Under Scrutiny

How would you define your company? A VAR? An integrator? A software developer? Today, it is rare for businesses profiled in Business Solutions to be pigeonholed into such categories. Most have become amalgamations as a result of industry and technology changes. Sometimes a company's evolution is dramatic, with its business focus entirely changing. More often though, this metamorphosis occurs gradually, with a company maintaining its core competency but adapting its product(s) to the status quo. Such is the case with Automatic Identification Systems, Inc. (AIS) (Westerville, OH).

It's not every day an AIDC (automatic identification and data collection) company is started by a man whose interest in bar codes began while he was selling supermarket, meat department scales. But, interestingly enough, that's how it happened for Mike Nolan, president of AIS. During the late 1970s, it became mandatory for meat packages to include a bar code label, in addition to a human-readable label, describing the weight and contents of the product. Thus, the company Nolan worked for added bar code labeling functionality to its scales. It was his responsibility to educate the supermarket employees on how to use this new technology. However, he slowly became more interested in the bar code aspect of the business rather than the weighing technology. Therefore, in 1985, he decided to start AIS primarily as a VAR reselling bar code printers and other AIDC hardware.

Bar Code Standards Knowledge Is A Must When Working With ERP And WMS
"In retail, although I learned AIDC products increased productivity, I knew the bar code's data would become the most important element of this technology," Nolan said. In other words, the data in a bar code is the foundation of many companies' operations (e.g. enterprise resource planning [ERP] systems and warehouse management systems [WMSs]). An unscannable bar code results in either manual data entry or time wasted reprinting a label. Furthermore, just because a bar code label seems to print fine and is scannable by the company that printed it, doesn't mean the end user will be able to successfully scan the label.

The ANSI (American National Standards Institute) system grades bar code readability from A to F, A being the best and F being the worst. All industries have indicated the minimum acceptable grade as ANSI C (one minor exception is direct printing on corrugated boxes in the retail sector). "Some industries [automotive and healthcare] suggest ANSI B is a good target to achieve as the code is printed," explained Nolan. "They assume the label's readability will worsen over time as it is handled and exposed to harsh environments [e.g. water, cold, heat]."

In general, the lower the grade, the more difficult a label is to scan. When a bar code reaches ANSI F, there is a high risk it can't be scanned (which forces manual entry and its resulting high error rate). Also, with ANSI F, there is a chance the code will be miscanned and inject incorrect data into an information system.

"Historically, companies were fairly tolerant of bad bar codes," stated Nolan. "For example, retailers were not very concerned about the lost data or productivity [due to unscannable bar codes] because only a small percentange of products had this problem. However, in the early 1990s, companies throughout the supply chain became more sensitive to poor quality bar codes because the associated loss of accurate data restricted IT-based initiatives [e.g. ERP, WMS]."

Streamline Customers' Supply Chains By Enforcing Bar Code Standards
By 1994, AIS already had added integration services to its repertoire by creating bar code printer interfaces to companies' information systems. But then, seizing upon the current industry shift toward better bar code verification, Nolan launched his company into the software development realm.

A software developer himself, Nolan created SCANALYST, which is now AIS' top selling product (in terms of dollar volume). Essentially, the software compares a printed bar code against the ANSI bar code quality standards. For example, a quality control director could periodically scan a bar code in a warehouse and SCANALYST would provide instantaneous feedback regarding the code's readability. Often, companies use the software to periodically check samples of a print run, to reconfirm print quality after a bar code printer ribbon has been changed, or to test a bar code exposed to elements such as water. AIS has more than 1,000 installations of SCANALYST.

"Many retailers are unaware of difficult to scan bar codes because employees scan the label several times or turn it upside down until it is read," Nolan elaborated. "Now, as retailers begin to implement self-service scanning [see "Self-Checkout: Who's Got Control" in the May 2001 issue of Business Solutions], these companies realize customers will not tolerate unscannable bar codes. The customers will get frustrated or embarrassed, ultimately leading to a bad shopping experience."

