Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.ibd From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: Executive Update Date: Wed, 28 Oct 92 13:12:52 EST Message-ID: <13.1992Oct28.131253@AmeriCast.com> 10/28/92 TITLE Executive Update #m#sw#m#Off-The-Shelf Savings: The Bene- fits Of Today's Data Collection Systems Brian Deagon American industries could save tens of billions of dollars annu- ally by using automatic data collection technology to improve the way they order goods and ship products, industry analysts pro- ject. Computers & Automation About 60% of U.S. industries already use one form of automat- ic data collection: bar code technology. But these same companies on average have only integrated bar coding into about 20% of their operations. "Some companies only use bar coding in their most modern facilities, while others have them in a pilot test program which hasn't propagated to other facilities," explained David Collins, president of the Data Capture Institute, a research group in Duxbury, Mass. Bar codes are those ubiquitous black and white vertical bars stamped on all kinds of products. The lines are coded from digits and letters that identify the item, its producer and other information needed to control its movement. An electronic scanner converts the code into a binary language, which can then be transmitted to a computer. The incentives to deploy automatic data collection equipment such as bar code readers are strong. The cost for an average system, somewhere between $26,000 and $50,000, can be recovered within the first year of use, according to a survey by Automatic Iden- tification Manufacturers Inc., an industry trade association based in Pittsburgh. Successful, well-planned projects save mo- ney in several ways compared to older, paper- based methods. Us- ing bar codes to monitor work in progress can sharply reduce the amount of time inventory sits idle on shelves, case studies re- veal. Because the systems allow companies to track the flow of products more closely, they can help identify inventory shipping bottlenecks so that product managers can solve problems that in- crease lead times. Reducing Costly Errors Bar code technology speeds up the job of counting inventory, im- proves the accuracy of such tallies and helps reduce costly mis- takes, known as mispicks. One company reduced the number of delivery vans to 21 from 26 by eliminating picking errors, ac- cording to Quad II Inc., a Chalfont, Pa.-based company that pro- vides information and research on bar code topics. "If you use a personal computer to manage your business, then you can use bar code technology," noted Richard Bushnell, Quad II president. "Any company with transactions involving the movement of anything, from a pack of gum to shipping containers, can fit the bar code profile," he said. Collins of Data Capture adds that bar code systems costing about $50,000 have accelerated the movement of $80 million of inventory. The entry-level price for a company that already has a personal computer begins at about $5,000. Au- tomatic data collection equipment sales in 1991 were estimated to be $3.4 billion, and that figure is expected to grow 18% to $4 billion this year, Collins estimates. Bar code systems and printers account for 82% of total market sales. The rest come from other types of data collection technologies. "There's no disbelief or hesitation about the benefits of au- tomatic data collection. It's just that companies are spending only about 3% a year on capital improvements, so it's taking far longer than expected to implement," Collins said. Agreed Bush- nell: "There are all kinds of studies to show that automatic data collection works. But when you peel back the lid, the lack of im- plementation is due to a lack of management involvement. Technol- ogy is too often looked at as an event, rather than a constant . . . refinement of all business systems." Different Technologies A number of different technologies fit the definition of automat- ic data collection. All accurately and rapidly collect data. The difference lies in the way they capture and process data. Bar coding is particularly useful on fast-moving conveyor belts and assembly lines and at supermarket checkouts. It is widely used in retailing, the automotive industry, health care and the government. The second most popular format for automatic data collection, magnetic striping technology, is frequently used by the financial services industry to identify credit card accounts and users. Data is electromagnetically coded onto the stripe, which can then be read by a decoder that translates the data into computer format. Compared to other data collection technologies, magnetic striping holds the most data. Uses include employee identification badges, time and attendance tracking systems, gam- ing and vending machines. Some airlines have replaced multiple layers of carbon-copied ticket vouchers with automated boarding passes that have magnetic striping on the back. Radio frequency devices are another way to collect data. The typ- ical system is a hand-held computer terminal that communicates to a host computer by radio link. These systems are often integrat- ed with bar coding and voice data collection for more efficient data entry. A user might scan a package and then, using voice technology, call out additional information into a microphone - say, the number of pallets of such packages. The system would be programmed to integrate the bar code and voice data and automati- cally transmit the information to the host computer. Radio fre- quency identification tags are another form of automatic data collection. The tags can send and receive a radio signal that identifies the object attached to it. A shipper might attach the tag to its trucks so that they can be automatically identified and the company billed when they pass through toll booths. Tracking Farm Animals Radio tags are also used to keep track of farm animals or of com- ponents or products in "hostile" manufacturing conditions, such as in painting operations where a bar code label might be covered. Several other forms of automatic data collection tech- nologies exist. They include complex image processing systems, called machine vision systems, which can identify entire objects or forms; so- called smart cards, which are credit cards that contain a pro- grammable computer memory chip; and optical character recognition devices, which can read standard numbers and letters. This arti- cle is copyright 1992 Investors Business Daily. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM