A Global Trade Item Number (GTIN) is used to identify any item or product at any point in a supply chain. A new GTIN should be given to each different product by shape, size, colour, flavour, promotional variant, and so forth. The guiding principle is if the organisation is expected to distinguish from one item to another due to some variant, then a new GTIN must be provided.
For example, if a new GTIN is not given to a new variant of a toiletry product, e.g. shampoo, that is different in fragrant, the manufacturer would not be able to track what is the fragrant that is being purchase by its trading partners. Retailers will not be able to trace what is the fragrant that consumer prefer and also the inventory will not show what fragrant are still in stock. Therefore it is vital for companies to assign different GTIN to any modification of the products.
Besides every item carrying a GTIN, a group of products when sold as one should also carry a different GTIN from its individual GTIN. This will ensure that the product sold as a group is correctly accounted for in the supply chain. When there is a group of products sold as one, it is vital and very important that the individual EAN bar code symbol on each item is not visible or seen. The individual EAN bar code should be facing inside, that is, facing the other product, so that the individual EAN bar code can be obscured and will not accidentally be scanned at the check-out counter.
If the individual EAN bar code is visible, there may be an error at the check-out counter where the check-out counter personnel may scanned the individual EAN bar code by mistake instead of the EAN bar code that represents a group of products. This mistake will distort the inventory level in the store, inventory at warehouse/distribution centre cannot be reconciled, out-of-stock situation will arise at the retail store and finally loss of income to the manufacturer and the retailer.
An example of this scenario is when the manufacturer packs ten (10) packets of flour as one whole item. But each packet of flour carries an individual EAN-13 bar code which still can be seen. If the check-out counter personnel scanned the individual EAN-13 bar code instead of the EAN bar code that represents 10 packets of flour, the retailer stock level will be reduced by one (1) packet of flour but in actual sense, the inventory has been reduced by ten (10) packets.
The immediate effect will be loss of income to the retailer as the customer was only charge for one (1) packet of flour when the consumer actually purchased ten (10) packets. When the retailer do a stock takes, he would not be able to reconcile his inventory. The retailer might actually run out of stock without even knowing it. This will create an out-of-stock situation where there will be unhappy customers that may not come back to his store. This will create further loss of business to the retailer. Or the customers may switch brands, that is, to purchase the same product but a different brand due to the out-of-stock situation. This will lead to lower demand and the retailer will order less from the manufacturer and thus loss of income to the manufacturer as well.
A simple and small mistake can lead to many repercussions. Every trading partner in the supply chain is affected. Therefore it is vital and crucial to for every company that uses GS1 System to be able to correctly allocate GTINs.
Companies that would like to know about allocation of GTINs can attend the Growth with GS1 Briefing that are held at our Head Office at Bandar Sri Damansara, Kuala Lumpur.