One AIS customer, Kmart (Troy, MI), wanted to not only eliminate the possibility of unhappy shoppers, but also improve the bar code quality throughout its supply chain. The department store chain has approximately 2 million SKUs (stock keeping units), some of which can't be scanned or have high key-entry rates. AIS built a lab at Kmart's headquarters equipped with bar code scanners and SCANALYST. There, products with scanning problems are weighed, measured, and analyzed for UCC (Uniform Code Council) and ANSI compliance. A detailed report is issued to the product's manufacturer detailing the reasons why a bad bar code is being produced and instructions to please fix it.

Nolan noted the Kmart example is typical of the shift in many industries toward compliance labeling (e.g. requiring a company's suppliers to use a specific format for a bar code label, including the information contained in the bar code) initiatives. In fact, although SCANALYST can be sold as an entire solution (including bar code verifiers), he said many of his customers purchase just the software and add it to an existing bar code verifier.

As The Market Goes Mobile, So Do You
With the addition of SCANALYST, Nolan suddenly found himself balancing between being a VAR, integrator, and software developer. However, as he put it, "Constant market changes kept us from becoming complacent." Case in point, wireless mobile computing was - and still is - exploding. He didn't need some detailed, intricate research report to tell him PDAs (personal digital assistants) were becoming a preferred form factor for data collection - they were already being used everywhere. "This transition to smaller computing devices means a new day for the AIDC industry," commented Nolan. "PDAs are naturals for incorporating AIDC technology like bar code scanning. After all, people have big fingers; it's difficult to correctly enter data on a small PDA keypad."

Nolan capitalized on the mobile computing trend by introducing sCan Easy, a software that enables Windows CE PDAs to read bar codes (including 2-D bar codes) or RFID (radio frequency identification) tags. Data is input through a scanner/reader connected to the PDA's serial port. The data is transferred via sCan Easy to the active application (e.g. Word, Excel, Web browser). "We decided to support a CE platform as opposed to Palm because most of our clients use CE devices. Furthermore, we're more familiar with the Microsoft operating systems and languages, so CE was a natural fit for us."

Customers Want Ways To Audit And Standardize Shipments Across An Enterprise
First, there was an industry need for verifying bar code quality. AIS met that need with SCANALYST. Then, data collection devices shrank and mobile computing became the standard. Again, AIS adapted and created sCan Easy. But, recently Nolan was faced with a new challenge: Combine the auditing functions of SCANALYST with the Windows CE capability of sCan Easy.

The request came from an AIS customer with seven warehouses and 7,000 different products (syringes for the healthcare industry). The company already was using SCANALYST and had recently installed a new ERP system. "Many companies' ERP systems connect to multiple plants/locations that make the same product," Nolan explained. "However, each location may have a different bar code printing system placing the data identifiers [e.g. model number, quantity] on the bar code label in different places. Or, each plant may be packing different standard quantities."

Basically, the client wanted to ensure if a bar code said a box contained widget x, then an employee could look in the box and see widget x. Quantities could also be cross-checked this way. So, AIS built a Windows CE version of SCANALYST that provides a screen prompt instructing the user to visually compare and verify a package's contents with the package's bar code information (e.g. part number, quantity, best if used before date). If the package's contents don't match the bar code information, the user can edit the appropriate fields on the portable data collection device and the ERP system is updated.

Can You Change Your Ways, But Keep Your Customers?
Although AIS is transitioning toward the software development category, this change hasn't confused any of the company's customers as to its bar code focus. In fact, on average, AIS tends to keep customers for 10 or more years. Yet, despite this solid customer base, AIS remains a smaller VAR. Why? First, the company's largest product in terms of unit sales, sCan Easy, costs approximately $50. More importantly though, Nolan admitted, "In the past, we really haven't been focused that much on marketing. Now, with our software products, that may have to change. But, it's hard to tell what our growth rate will be. After all, look at how fast technology changes these days. For example, the recent focus on security is bound to have an impact on the AIDC industry. How we're defined - whether as a VAR, integrator, or software developer - is just dependent upon the day."