Supplier compliance is key for organizations to ensure their good keeps moving through the warehouse quickly. It also helps avoid delays caused by labeling errors. But rather than forcing compliance and putting at risk the positive relationships that are crucial to successful supplier management, businesses can and should adopt a standardized process that offers another way forward. In this article, we look at how organisations can help suppliers to meet their compliance needs by adopting a standardized cloud-based labeling solution.
Looking at the impact
It is first important to highlight that lack of supplier compliance with labeling standards is likely to result in a raft of problems for organisations. In fact, we would expect them to face one or more of the following issues as a result.
We have seen companies across multiple industry sectors have problems with supplier labeling.
Often, we see suppliers whose labeling methods make it difficult for the manufacturer to adhere to traceability requirements; and others who weren’t labeling parts at all. The latter can mean manufacturers have to label the goods on the receiving end, in the warehouse, a step that was time-consuming and labour-intensive.
Processing time is a key KPI for all manufacturers. Goods need to move as quickly through the warehouse as possible, as you don’t earn money if they’re sitting gathering dust on warehouse shelves.
We often see delays to the unloading process, where suppliers aren’t labeling products consistently. Some didn’t label anything, so warehouse staff have to open the boxes to see what is inside. It is an inefficient process and can cost significant sums.
Reason #1: Lack of power
These examples beg the question. Why hasn’t this been solved yet? The answer is lack of power. Almost every company has packaging and labeling requirements. Yet few have the necessary power over suppliers to demand compliance. Additionally, effective supplier management is about good relationships, not brute force. That’s why many manufacturers have chosen to print labels themselves, rather than engage in a power struggle with their suppliers.
Reason #2: Change requires effort
Many suppliers may genuinely want to comply with customers’ labeling requirements. They just lack the necessary resources. They might have weak or nonexistent IT infrastructures, or they may feel that if they adopted the labeling standards of all their customers, they would be drowning in label templates and software programs. One of our apparel and garment customers sent PDF files to their suppliers. The PDF contained label specifications in what was basically a CAD drawing. It took our customer the better part of two days to create the specification in CAD software, and their suppliers spent anywhere from one hour to several weeks to try to reproduce the label in their own environment according to the specifications. It’s not for lack of trying. In many cases, compliance just isn’t feasible.
What’s the answer?
Let’s go back to the supplier-manufacturer relationship. When a manufacturer issues a labeling mandate, they’re primarily thinking, “How can I make life easier for me?” Successful supplier labeling happens when manufacturers think, “How can I make life easier for me and for my suppliers?” The answer is through technology. By using technology to bring you closer to your suppliers, you can actually improve the relationship and get compliant labels. That is the textbook definition of a win-win.
Solution: Use the Cloud
We believe that the key to consistent, standardized supplier labeling lies in the Cloud. This approach makes it possible for you to store your label information centrally. You control the entire label management process, and you extend that label process to your suppliers over the Web.
With the cloud:
Benefit #1: Faster time-to-market and reduced inventory
With standardized supplier labeling, the average time spent unloading trucks can go down significantly and inventory turnover increase significantly because manufacturers can now move goods more quickly through the warehouse. By reducing and better controlling inventory, manufacturers can make significant working capital savings also. The end result of all this is faster time-to-market and a more competitive, efficient business model.
Benefit #2: Increased compliance
Under traditional supplier labeling set-ups, supplier compliance rates are often very low – and can be well below 50%. While 100% compliance might be a long shot, imagine if you could get an 80 or 90% compliance rate. That would have a major impact on the efficiency of your goods-in process. By using technology to make compliance easy, you get consistent labels and improved supplier relationships.
Why it’s finally time to solve supplier labeling
It used to be that if your supplier was bigger than you, you could forget about them complying with your labeling requirements. That’s changing. Everyone today is looking for ways to grow their business and gain the slightest advantage and complying with customers’ labeling demands is one way suppliers can distinguish themselves.
There are external pressures as well. In certain industries, we hear talk of manufacturers auditing multiple tiers of suppliers. This is mostly due to quality assurance, but it illustrates the focus on supplier labeling in some sectors. There’s never been a better time to solve the supplier labeling conundrum.
To learn more, visit the NiceLabel’s supplier labeling solution page.
