Get the basics right

Your sales people should know what is required

Last week we discussed some strategies to get meetings with existing or potential customers. To secure these meetings your business needs to meet or exceed the basic requirements of the customers. Your sales people need to be the conduit between your business and existing/potential customers. They should be sharing the basic requirements of each customer with the rest of your business. This can cover a number of functional areas in your business.

Your customers will have expectations in food safety, logistics, electronic data interchange (EDI), product specs and standards and perhaps labour standards. Every customer is different. Usually, the bigger they are the more expectations they have. From the supplier’s perspective the more hurdles you need to get over.

It can be a challenge because many of these ‘basics of retail’ add complexity and costs to your business. For example, you might need volume before you can afford to get to a specific level of food safety. We like to see suppliers looking two steps ahead. If you are selling into specialty stores, they have one set of requirements for the basics to list your products. One step might be a regional listing and two steps could be a regional listing with a national retailer. Your sales people should be communicating the basic expectations of the national retailer so your business can be ready when it is time to secure the listings with the national retailer. Does not mean you need to have these standards in place now but you know what you need to accomplish.

For most retailers they want the basics in place before you talk to them. They have heard many times, ‘we are really close to our federal license’ or ‘we should have EDI in place in two months’. Unfortunately, many of those promises have not been fulfilled and they are leery of investing much time until your business is ready. Over the next couple of weeks, we will share some of the basics you need to consider. As we said earlier, every retailer is unique so do not assume you have the basics in place for them all just because you understand the requirements of one.

Universal Product Codes (UPC’s)

Almost every retailer will expect products to scan at the cash register. This requires a bar code printed on the package, that is compliant and accessible to the retailer. In Canada the industry standard is GS1. There are other options but most retailers would suggest suppliers get barcodes through GS1.

GTIN’s and barcodes can be a challenge to understand. It is also fundamental in your business to be correct and up to date. Retailers manage tens of thousands of SKUS and the GTIN is critical to the efficient management of this vast amount of data. One wrong digit can impact your listings, re-orders and getting paid. Someone in your business or an outside resource should understand it and keep everything up to date.

This can be intimidating for early-stage companies and even a challenge for established businesses. It can be confusing in the beginning and if you do not use the platform regularly you feel like you must learn it every time. We will share some definitions to ensure you have a good understanding as you work through these requirements in your business.

GS1-‘a neutral, not-for-profit association that develops and maintains global standards for efficient business communication.’ GS1Canada

Global Trade Identification Number (GTIN)-This is the number you see under the bar code on product packaging. This is a unique number, assigned to that specific business and SKU. The North American standard is 12 digits and the rest of the world uses 13 digits. If you are registered with GS1 your 12-digit GTIN will work in the rest of the world and your 13-digit GTIN will work in North America when it is published to the appropriate retailers.

GTIN-12-The most common configuration for the individual SKU in North America. The GTIN is made up of 12 digits which include a company prefix, a 5-digit item number and a check digit.

GTIN-14-The most common configuration for master cases going through supply chain networks in North America. GTIN is made up of 14 digits which include an indicator digit, a 0 filler, a company prefix, a 5-digit item number and a check digit.

Barcode-The combination of black and white lines that allows retailers to scan your product and access the information about the item in their system.

Universal Product Code (UPC)-A term used to describe the 12-digit GTIN on packaging.

European Article Number (EAN)-This is the standard outside North America. It is a 13-digit GTIN.

Prefix-If your company has over 100 unique items, you will need to subscribe to at least the limited level subscription. This will trigger GS1 to create a unique 6-digit number for your business. Each of your GTINs will start with these 6 digits.

Check digit- The last digit of a barcode number is a computer check digit which makes sure the barcode is correctly composed. The GS1 website includes a calculator to confirm the accuracy of your check digits.

ECCNet-A repository managed by GS1 where all of the specifics for each of your GTIN products resides. You are responsible for keeping this information up to date and publishing it to your retail partners. This is where your customers will access attributes such as product size, case pack size and even photography of each SKU.

