New Infographic: How Supplier Labeling Reduces Inventory Costs

by Craig Hodgson, on August 17, 2017

“How much are you spending to receive and process shipments from your suppliers?” That’s the question posed by a new infographic that was just published. The answer is not so easy for supply chain professionals since there are so many moving parts and associated costs in the receiving process.

Outlandish Cost #1: Relabeling
One of the biggest expenses is the relabeling of inbound supplies and materials that occursINFO-Supplier-R12B.png all too frequently at the receiving docks of many of the world’s leading manufacturers, regardless of industry. It’s a time-consuming endeavor that costs millions in labor and materials, and yet, of the companies we talk to, a good number simply accept it as the price of doing business. But why?

Typically, suppliers work with procurement departments in taking and fulfilling orders. They rely on the Advanced Shipping Notice (ASN) to alert buyers of incoming shipments and, more importantly, initiate payment. Sure, the ASN has important information such as product name, quantities, physical characteristics and PO#, but does it have all the data to make a useful label? What about pallet breakdown or the barcode labels required by receiving or warehouse management? Not so much.

As a result, it’s quite common to see stacks and stacks of parts, materials, components, even chemicals put aside at manufacturing plants waiting to be properly identified, relabeled and moved on in the process—either to production or warehousing. And that leads to another significant cost.

Excessive Cost #2: Storage
With valuable supplies left in limbo until they can be relabeled, manufacturers must keep more safety or buffer stock to compensate for the lag in receiving inbound materials. Running out is simply not an option so companies are forced to keep extra supplies on hand—and pay for it, too, in the form of escalating carrying costs. Upwards of tens of millions of dollars a year.

Now imagine a different scenario where your supplier remotely accesses and prints your labels. By leveraging data directly from your ERP and merging it with supplier actions, you ensure that inbound materials are labeled and formatted the right way—your way, securely. Receiving quickly scans and processes shipments without delay, eliminating the need to store so much additional supplier managed inventory. In addition, you can track goods with unprecedented visibility to respond faster and smarter to fluctuations in supply and demand.

How much could you save in inventory reduction? Take a look at the infographic for a ballpark figure. And then get the formula to more accurately calculate your savings by downloading the new report Move Inventory Faster. It Starts with the Label. The potential savings with enterprise labeling are eye-opening and within your grasp.


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Topics:Supply ChainLabeling