Barcodes & Universal Product Code (UPC)

Barcodes and UPC:

  • Vastly sped checkout times.
  • Reduced the number of staff and training required and the risk of the wrong price being rung.
  • Increased the ability to electronically manage inventory, lowering carrying cost and spoilage risk.
  • Enabled Just-In-Time ordering and itemized invoices.
  • Transformed market research, enabling “big data” studies about items purchased together and which items are purchased in various geographies, at various times, and (when coupled with loyalty cards) by which customers.

Early History

Bernard Silver quit his job after hearing the need, from a grocer, for a better way to manage innovatory and imagining the barcode. He worked with Woodland, who was employed by IBM. Eventually, the two ー inspired by Morse Code ー invented the barcode, a series of dashes and dots to electronically identify items. They patented the innovation Oct. 20, 1949.

Woodland, loyal to his employer, urged IBM to commercialize the technology but they passed. IBM sold the patent to Philco in 1952 for $15,000, which later sold it to RCA, that went on to commercialize barcodes. Silver died in 1963, at age 38.

Barcodes had no known commercial uptake until patents expired in 1969. Eventually, a group of supermarkets banded together to hire McKinsey. They jointly developed the Universal Product Code (UPC).

IBM tasked Woodland, who still worked there, to work with the group developing the UPC.

The UPC identifies every version of every product in barcode form, allowing computers to quickly lookup the product name and price in a computer, the now-familiar checkout process. Laser technology, the bright beam of light, makes modern barcode reading possible.

To encourage adoption of the UPC, IBM agreed to put their barcode patents in the public domain, which they did.

McKinsey’s Wilson implies that IBM and others went on to file new patents, involving the use of the UPC, violating the spirit if not the letter of their agreement.

Barcodes Evolve

There were several competing barcode types in the early days but the now-familiar horizontal bars won out. The original barcode looked more like a bullseye. In 1973, the grocery consortia adopted the modern barcode and UPC as a standard.

Barcodes Become Ubiquitous

Troy’s Marsh Supermarket, in Ohio, is the site of the first barcode being run-up on June 26, 1974.

McKinsey estimated that, for UPC to work, nearly every product would need a UPC barcode before supermarkets would adopt the technology. They found that, in hindsight, the technology lowered cost and increased convenience so much that stores would adopt the technology when about two-thirds of products had UPC codes.