Understanding UCC 128 Compliance

To reduce cycle times, limit inventory, and increase profitability, most large retailers require that their suppliers receive electronic purchase orders and send electronic invoices.

The UCC in the United States, the Electronic Commerce Council of Canada (ECCC), and the International Article Numbering Association (EAN) have established standard identification and information transmission procedures. These standards, known as UCC 128 compliance, facilitate uniform product identification and the exchange of shipment information between suppliers and customers (retailers).

To adopt UCC 128 compliance practices, suppliers and retailers adopt these standards:

• Identification codes.

  A defined structure for each code.

• Bar code labels.

  Fixed or variable codes that encode information for a single product unit, a consumer pack, or a collection or packages for shipment.

• Shipping labels.

  Labels that follow the specific standard of the UCC Common Label. This standard sets up specific label segments and the information that is contained in each segment.

• Electronic Data Interchange (EDI).

  The electronic exchange of structured computer-readable information.

For large retailers, the benefits of being UCC 128 compliant are:

• Improved sales

  By reducing warehouse cycle time, retailers can get their products on the shelf more quickly. A retailer can increase the sell-through revenue by moving the product to the customer faster.

• Reduced safety stock

  By receiving information about shipments before their arrival, companies can react more quickly to shortages and maintain less safety stock in inventory.

• Increased forecasting accuracy

  Retailers are able to more accurately measure lead time of shipments. This can reduce safety stock.

• Reduced receiving costs

  By scanning shipping labels, the retailer can collect bar-coded data faster than by manually entering data. Scanning shipping labels is less labor-intensive and results in fewer errors and omissions of data.

• Improved warehouse management

  Retailers can gather better shipping statistics, reduce warehouse cycle time, and more efficiently plan floor space and labor schedules.

For suppliers, the benefits of being UCC 128 compliant are:

• Improved cash flow

  By reducing the payment cycle times with retailers, suppliers can reduce borrowing requirements and improve cash flow.

• Improved sales

  Retailers penalize suppliers that cannot adopt UCC 128 compliance procedures. Typically, this penalty is per transaction. If the supplier cannot adopt UCC 128 compliance practices within a given time frame, the supplier can lose business with the retailer.