If you asked most Americans what Amazon does, the vast majority would say something along the lines of “big online retailer.”
But an even smaller group — mostly comprised of current and former employees — would say something very different. That small minority would report that Amazon is the world’s most successful, adaptive and forward-thinking supply chain logistics company, one that also happens to be in the eCommerce business.
It is notable, however, that in that small group is Amazon’s founder and CEO Jeff Bezos.
“Amazon is less a retailer and more a logistics organization dedicated to moving physical goods and digital bits in as many ways and as efficiently as possible,” Bezos wrote in his annual letter to shareholders in 2014.
Consumers, generally speaking, don’t think about supply chain logistics. And when consumers do focus on “logistics,” it is often because something has gone wrong — a truth demonstrated shortly before Christmas 2014 when a strike at the Port of Long Beach made it difficult for merchants to get merchandise delivered to them, which in turn made it impossible for them to get merchandise to the consumer. Aside from those anomalies, the supply chain is more or less invisible to consumers.
Which is what keeps GS1 in business.
“GS1 is a not-for-profit organization that is here to serve industry. We’re an information standards organization and our primary focus for many decades has been on supply chain standards, starting 40 years ago with the UPC code,” remarked Bernie Hogan, Senior Vice President and Chief Technology Officer for GS1 US. “Products, be it a tube of toothpaste or a hedge clipper, license a number from GS1 which identifies and tracks their product at the source and throughout the supply chain as it goes from the manufacturer, to the distributor, to the retailer, to the consumer.”
In the U.S. alone, GS1 works with 300,000 businesses, a number that grows to 2 million or so worldwide. Their most familiar use, in the commerce context, is usually when something goes wrong and product recall has to happen.
“In a retail scenario we allow members of a supply chain to select individual items or portions of the items throughout the supply chain and do an industry recall. It depends on the industry how that is done, but we provide the granular detail that really allows members to zoom in to the batch that is the problem, and then expedite the recall of the goods,” Hogan noted.
However in the intervening four decades GS1 has been in business, it has broadened its suite of standards and services, and now is preparing to do so again as it works with the Federal Reserve, financial institutions and merchants to come up with a better, more transparent and more efficient supply chain for cash circulating in the commercial cycle.
“The initiative started about three years ago,” Hogan noted, and has its roots in the wholesale cash cycle between commercial banks, the federal reserve and cash processors.
“It was a good coming together of like-minded organizations that are trying to get a better supply gain, better efficiencies and reduce their overall costs.”
However, while improvements were made in the wholesale cash-handling supply chain — the more complex commercial cycle — where money bounces between consumers and merchants, the ability to move and process cash quickly becomes more important — and more difficult.
To that end, GS1 US and the Federal Reserve announced last week they would be collaborating with banking institutions like JPMorgan Chase and retailers like Walmart to enhance cash security and traceability. Those entities, among others in the cash-handling community, are working to develop new standards for the handling, transferring and processing cash across the commerce ecosystem.
“The initial stage is most concerned with creating better efficiencies between merchants and armored carriers, but the long-term vision here is to really work with merchant partners to drive the entire cash processing cycle to be more transparent and efficient.”
While cash’s imminent demise has been predicted for some time, Hogan noted, the reality is that at present it is alive and quite well. According to GS1 data, 40 percent of transactions in the U.S. are in cash, 46 percent of the low value (less than $25) transactions. And among some consumers — particularly those who make less than $25K a year — cash is king for a 55 percent majority. The 2013 Market Platform Dynamics study of usage of cash in 30 countries — the first ever methodology to quantify and project the usage of cash worldwide — suggested that cash is not only alive and well, but will grow in usage simply because the size of the pie – the number of people in the world – will grow even if the slice of the pie – the number of people who use cash — is declining.
“We are hoping to re-invent the process to make it more efficient, require less manual data entry, less prone to interoperability problems and ultimately more traceable,” Hogan said.
And it is a process that they are hoping will move forward quickly. Hogan reported that now that the leadership group has been formed, the next step the project will take will be releasing draft standards for cash handling. He notes they anticipate that will be in October. He further noted that at least some participants hope to begin implementing those standards as early as March 2016.
“The focus is getting this into place and driving adoption. How can we engage the maximum number of industry participants from all corners of industry and we work with over 200. For any standard, the more participation, the better it works to increase efficiency and opportunity,” Hogan said.
It is an aggressive schedule, he noted, but one their industry partners in retail and beyond are excited to move forward with.
“There are a lot of ways cash can be handled better,” Hogan noted, “and we think in cooperation we can make these improvements a concrete reality pretty fast.”