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What’s the secret behind those little boxes with the black lines and white spaces with a code of numbers across the bottom?  These ingenious little boxes rule the retail and business world and are a must-have for small businesses wanting to expand their products into new markets.  

There are two version of the barcode; the EAN-13 which was the European Article Number, now called the International Article Number (and called the UPC-13 in the USA), and the Universal Product Code (UPC).  The EAN-13 is a 13-digit code used for products sold on the international market in retail locations.  Additionally, there are shortened versions of the EAN for confectionary products (EAN-2) and for small products EAN-8 and EAN-5, which extends the 13-digit code to 14 or 17 digits in length.

The UPC is an American subset of the EAN and has 12 digits (11 plus the check digit).

Why do you need a UPC?

Universal Product Codes, or UPCs, (called the human readable code) are 12-digit codes that appear under the black lines and white spaces in the bar code box.  The numbers are issued by a nonprofit organization called GS1 US.  The code provides vendors with a series of pertinent information about the product’s manufacturing location, the specific product type, recall and product safety information, as well as a method for tracking the items throughout the supply chain. To obtain a number, a business must join a group who is a member of GS1-US.  Businesses need UPC codes in order to sell products in the national or global marketplace. 

The publishing and music industries also use a similar subset of the UPC called the ISBN (books), ISSN (periodicals) and ISMN (sheet music) and use EAN country codes of 978 and 979 regardless of the published material’s country of origin. 

What’s in a barcode?

The UPC is encoded in a specific way to provide valuable data to supply chain partners regarding your product.  The numbers are also made machine readable and can be decoded by an infrared scanner using a printing technology that converts the numbers and letter we see into black barcodes.  The bars are spaced in such a way that the scanner knows where the code begins and ends.  There are three distinct areas of the bar code that you will obtain for each product and style you sell.

Figure 1 - Courtesy of GS1-US.org

1. A company prefix is the unique number assigned to your company by GS1-US.  This is to ensure that no other company can be confused with yours and that appropriate tracking can be performed. In the EAN, the country code identifies the country in which the manufacturer is registered and is not necessarily the location where the product is made.
   
   
2. The Item reference number is located right after the company prefix and provides a unique identification. This portion of the number is provided by your business.
   
   
3. A check digit is the last digit in the 12-digit series.  A special formula, called the Modulo 10 calculation is used to calculate the check digit and is the resulting number created to ensure the accuracy of the information in the code when it is scanned. The check digit can be calculated using the following formula:

1. Add the values of the digits in even numbered positions
2. Multiply the result by 3
3. Add the values of the digits in the odd positions (1, 3 5, etc)
4. Sum the results of steps 2 and 3
5. The check sum is the smallest number which, when added to the result in step 4 produces a multiple of 10.

Obtaining a barcode requires either a membership in GS1-US or partnering with another business or organization to utilize their company code to generate a barcode for your company’s product.  Joining GS1-US requires a $750 membership fee plus a $150 annual maintenance fee.  Additional fees are charged based the number of unique products you sell combined with your company’s annual revenue. If your business has just a few products that you’d like to enter into local markets, it may make sense to join forces with another company and share their company code.  If you have designs to take your product national or global, then joining GS1-US is a must in order to ensure compliance, safety and proper communications.

There are also internet-based companies that resell codes for “less than $100” according to a report in the Wall Street Journal.  Try BuyABarcode.com or SimplyBarcodes.net for resale versions at a discount.  Just remember that if you purchase a resale barcode you will be using another business’s company number, which for large retailers is not an acceptable form of the UPC or EAN.

Obtaining barcodes is the first step in taking your small business’ products into a larger market place.  To learn more about growing your business and increasing profitability, talk with a Fiducial Advisor by calling 866-FIDUCIAL or visit www.Fiducial.com.