2D barcodes-The technology for bar code scanning was introduced over 50 years ago. Change is coming. 2D bar codes are the next evolution. This next generation has the capacity to store more information in a smaller physical code. The pharmacy industry is moving to adopt these codes by 2026 and the grocery industry intends to follow in 2027.

Product Look Up Code (PLU Code)-Produce uses a global PLU format where the same item from different growing regions will have the same universal PLU. This is in place because the supply of produce comes from different regions and countries throughout the year. It would be very challenging for growers and retailers to manage unique codes as items shift from one area to another. For example, a 24 count celery will have the same PLU 4070, regardless of where it is produced. The PLU code for the organic equivalent will have a 9 added at the beginning so it is 94070. Many retailers will use their own unique PLU codes for bulk food and bulk bakery. Usually these are just internal but can impact suppliers if you are prepackaging bulk items with a label for the cashier. These are different from one retailer to another.

One retailer who expects a unique package is Costco. Their commitment to members is built on value, which often means a unique size or banded pack. Costco requires suppliers to print the bar code for the product and the Costco article number on packaging. Other retailers do not require this, at this time.

Once a supplier is registered and acquires the GTIN’s for products and master cases, you can begin to populate ECCNet with your product information. This is the platform your customers will use to access information about your products. They use it for plan o grams, warehouse management, pricing and other requirements in their systems. It is the supplier’s job to keep this up to date.

Suppliers need to do their homework to ensure the 12-digit GTIN on their packaging is correct and that the 14-digit GTIN on the master case is also correct. GS1 is the industry standard and the place to start to generate the UPC’s for your products. Once you obtain the correct GTIN, you can generate the barcode for your packaging. It is a good practice to always visit your customer’s store to test the scanning of a bar code every time you make a change to packaging.

Regulatory compliance

There are very specific regulations for producing and packaging a food or beverage product in Canada. Suppliers should be knowledgeable about these regulations as they pertain to your specific item or category. If you do not have the expertise in your business, you should find someone who can be a resource for you. Your customers expect your products to be compliant. They will not check your labels or your nutrition facts table. That is your job to have that work done before you get to them. As we said earlier the bigger the retailer the higher the expectations.

Food intended for human consumption, that is intended to travel across provincial borders is governed by the Safe Food For Canadians regulations. Producers and processors must meet or exceed these regulations and be ready to share proof of compliance with your customers.

Category managers are not experts at producing products, that is the supplier’s job. You can find a handbook for food businesses that outlines everything you need to know when producing a food or beverage in Canada. When you can provide assurance to your customer that your product is being produced in an environment where Safe Food For Canadians regulations are the guiding principles, this will reduce one of the barriers to entry.

One of the most complicated segments of regulatory compliance is labelling. There are very specific guidelines that impact what you can and cannot say and how you say it. When you embark on packaging design it is advisable to work with someone who has expertise in these regulations. You need a package that sells your product and is compliant. Bilingual text, font size, requirements for front of package messages and nutrition facts tables all need to meet or exceed requirements. Packaging is expensive so you do not want to print 10,000 labels only to discover they are not compliant. Correct labelling also builds confidence with your customers. A product recall for non-compliant labelling will erode the confidence they have in your business.

The last thing you want is to get your product listed and then have a regulatory compliance issue. This erodes confidence with your customers and worst case might force you to pull your product off the shelf. They will not congratulate you for being regulatory compliant but they will not be impressed if you are not where you need to be.

Your sales people should be asking these questions

Your sales people should be aware of the expectations your customers have for bar codes and regulatory compliance. We can’t stress enough that different retailers have different expectations. It is much better for your sales people to do their research, ask the question and confirm what the customer expects. Next week we will talk about some more basics of selling into retail like food safety and electronic data interchange (EDI). These are two areas where the more sophisticated the retailer, the more demanding the expectations will be.

I do have travel coming up to Toronto, Vancouver, Edmonton, Guelph and Winnipeg so if you want to connect or have an event in any of these locations give me a call or send me an email.

Peter