Evolution of Product Identification Standards: From UPC to GTIN to EPC to RFID

1. Evolution of Product Identification Standards:From UPC to GTIN to EPC to RFID Presented to: Richard Randall Business Advisor July 13, 2004

2. Agenda • Update on QRS • Product Identification Standards • History of the Barcode and UPC • Current utilization (UPC and EAN) • Clarification on “Sunrise 2005” and GTIN • Future – Electronic Product Code (EPC) and RFID • Update on UCCnet • Evolving to the Global Data Synchronization Network (GDSN) • Item Data vs. Instance Data • EPCglobal • Questions

3. Who is QRS? • Founded in 1988, only QRS gives retailers and marketers/manufacturers the ability to connect, transact, collaborate and differentiate • Full suite of collaborative commerce solutions for retail industry • Global data synchronization • Industry and retail mandate compliance • Transaction outsourcing • Global trade management • Market intelligence • More than 10,000 retail industry customers rely on QRS to improve supply chain performance and brand equity “With QRS we have reduced order errors and cycle times, which translates to reduced costs and better service for our customers.”— Yusef Akyuz, CIO The Stride Rite Corporation

4. What’s new with QRS? Since we last met… • Introduced two new Product Information Management (PIM) software solutions • QRS IMPACT™ • QRS QuickSync™ • June 17th announcement QRS to be acquired by JDA

5. History of the Barcode and the UPC

6. Components of a UPC Number System Character Mod-10Checkdigit Manufacturer Number Unique Item Reference Number to Color/Size Level 5-2 digits Company Prefix (Block ID) 6-9 digits • Eventually evolved to the EAN-13, where first 3 digits are the Country Code. (North America is 000-099.) • And now, the GTIN-14 where first digit is a “Pack Indicator.”

7. Widget X Case of 12 Widget X’s Pallet of 4 cases of Widget X GTIN-14 Usage UPC-12: 123456 000018 GTIN-14: 00 123456 000018 • The first digit of a GTIN-14 is a level of packing indicator • A higher level pack of a single UPC can be assigned a “Case GTIN:” • Where the root of the Case GTIN is the lower level UPC • Where the first digit of the Case GTIN is not “0” or “9”* • And the checkdigit has been re-calculated appropriately • A case or higher pack level may be assigned a new UPC (Pre-Pack UPC), or if case is homogeneous (only 1 UPC in the case), then a “Case GTIN” (where the first digit is not “0” or “9”) can be assigned to the case • “9” is reserved for variable weight/measure items Pre-pack UPC-12: 123456007215 GTIN-14: 00 123456007215 or Case GTIN-14: 10 123456 000015 GTIN-14: 30 123456 000019 • Note: • If a GTIN-14 begins with a zero, the number is actually one of the other, shorter GTIN data structures. • The actual GTIN type may be determined by the number of leading zeros on a GTIN-14.

8. Clarification on “Sunrise 2005” & GTIN • Technically, the UCC’s Sunrise 2005 states that all North American retailers should be able to handle the EAN by January 1, 2005 • However, while making changes to systems and hardware, should go all the way to 14-digits for the GTIN • Technically, no “sunrise date” for supporting the GTIN-14 has been issued Note: The consumer level unit will always be marked with the UPC or EAN symbology. Although the number may be stored in a database or transmitted in EDI in a 14-digit GTIN format, the consumer unit will always be marked with the applicable UPC or EAN format. In general, POS hardware and software will not need to be modified to support the GTIN-14 format.

9. The GTIN “Family” 14-digit format for database storage: 00123456789012 01234567890123 00000012345678 12345678901234 12345678901234 Global Trade Item Numbers include: • Existing • UPC (UCC-12) • EAN (EAN/UCC-13) • EAN/UCC-8 • SCC-14 (ITF-14) • New (2005 Sunrise) • GTIN-14 (EAN/UCC-14)

10. “Item” Data vs. “Instance” Data • An “item” is represented by a UPC/EAN/GTIN • An individual copy of an item, is an “instance” of that item • To identify individual “instances” of an item, they need to be serialized – each instance gets assigned its own serial number • Necessary for RFID to work – if RFID only had the UPC imbedded, how could the RFID receiver identify whether there were 1,000 instances of an item, or whether it just heard the same one item 1,000 times?

