Barring confusion: consumer labelling. (effort to make bar-code information uniform in the industry leads to software by UDEX)(Brief Article)

NEW YORK

CASH registers used to make a noise that said "money"-levers crunching, bells ringing, drawers springing open. No longer. Bar codes, the alternating black-and-white stripes on shop goods, even newspapers, and the lasers that read them have silenced the old-fashioned sound of selling. Yet quiet contentment is not always the response of shopkeepers.

Although bar codes have revolutionised the way retail chains manage their suppliers, allowing them to reap the profits of just-in-time delivery and smaller inventories, they have also caused confusion. This is because the information associated with bar codes that retailers and suppliers rely upon to identify the goods they want to order and invoice has developed haphazardly. Now software companies are trying to deal with this bar-code babble, and introduce industry-wide standards.

Although all bar codes contain some common information, such as a general description of the product, they have space for only so much detail. To supplement these messages, manufacturers, distributors and retailers add their own descriptions (including prices), stored in computer systems along with the associated bar codes.

The problem is that there are no common rules about what to include in these descriptions or how it is presented. ACNielsen, a market-data group, found that 14 different retailers in Britain alone each have their own description of the same squeezy bottle of Heinz salad cream. The resulting confusion costs shops tens of millions of pounds a year. Up to a fifth of a typical consignment to a supermarket is returned, because shopkeepers and suppliers have misunderstood each other.

Until recently, this was costly, but not catastrophic. Most retailers had enough stock even if suppliers delivered the wrong product. But as supermarkets continue to cut their inventories, misplaced orders can leave gaping holes on their shelves. Three years ago, Tesco, Britain's biggest supermarket chain, held around 11 weeks' worth of products in its shops and warehouses. Now it has only two weeks' reserves. Moreover, growth in home-shopping and ordering on the Internet is putting pressure on distributors to get orders right the first time, since consumers are less forgiving than retailers.

A solution may now be in sight. Next week UDEX, a British software company backed by 3i, a venture-capital firm, is launching a centralised library that puts product descriptions into a standard format. John English, UDEX's managing director, compares the new classifications to a common currency that all parts of the supply chain can deal in.

The system, which will be available on a secure website, will include details such as ingredients and calorie content. That is more than is needed to fill a simple order, but could help track consumer trends. Easy access to common classifications will also speed the flow of data along the supply chain, which is increasingly important to manufacturers and retailers. At one time both would hold information about sales and market shares close to their chests. But pooling information gives manufacturers a clearer view of the market, at a time when they are marketing whole categories of products, rather than just individual brands. It also helps retailers compete for customers by responding minute by minute to what is flying off their shelves.

Whether UDEX's classification will be useful for all goods remains to be seen. Well-defined categories with powerful brands, such as soft drinks and detergents, fit easily in the UDEX taxonomy. But interchangeable local foods, such as dairy products or meats, are more difficult to describe accurately. To begin with, UDEX will probably cover only 50-60% of a supermarket's selection, according to Floris Van Dam, an analyst at ACNielsen.

The key to success is attracting enough users, since there is no point in creating your own language if no one else wants to speak it. The company is off to a decent start, with the system being tested by Procter & Gamble, Asda (a British supermarket chain), ACNielsen and Taylor Nelson Sofres (another market-research firm).

UDEX plans to charge its clients a $2,000 annual licence fee and a further $1 for each bar code downloaded from the system. The company hopes that as the euro is adopted and retailers become more international, its system will leap across borders to become the single European standard.