Case for the readable code;

              How does the new UPC system work?
The Case for the Readable Code
By DAVID L. FLEISHER / National Director, Retailing Services, St. Louis
The housewife will soon be noticing some unusual changes when she visits the local supermarket. Product labels will not be marked with the price; instead, the price will appear on the shelf on which the product is found. When the cus-tomer reaches the checkout lane, she will not hear the noise of keys being punched on a mechanical cash register. Instead, the checker will pass each item across a slot in the checkout counter, and the price will appear instantly on the display screen of an electronic po/n£-of-sa/e terminal. This system will speed up the flow of traffic through the checkout lane.
All of these changes are part of the new technology being adopted by the supermarket industry.
Supermarket executives face shrinking profits. Rising prices, coupled with increased operating costs, have caused their net to fall below one percent of sales over the past year. Many large chains have reported losses.
Can anything be done about reduced profits? One an-swer may be to use the Universal Product Code (UPC), recently adopted by the supermarket and food manufac-turing industries. UPC may not only reverse this downward trend in profitability but benefit consumers as well. When it is combined with increased automation at the checkout counter, in fact, the system may well revolutionize the food distribution process to the same extent that self-service supermarkets did more than 25 years ago.
The UPC concept is not new. The idea of assigning a unique identification number to each product in a grocery store was first discussed in the 1930's. But it was not until an ad hoc committee was formed under the sponsorship of seven trade associations* in October, 1970, that real
'Cooperative Food Distributors of America, National American Wholesale Grocers' Association, National Association of Food Chains, National Associa-tion of Retail Grocers of the United States, Supermarket Institute, Grocery Manufacturers of America, and National Association of Convenience Stores.
progress was made. The committee, comprised of eight food retailers/distributors and eight manufacturers, spear-headed a 30-month effort that culminated on April 3,1973, with the adoption of a machine-readable symbol—the last step required to establish the UPC program. The program's main features include:
A numbering system consisting of 10 digits to identify each product. The first five digits identify the manufac-turer; the second five digits identify the item.
The machine-readable code symbol, consisting of black and white bars to be read optically at the checkout counter, A Uniform Grocery Product Code Council (UGPCC), a non-profit corporation of 21 industry members, estab-lished to administer policy and procedures for the UPC. In order to obtain numbers, manufacturers, retailers, and dis-tributors are required to become members of UGPCC and pay a membership fee.
The Distribution Number Bank, a corporation hired by the UGPCC to assign and maintain manufacturer code num-bers and operate an inquiry service.
Food chains are installing electronic checkout systems to increase productivity and profits. (See accompanying article on their early use by jewel.) Systems installed today, however, still will not be able to take full advantage of UPC for a number of reasons, primarily because manufacturers are just beginning to apply numbers and symbols to prod-ucts. It probably will not be practical to place this scanning equipment at the checkout counter until approximately 50 to 75 percent of all items are encoded by the manufacturer. (The cost of applying symbols at store level is prohibitive— about 14 times as great as the cost at the time of manu-facture.) Studies estimate that wide scale encoding of grocery items will take place by 1975-1976.
Meanwhile, scanning equipment which can read the UPC symbol has only recently been available commer-cially. During the past 18 months, the Kroger Company and
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