The Hindu Business Line : USP: Raising the bar

Generation Y may not know this but there was a time when on purchasing a product, say, a book, the sales representative would check the price and make out an invoice manually. Then came automation. The guy at the counter would feed your purchase data into a machine and the software would identify the product and generate an invoice.

Finally, came the barcode, which simply reduced entry and processing time. Now, when buying a book, the shopkeeper at the counter scanned the book, the software decoded the barcode, the names of the author and the book got automatically printed on the invoice.

Bartronics is a leading manufacturer of AIDC (Automatic Identification and Data Capture) devices that capture and process data using a microprocessor chip. What started off with barcodes moved to smart-cards. Each card has a money value assigned and the card-holder could make purchases until the card value was exhausted.

Plastic money had really and truly arrived.

Barcode readers and smart-cards found extensive applications in retail and healthcare industries in the areas of supply chain management and inventory tracking. Today, advanced products such as wireless tags and biometric devices have widened the scope of application of this technology to security management too.

Forefront of the value chain

Instead of being an equipment vendor, Bartronics partners clients by offering end-to-end services built around its regular product lines. For instance, its Building Management Solution provides security solution in access control, electronic surveillance and attendance management. The other solutions include crowd management system, patrol management system and retail security system.

The company has carved a niche for itself by offering specialised e-governance solutions. It has executed mammoth Government projects such as Bhamashah that involved issuing smart-cards to 50 lakh rural families across India. It bagged a project from the Municipal Corporation of Delhi to set up 2,000 kiosks that will be one-stop shops for general utilities such as payment of taxes and mobile bills, and booking cinema tickets.

Generally, Government projects operate with strict budgets and limited potential for margins. However, Bartronics scores here as well. In the kiosk project, the business model is designed in such a way that a portion of its revenue comes through advertisements, which offers a huge upside potential in the wake of the upcoming Commonwealth Games.

Porter’s 5 Force Analysis

Bargaining power of suppliers: Medium

Bartronics, being an end-to-end solution provider, does not face any significant influence from suppliers.

Bargaining power of customers: High

Like any other technology, AIDC devices are commodities and there is little differentiation between the product functionalities of various players. Thus, customers have a wide choice and this puts huge pricing pressure on AIDC players.

Threat of substitutes: Medium

AIDC encompasses a wide range of technologies, which are substitutes to each other. For instance, a small-scale player can do well with a simple access control mechanism rather than opting for biometric access device. To this extent, sub-technologies are often substitutes of each other.

Threat of competition: Medium

Competition comes from small and medium technology players in India in low-end products such as barcodes and smart-cards. However not many match Bartronics’ capabilities when it comes to executing projects of huge scale.

Barriers to entry: Low

AIDC may no longer be a new concept, but operating at a high scale is critical to keep the production cost viable. So many small players may shy away from venturing into this field.

Barcodes and their family of products have changed our lives irrevocably.

The authors are Chennai-based chartered accountants.

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