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Meet the kingmakers of global logistics

Meet the kingmakers of global logistics

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UPS? FedEx? No. The kingmakers of logistics work in the shadows to make globalization -- and sustainability -- possible. Starting with the barcode. Meet GS1.

UPS claims to love logistics.

FedEx? Same deal.

But while these companies do move breathtaking amounts of goods around the world every hour of every day, other companies couldn't do it without a little organization called GS1.

You've probably never heard of them, of course. That's intentional. Instead, it's the clients of this Brussels, Belgium-based company you know and love: AT&T, Cisco, Microsoft, Coca-Cola, IBM, Johnson & Johnson, Kroger, Proctor and Gamble.

There are a lot of big, multinational companies in that list. Many of which have impressive operations and, as follows, significant global sustainability efforts underway.

But those programs -- and globalization itself, in many ways -- couldn't happen without the folks at GS1, who made the U.P.C. barcode ubiquitous and virtually every form of standard product identification ever since.

I invited the chief executive of GS1 USBob Carpenter, to SmartPlanet's New York City HQ to tell me more. Here's what he had to say.

SP: Tell us a bit about GS1.

BC: We help organizations use standards to capture and identify information. We're in 108 countries.

The UPC barcode, the RFID tag -- there are ways to share that information in terms of data synchronization.

We are not-for-profit. We're a neutral party when you've got to get trading partners into the same room to agree on something. We don't have a biased dog in the fight.

SP: Why is standardization important? Break it down for us.

BC: Take recalls and the traceability of goods. Today, the way food recalls work is that we completely purge the store of anything that looks like that food. There can be a more efficient process to heighten consumer confidence so that complete industries aren't decimated, as with what happened with spinach or eggs.

That recall process is enabled through better visibility and traceability.

That's one key use case. Another that's emerging is around a consumer today much more starved for information than she was years ago. They're shopping smarter and continue to do so.

They've done research ahead of time. How that information is being delivered to consumers is much more visible than it was years ago.

Today, information is crowd-sourced on phones. But that information is confusing or sometimes inaccurate. Some of it might be based on price information. There's an inventory attached to that.

SP: How about the bottom line? How does identification standardization affect business process?

BC: E-commerce is growing two to three times as much as brick-and-mortar business.

In an environment where margins are thin and top-line growth is scarce, I'm looking to the middle of the P&L. Cash flow is important; my inventory is a big part of that. I want to have only as much inventory as I need. It's the holy grail. Everybody's been searching for that.

You get your cash faster when you send a PO. There's time efficiency. Time to get cash -- AR outstanding is reduced. Actual amount of inventory improves.

That's hugely relevant for suppliers and retailers.

Take apparel and the RFID tag. The electronic product code -- the numbering nomenclature -- is coupled with a capturing mechanism, the tag. So employees on the floor can go and take inventory in 20 minutes, when it used to take hours.

We're working very hard on what we call the perimeter of the store.

This also impacts healthcare. Now we know which "Our Mother Mary" hospital to ship supplies to.

For the business owners right now, it's all about efficiency.

SP: And consumers. One selling point for smartphones is the ability to take photos of a barcode to find more content.

BC: Some of the work we've done in the B2B context can now be applied to B2C. It's a different kind of ecosystem for us; we're dealing with technology companies, handset manufacturers, etc. in addition to goods makers.

Having a standard is motherhood and apple pie. You have to change habits -- it's no different than losing weight or quitting smoking.

The other piece is a chicken-or-egg scenario: you only really fully see the utility of standards adoption when a huge chunk of the industry adopts it. How do you coax on different shareholders in the value chain such that no one's too far out, looks behind and no one's there?

Until you can hit that threshold critical mass, there has to be a reason.

SP: Why are there so many different kinds of barcodes? We still see the traditional UPC, but then there's also the QR code and many other variants like the DataBar and DataMatrix.

BC: You can store more information.

It has to make busines sense. The industry would say that one version isn't better than another. In Asia, the DataBar is used extensively.

At the end of the day, this is where regulatory emphasis is important. It can't be the only way industry does things, but candidly, the barcode would not have existed if someone didn't say you had to do this. We're seeing a lot of interesting activity in financial services because of the Dodd-Frank bill.

There's huge inertia in staying put. It makes intuitive sense. On the other hand, the recent S.510 food bill is supported by Kraft, General Mills, P&G and others because it's in their interest to source properly.

There are a lot of retailers that don't scan product when it comes in. But consider this: there's a big margin difference between an organic Braeburn apple and a conventional Braeburn apple. So it's important at checkout, too.

There's been a big shakeout in the distribution segment. The big guys have to be efficient. It's exciting, but you've got to build a lot of trust.

SP: How do you spark change?

You need senior executive advocacy, at the C-suite. How do you cause that momentum to move? It doesn't happen quickly. But when you get there, I can't imagine retail without barcodes. Or business without EDI or XML.

The consumer is not going to slow down. With mobile commerce, consumers are expecting and demanding the right information when they want it. Brand manufacturers are going to have to reconcile that because they've got huge investments in their brands. They can't afford to have intermediation in that conversation with that consumer.

B2B is about control, supply, use case. But now, it forces us to reach a different stakeholder. B2C has forced us to talk to consumer marketing people.

Today no matter where you are in the value chain -- raw material to consumer -- people want more transparency.

Where's my stuff, where's it coming from, where's it going to, how it's not tampered with, how it's sustainable. You can't get that without a systems standard. If you want transparency on a global footprint, it's particularly important.

Sustainability is still seen from a company standpoint as a competitive advantage. Others are about packaging. Some are about carbon footprint. What I don't really see yet is a strong industry stance around committing to it.

Right now I don't see an end-to-end solution for the value chain. The technology is not a barrier.

SP: There are other applications to this technology, too.

BC: We have a longstanding relationship with MIT labs. They're doing interesting things with sensor tags. Embedded in bridges, and the density of concrete changes and says this bridge is damaged and needs repair. There's a tremendous opportunity.

What you don't need is more information. You need information you can use.

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Andrew Nusca

Editor Emeritus

Andrew Nusca is editor of SmartPlanet and an associate editor for ZDNet. Previously, he worked at Money, Men's Vogue and Popular Mechanics magazines. He holds degrees from the Columbia University Graduate School of Journalism and New York University. He is based in New York but resides in Philadelphia. Follow him on Twitter. Disclosure