Unlocking data value

Phygital systems blend digital tools and data standards with physical data carriers, such as barcodes. These tie products, assets, logistics units, and locations within a supply chain to digital information for enhanced accuracy and consistency. This capability, especially with more advanced data carriers, can help automate data flows and boost supply-chain visibility.

Newer barcode iterations such as the increasingly common QR codes (quick-response codes) or Data Matrix barcodes (codes with a black-and-white grid pattern), store more information—up to 7,000 characters, compared to about 20 characters for conventional bar codes. The technology is growing alongside its use in the supply chain. Grand View Research data measured the global barcode reader market at $7.3 billion in 2022, and projects it will maintain a 7% CAGR from 2023 to 2030.

By uniquely identifying products and tracking their supply chain journey with universal standards, Nuce-Hilton says, organizations can unlock extended value for the whole enterprise. This can lead to raising operational efficiencies, improving safety, attracting consumers, advancing energy efficiency, and decreasing waste. “Supply chain resilience isn’t just about the supply chain,” she says. “It’s about the whole enterprise coming together from a data, product, and execution point of view to create an immersive experience.”

The best of both worlds

Several industries have explored phygital connections to enhance user experience or speed up processes. There are multiple ways to connect physical objects to technology and standardized data; all can help make data accessible, sharable, and useful. These phygital connections of product data, financial facts, and information to real-world activity can lead to a more resilient supply chain, Nuce-Hilton says.

For example, retailer Pacsun launched a phygital venture—Pacsun Los Angeles Tycoon—in early 2023 with platform provider Roblox. This metaverse experience uses avatars so participants can connect and play games while viewing Pacsun’s 2023 summer clothing collection, bridging physical and virtual experiences. Nike also used phygital tools in 2022 in its Cryptokicks digital sneaker campaign with Roblox. Avid sneaker collectors can buy virtual sneakers as non-fungible tokens (NFT). Each unique digital pair is one of 20,000 customizable NFTs, some of which trade for hundreds—or thousands—of dollars.

Healthcare companies have invested in phygital track-and-trace technology like barcodes and RFID tags for patient safety: Global healthcare company Fresenius Kabi relies on GS1 DataMatrix, a two-dimensional barcode carrying drug information, for its product portfolio. German consultancy Roland Berger said in its 2021 Future of Health 3 study that such digital health care technologies are reaching maturity, pointing to not just tracking but digital patient monitoring, early detection devices, and using data for AI for diagnostics and therapies.

Phygital technology also helps the food industry keep food safer, while ensuring trading partners and consumers can get the products they want. Imagine, Nuce-Hilton says, a frozen pizza manufacturer whose products, with various expiration dates included in 2D barcodes, ship to hundreds of retailers from dozens of plants. With machine-readable expiration data, the manufacturer and retailer can know which products will expire and when, avoiding delays, inventory gaps, and empty shelves. A 2023 Zebra Technologies annual survey found nearly half of retail shoppers who left stores emptyhanded did so because their item was out of stock, an experience increasingly commonplace during the past two years, having increased by 26% since the 2019 survey.

Examining the business benefits

Phygital tools, with data standards and technology, deliver broad benefits to the enterprise, Nuce-Hilton says. These are some of the ways businesses can benefit.