We seemed to have caused what I view as some very positive ripples with my column last week on the Worrisome Trend in Retail Label Requirements.
In a nutshell, there is a small, but growing and concerning trend, primarily among soft goods retailers, to either (1) ban any other bar code from being on the box, other than the UCC128 label they require, causing conflicting requirements with other retailers’ mandates and, in effect, making it impossible for manufacturers to track their own products in their own processes; (2) moving away from the standard placement of the UCC128 label on the bottom right of the longest side of the carton to the middle, the left, the top, the front – causing operational confusion and making use of automated print-and-apply very difficult.
My friend Jim Tompkins picked up on this in his blog, and tells me after several responses from clients, “You are right – this is a big issue.” (See Opening up Pandora’s Carton: Retail Labeling Requirements Becoming Worrisome.)
Our Cliff Holste re-emphasized in his blog the perils of this if it gets worse for automation vendors and consultants. (See Distribution Technology Providers, Consultants, need to be aware of Potential Impact of Compliance Labeling Changes.) It is clear to us that many materials handling-related solution providers do not yet see this issue, nor understand the risks it entails for their business, because it may preclude or hamper a consumer goods vendor’s ability to automate its DC processes.
Then, unbelievably, there is a story in another trade publication this week that unintentionally drove home the point.
The story is about A.H. Schreiber, one of the nation's largest manufacturers and distributors of womens' and girls' swimwear, producing some 14 million swimsuits each year under brand names like Badgley Mischka, Beach Native, Delta Burke, and Longitude.
To meet UCC128 labeling requirements more efficiently, the company implemented an auto print-and-apply system. I have great familiarity with these types of systems, and if done well, they can be a great productivity enhancer.
That’s what Schreiber thought too – and initially the system worked fine, especially to help it meet Target’s requirements. Target can be tough because they often order in full pallet quantities to a DC, but then still need a unique UCC128 on each case (“Mark for” labels). So you pull a pallet out of reserve, de-palletize, label, and re-palletize for shipment.
These print-and-apply systems are more involved than many know, requiring conveyors of course, “break meter belts” to separate the cases, scanners before and after the applicator, photo eyes, control software, etc. It is not uncommon to spend $200,000 for a robust print-and-apply sub-system, though certainly, more basic systems can be had for less.
But guess what – not long after the system was installed, here comes JCPenney asking for the UCC128 labels to be on the top of the cartons! Guess what – the existing print-and-apply system doesn’t work for that. So, another applicator, at still more expense, had to be added after the first one on the conveyor system to do labels on the top.
This is our point exactly. Would Schreiber have made this investment if, upfront, it knew they needed two systems? Many companies use redundant applicators, so that could mean four machines in total. What if someone else wants labels bottom left – does that mean a third applicator?
The cost and complexity soon become overwhelming, meaning the vendor won’t automate. And guess what – adding that other applicator slowed throughput of the print-and-apply system down from 1200 cartons per hour to 800, a 33% decrease! I won’t go into why this is here, but it makes perfect sense. The variability causes lower throughput.
So, the non-standard JCPenney requirement costs the vendor not only additional equipment and system costs, but a significant on-going productivity hit as well.
And just maybe the system there, or others like it, would not meet ROI levels as a result. So the vendors won’t automate to begin with. So supply chain efficiency is lost for both the vendor and the retailer.
This is exactly why we are aggressively reporting this story we uncovered. While the trade press story highlighted the fact that the system is getting the job done, we think it is a perfect illustration of why we need to get back to the original GS1/VICS guidelines.
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