Retail giant Walmart has caused quite a stir in its vendor community, after recently releasing new standards for carton marking that have the potential to add huge costs to its suppliers.
Largely out of the blue, Walmart sent letters and supporting materials to vendors in February and March, stating that the changes would "improve receiving, stocking, inventory management and on shelf availability while reducing shrink and labor hours in our stores."
Supply Chain Digest Says... |
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| While defying a Walmart mandate may seem risky, that is in fact the path most vendors took with regard to the RFID mandate in the mid-2000s - and that turned out to be the smart move. |
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To that end, the letter further states that the following are "non-negotiable requirements to be implemented immediately" on all four sides of each carton:
•14 Digit Case GTIN - Lithograph Printed (Flexo-Graphic). Ink Jet is not in compliance
• Brand and Sub-brand if applicable
•Department Number
• Case Pack QTY and Space for Writing Manual Adjustments by Store Associates
• Temperature Rhetoric
• "Single Stock, PDQ Capable or Case Cut Capable" must be indicated on TOP FLAP of case
All 4 sides require item information. Black Ink.
• Lot-Code
• Sell-By Date - Legible, Large Font. Short Side
• Online Item File must reflect what is printed on the Master Case, including 14 Digit Case GTIN
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A graphic of the requirements provided by Walmart to suppliers is shown below.
Contrary to a general belief by many in the industry, Walmart has never required - in fact cannot use - serialized carton labeling employing GSI128 (formerly UCC128) bar code standards. That is in large part because GSI128 labeling really only provides value if tied to an advance ship notice (ASN) that details the contents of each case linked to the unique serial numbers on the carton shipping label. But Walmart has never required such ASNs.
Instead, Walmart has relied on the GS1 case code, basically like a UPC code but at a carton not item level, encoded using the interleaved 2 of 5 bar code symbology. In general, at its distribution centers, Walmart applies its own serialized bar code on incoming cases, some manually, some using automated print and apply, which then drives each carton's movement through the miles of conveyor and sortation systems before it winds up either on a truck heading for a store or into DC inventory.
Walmart hoped to leapfrog the GS1128 labeling paradigm with its carton-level RFID mandate announced in 2003, which would have provided unique case level identification. But that program collapsed.
So Walmart has instead required use of the GTIN case code for a couple of decades or more. What is changing in these requirements now are two important things:
First, that the GIN case code be achieved using flexo-graphic printing. In summary, this means that this bar code must be pre-printed by the carton supplier. That in turn means that a Walmart vendor would therefore have to maintain a separate inventory of empty cartons for each and every SKU.
That is very different than the practice used by most companies today, which print the case code using an "on-demand" approach, typically an inkjet printer, but also sometimes by applying a label. This enables these companies to maintain a reduced set of carton inventories that are then customized for each SKU as it is coming off the production or packing line.
Historically, there have been sometimes been issues with case codes printed by inkjet in terms of quality, and if you look in a grocery store it usually doesn't take too long to find a carton that has a case code that looks like it is slanting one way or the other, a result caused by mis-calibration of the equipment. However, even these codes are often readable with today's improved scanning technology.
But bar codes printed on white labels actually have superior readability than bar codes printed on the darker corrugate material.
Furthermore, "A number of observers I spoke to want to know where Walmart gets off saying that ink-jet-printed bar codes are unreliable when both ANSI and UCC councils thoroughly analyzed their use for an extended period of time and pronounced them reliable," wrote Pat Reynolds of Packaging World magazine. "The same observers are quick to point out that if indeed ink-jet-printed bar codes are not as consistently legible as Walmart wants them to be, there's a much less draconian solution available: Require CPG companies to scan 100% of the ink-jet bar codes they print on their packaging lines and use readily available controls technology to immediately reject any case that is not up to par."
Many suppliers are said to be in quite a lather over this.
"We will have to build a whole new warehouse just to hold all these cartons," one supplier complained on a recent webinar held by Walmart to explain the changes, according to another supplier who was on-line for the event but described to SCDigest what transpired.
In addition to the bar code printing requirement, the other problem for Walmart vendors is that the rest of the marking requirements - which can be printed with on-demand technologies - now have to be printed on all four sides, rather than just one or two as is generally the practice now.
That will mean that Walmart vendors likely will have to reconfigure their manufacturing lines with "bump-and-turn" stations. Not only will there be an investment in equipment and systems to make the change, it will slow down the flow of cartons say to a palletizer, perhaps significantly so, increasing vendor production costs.
It is not completely clear what is driving this. The best guess is that Walmart is having some bar code scan issues in its DCs. It is also likely this move is designed to assist Walmart store personal to find merchandise for the floor in its backrooms – an issue the company has been battling for several years.
Will vendors comply? That remains to be seen. While defying a Walmart mandate may seem risky, that is in fact the path most vendors took with regard to the RFID mandate in the mid-2000s - and that turned out to be the smart move, as Walmart never did enforce the mandate, and the program was dropped not long afterwards.
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