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Expert Insight: Sorting it Out
By Cliff Holste
Date: June 4, 2009

Logistics News: Distribution Technology Providers, Consultants, need to be aware of Potential Impact of Compliance Labeling Changes


At what Level of Special Handling will Companies Decide it Makes more Sense to Stay Manual?

We stumbled on something very interesting here at SCDigest and Distribution Digest with regard to the creeping changes in retail carton labeling requirements.


I won’t repeat the details here: you can find them in Dan Gilmore’s column and the interesting supply chain video discussion he and I had on this topic.


Clearly, this should be something consumer goods vendors pay attention to, as it could add greatly to their costs and operational complexity.


Part of the reason it could add to costs, as we note, is that these requirements could make it a lot less attractive to automate distribution center processes. In fact, that’s in part how we got onto this story. As we were doing some in-depth interviews with logistics executives for our upcoming report on automated case picking, we spoke with one logistics VP who said that the changes they had already seen were causing them to leave as much as 30% of their volume outside an automated system they have implemented.


That dovetailed with some discussions we had had last year and repeated a few weeks ago with another manufacturer facing these challenges. Its executive is concerned an existing mechanized system it has will eventually become impractical due to mandates to leave all bar codes off the box other than the retailer’s UCC128 label (bar codes which drive their system), and increasingly variable requirements about where that label is placed for different retailers.


If the trend continues, it could mean some existing systems will no longer work as designed – and that new ones would be avoided because they can’t provide something as simple as labeling flexibility.


That would be a shame, because of the potential productivity losses, and also be ironic, because the first waves of retail compliance clearly spurred adoption of many automated systems and accompanying WMS software to deal with the requirements.

Impact can be Big Even if Volumes are Relatively Low

The point we make on the video is that as little as 20-30% of the volume that has to be handled differently could make the difference. Certainly the ROI for a new system would be impacted, especially if the vendor is worried that number could go higher.


I hope our work here will spur some dialog, and that everything will come out fine in the end. But if you are a materials handling automation provider, WMS provider, or a consultant that helps companies design and implement these systems, you should keep tabs on this too, as in a worst or even maybe middle-ground case, you could see a lot more manufacturers decide to move to or stay with manual systems.

Agree or disgree with Holste's perspective? What would you add? Let us know your thoughts for publication in the SCDigest newsletter Feedback section, and on the website. Upon request, comments will be posted with the respondent's name or company withheld.

You can also contact Holste directly to discuss your material handling or distribution challenges at the Feedback button below.

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profile About the Author
Cliff Holste is Supply Chain Digest's Material Handling Editor. With more than 30 years experience in designing and implementing material handling and order picking systems in distribution, Holste has worked with dozens of large and smaller companies to improve distribution performance.
Visit SCDigest's New Distribution Digest web page for the best in distribution management and material handling news and insight

Holste Says:

If you are a materials handling automation provider, WMS provider, or a consultant that helps companies design and implement these systems, you should keep tabs on this too.

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