identifiers, when embedded in a data carrier such as a barcode, are examples of standards that provide a way for varying technologies and trading partners across the globe to interpret the data in the same way, enabling them to find products anywhere in their supply chain. Today, a simple scan can connect permissioned data between points in the supply chain. Unlocking the full potential of data in a more robust data carrier can elevate that simple scan to connect any product data to digital information that flows seamlessly across trading partners.

The Universal Product Code (UPC), the one-dimensional machine-readable identifier in North America, and the European Article Number (EAN) barcode for the rest of the world, are the longest-established and most widely used of all barcodes. These common barcodes-and the data behind them-can shed new light on supply chain data. However, a new generation of barcodes is emerging that promises to provide consumers with greater transparency, helping them to make smarter decisions about what they buy and use, while simultaneously improving supply chain safety and resiliency for all stakeholders.

While UPC and EAN barcodes carry GTIN data and can be found on consumer products all over the world, they fail to create a link between the physical and the digital," says Wilkie, We need more information about products at our fingertips in a machine-readable, interoperable way than we'll ever be able to fit on product packaging."

Advanced data carriers and emerging standards are capturing unprecedented amounts of data for businesses, regulators, consumers, and patients alike, offering much more than just links to static webpages. Rather, two-dimensional (2D) barcodes and Radio Frequency Identification (RFID) technology can support phygital connections to tell a richer story about a product, including where it comes from, if it contains allergens, is organic, even how it can be recycled for sustainability purposes.

Better yet, 2D barcodes and RFID technology allow brands to communicate directly with consumers to offer more timely, accurate, and authoritative information. This is a step beyond consumers using their cell phones to look up product data while browsing in a physical store, which nearly four out of 10 consumers currently do, according to 2020 research by PwC Global.

Another advantage of today's more advanced data carriers: One-dimensional barcodes can contain about 20 characters of information, but 2D barcodes, such as QR codes (quick-response codes), can hold more than 7,000 characters of data, and can provide access to more detailed information such as features, ingredients, expiration date, care instructions, and marketing.

Innovative use cases for QR codes are expanding rapidly, as this matrix code can be read with a line-of-sight device like a hand-held scanner or personal device like a cell phone.

By using 2D barcodes, we're able to start unlocking more information for consumers, patients, and regulators, and create more of a phygital experience at every point in the supply chain," says Wilkie.

For example, a grocery store chain can use a QR code containing batch and expiration data to support traceability, waste management, and consumer safety around the world. Another application of QR codes is on-demand discounting. According to Wilkie, a bakery can rely on a QR code and electronic store shelf tags to determine which racks of bread will expire in the next few days," and can easily mark down products about to expire without the intervention of a store associate. The result is a win-win scenario. Consumers benefit by receiving product discounts, while the retailer saves on both product waste and manual labor costs.

RFID technology is another advanced data carrier that is already delivering significant advantages. RFID uses electronic tags that respond to radio waves to automatically transmit data. They are affixed to products or pallets, enabling strategically positioned readers to capture and share huge amounts of information in real time. Since data is transmitted via radio waves, unlike barcodes, line of sight is not needed.

As a wireless system of tags and readers, RFID can deliver enormous benefits. For starters, RFID technology drives a more precise understanding of physical inventory across the supply chain, and in physical stores, with accuracy levels near 99%. By minimizing inventory errors and notifying organizations when it's time to restock, RFID not only drives supply chain efficiencies but enhances the experiences of customers who want assurances that the products they order are readily available.

RFID can also enhance in-store consumer experiences when used in applications like smart shelves that can detect when products are removed, dynamic-pricing displays, and frictionless check-out where an RFID reader can read and check out an entire basket of tagged goods almost instantly. With real-time visibility into stock levels, RFID can also ensure better on-shelf availability of products. In fact, a study by research and consulting company Spherical Insights says the global market for electronic shelving technology, sized at $1.02 billion in 2022, will grow to $3.43 billion by 2032.

Global standards for the benefit of all

For data carriers to deliver on their promises of greater supply chain visibility and enhanced customer experiences, global standards need widespread adoption.

Standards and technology innovations are extending the power and flexibility of unique identifiers, providing a gateway to unprecedented volumes of important information. For example, the GS1 Digital Link standard with a QR code, says Wilkie, allows organizations to take the GTIN and GS1 identification, and encode it in a URL in a standardized way, unlocking value for the consumer by allowing them to go to a website and access more information than would ever fit on a product package."

Products still go beep at the point of sale; it's just that consumers are now able to access more information than ever before in ways that not only facilitate a more phygital interaction at every point in the supply chain but promise to transform the way in which product data is shared with consumers and suppliers.

Supply chain standards are table stakes," says Wilkie. Using standards to ensure interoperability is critical in making sure that the supply chain is efficient."

This content was produced by Insights, the custom content arm of MIT Technology Review. It was not written by MIT Technology Review's editorial staff.