11. RFID isn’t new • Over 60 years old – used by the British in WWII to identify their aircraft • More recently, has been used to track: • Soldiers in war zones • Patients in hospitals • Airfreight parcels • Toll roads & bridges (FasTrack San Francisco, E-ZPass New York, etc.) Benefit of RFID over UPC/Barcode • RFID is radio versus UPC/Barcode which is optical – can process items in bulk rather than scanning each individually Then why hasn’t it caught on? • Cost • Volume of data • Competing standards

12. Header 8 bit Filter Value 3 bit Partition 3 bit EPC Manager # (UPC Block/Co Prefix) 20-40 bits Object Class (Item Reference) 24-4 bits Serial # 38 bit GTIN Industry Direction: GTINEPCRFID • GTIN – Global Trade Item Number Format supports EAN-8, UPC-12, EAN-13 and Case-GTIN-14. Used to identify an item. • EPC – Electronic Product Code Is a GTIN with a serial number (or SGTIN) plus some additional data attributes. Used to identify an “instance” of an item. • RFID – Radio Frequency Identification A radio transmitter chip attached to items for identification purposes. Chip is programmed with the EPC. • Format of a 96-Bit EPC/RFID:

13. How “move” item data?... Historically       Vendors QRS Catalogue    Retailers

14. Physically load 35-160 attributes per item How “move” item data?... UCCnet Current UCCnet            Vendors QRS Catalogue Other Catalogue Other Catalogue Source Datapools UCCnet Global Registry Other Catalogue Recipient Datapools         Retailers

15. Only register 8 reference attributes How “move” item data?... UCCnet Current UCCnet New UCCnet (8/04)                      Vendors QRS Catalogue Other Catalogue Other Catalogue QRS Catalogue Other Catalogue Source Datapools UCCnet Physically load 35-160 attributes per item UCC GDSN Global Registry Other Catalogue UCCnet Other Catalogue Recipient Datapools                   Retailers

16. How move “instance” data? • First, have to know item data • Then, could move item data in Ship Notice (ASN) • Or, could wait until the actual individual items are received and simply “read/hear” them then (but could not query on their status until received) • Or, have a “global router” to direct you to individual “instance” databases • The last alternative is what is being promoted by the UCC, and their affiliate EPCglobal

17. How move “instance” data?... EPCglobal        • Item data includes things such as: • Product/Model # • GTIN • Size • Color • Flavor • Instance data includes things such as: • Date of manufacture • Lot • Expiration date • Country of origin • Expiration date • Highest temperature reached • How long in a particular warehouse A completely separate network from the UCCnet/Global Data Synchronization Network, which is for “item” data. The UCC’s EPCglobal network is for finding databases that have information on specific “instances” of an item. Local Router Local Router EPC global Local Router Local Router         

18. Why do we need an “instance” data network? • We don’t • Unless we want… • Refrigerators that tell you when you have a carton of milk about to expire • You want a washing machine to set the cycle and temperature automatically based on the contents • You want to know if an individual item has a safety recall • Net is, it is a necessary foundation for future applications

19. So, where are we with RFID? • Wal-Mart top 100 vendor piloting on cases/pallets • Driving standards and solutions • Forrester estimates at a cost of $9M per vendor per year • Standards will evolve and chip prices will come down • Privacy issues to be resolved • What is “real” business benefit? • Many years off before RFID at product level for average consumer goods – will probably be earlier adoption in high ticket goods, that are already serialized, such as cars, appliances, consumer electronics, etc. • Have to effectively manage item data before moving to instance data and RFID

20. Q & A For more information – • Web: www.qrs.com • Phone: 800.UPC.TALK (800.872.8255) • E-mail: Sales sales@qrs.com Support cshelp@qrs.com Careers careers@qrs.com Alliances alliances@qrs.com • Richard Randall, QRS Business Advisor: 510-215-3765 rrandall@qrs.com Thank you!