eBook 1: Inventory Best Practices

As a key part of the Inbound Process, the Receiving function is the foundation of accurate inventory. A bad start for incoming product - be it a wrong label, wrong location, or poor handling, will create a domino effect, costing your company far more than the value of the product itself. 

This is why there can’t be any compromises when it comes to your Receiving function. Here are the top 7 best practices:

1. Advanced Ship Notices. Arrange to have your supplier send you an ASN via EDI (856 document) or email. An ASN is an electronic file that is sent in advance of the shipment arriving and contains the contents of a bill lading such as quantities, weight, part #, lot ID,  description, carrier, load configuration, etc. Sometimes printable barcode labels are included such that scanning them allows you to rapidly perform the receipt of your goods.  Bear in mind using ASN requires some systems integration between yourself and the supplier. When used ASN have been known to reduce receiving costs by as much as 40%.

Inventory Best Practises: Receiving

Which of these seven habits are you not doing today? Not judging, BUT they are all non-negotiable and keys to a successful-running facility.

2. Schedule your receiving. While this is a key function of just in time manufacturing, we are seeing this used more in distribution facilities where suppliers are increasingly being held to a strict schedule and penalized if they are late or even early. So, why do it?  Because many facilities have to use the dock area for both receiving and shipping, limited material handling equipment and the need to work around your picking windows. Also if you’re a cross dock facility and have to do a reverse logistics building mixed pallets of goods, then scheduling receipts is an absolute must.

3. Separate Returns or RMA Goods. Returns from customers must be quarantined or received in such that they are not confused with good product from suppliers. Product identified as RMA and subject to inspection or re-packaging should be specially identified with a bright coloured label and kept in a specific area(s) of the warehouse.  At the extreme, major retailers like Walmart have gotten out of the returns ‘business’ and send their opened electronic goods to third party wholesalers who purchase the returned goods.

4. Use Part # Aliases. Often suppliers will ship goods that have their part # in barcode format on the label.  Arrange for your supplier to send their part # to you in an electronic file. This will save time having to re-label goods coming into your facility.

5. Shipping Container Code (SCC) or Master Carton Labels.  For companies distributing products bearing a UPC label, they will receive the bulk quantities in cases or cartons. The label on the case is an SCC-14. The SCC barcode label contains the UPC code and the package indicator (quantity). Ensure your inbound system is set up to scan the SCC label and convert that scan to the appropriate unit quantities.

6. Vendor Compliance Program.  This ensures that product arriving at your dock meets certain minimum standards such as timeliness, packaging, labeling, and advance shipment notification.  While it is fairly straight forward putting together a protocol for communications, label standards, ASN, packaging, carrier types, etc., it is much more difficult to enforce. 

7. Support Downstream Activities. As part of the Inbound process, the Receiver should know if an incoming shipment going to be cross docked, sent direct to manufacturing, going to a pick face or put into overstock.  Giving Receiving staff visibility to this information will allow them to take appropriate actions ranging from applying a production label, to flagging a product for cross dock to creating a mixed or “rainbow” pallet for replenishing bin locations.

Inbound Labeling

This is the first part in our still running series, Warehouse Best Practises. This article is about labeling on inbound goods – both raw materials and goods for resale.

Let’s start by looking at the basic anatomy of a label:

  • Part Number
  •  Purchase Number (typically your PO #)
  •  Sales Order 
  •  Production Date
  •  Lot # and/or serial #
  •  Quantity 
  •  Unit of Measurement how the above quantity is expressed e.g. each, pieces, kg, lbs

This does not take into account specific label formats for automotive, retail, drug, food, and electronics industries to name a few. 

However once the product and labels arrive at your destination the question becomes what can you do with them?

Here are 5 basic rules for efficient inbound labeling:

1) Support for the Supplier’s Part # 

Unless you use the same part number scheme as the manufacturer, you’ll need your systems group to build an alias table which cross references the manufacturer’s part # to yours. The alternative of course is to get the supplier to put your part # on the label – this is not typical as it is done for only very large buyers (i.e. Walmart).

2) Keep the Barcode Font Readable.

There are two areas where you need to be mindful. The barcode symbology and the width of the white and black lines as measured in thousands of inches or mil. Generally a 10-15 mil barcode will get you a 1 foot scanning distance. We've experienced suppliers sending in labels with the part # in 1/2 the size and couldn't be scanned by our existing equipment. As for symbology, don’t assume all barcodes are equal!

3) Parse the Barcode

Often the part # or other information you need is contained in one super long barcode like a UCC label which comprises 42 characters and contains everything you need to know about the product including expiry date, weight, part #, date of manufacture, etc.

This is a relatively simple programming exercise to strip out the characters you don’t need and only populate the fields with the data you need. This becomes more challenging when you have to parse a variety of long barcodes and making sure your equipment can scan those barcodes consistently.

4) Re-labeling

Consider technologies such as portable printers to minimize travel time, printing the labels in advance based on ASN, make sure your warehouse application supports printing of the label, while you are performing a receiving activity. This will save a lot of time, and remember to only print a minimum amount of information if there is already a lot of useful data on the supplier’s label. Also remove or label over the supplier’s label if it’s not going to be used. 

5) Create a Labels Action Committee

We most often think of outbound labeling as involving finished goods – product that is going out the door to your customer or if you’re a master distributor, your customer’s customer. However we are going to expand on this topic by including work in progress goods that are going to a third party for work that you can’t do in-house and means this product will come back to you for further work or just warehousing. 

For all outbound labels, the key considerations can be boiled down to what needs to go on the label to satisfy:

1. Your downstream warehouse processes like putaway, picking and shipping

2. Customer’s inbound processes and requirements

3. Government regulations (including transportation, environmental, health, food, drug authorities

4. Industry regulations that calls for compliance

5. Freight forwarders and transport companies requirements to ensure unimpeded movement of goods

While labelling guidelines for the most part are readily available and the catch for most companies is knowing how and when to produce them.

To help you decide on the how and when I’m going to identify the basic categories of labels and with each there is a best practise to produce them.

Finished Goods Label – best time to produce it is as soon as the product arrives at the facility or when it comes out of production.The most efficient way is to produce the label(s) in real time as part of the work flow which may mean re-engineering some of your systems to support a more dynamic interaction between user and your software.

Work in Progress Label – this is an often a tricky label to produce as technically speakingit is not quite a finished good part # yet.However a label is needed to identify the product to the next work cell or in the case of sending it out to a third party for work not supported in your facility. The label we typically produce is a license plate containing the work order # and the last operation performed on that part(s).This label is produced and applied upon completion of that operation. 

Industry or Customer Compliance Label – if you’re a made to order shop then this label is typically applied at the end of the production process. If however you’re picking the product out of the warehouse, then you’ll have to apply the label during picking or in the staging area of shipping. Ideally your WMS has the ability to generate customer specific labels on a per order basis instead of the generic label. Often these specific labels are printed on a 4x6 size label and applied on a per pallet basis.

Shipping Label – this is typically produced by the courier system or your transportation management system. The label is either applied on a per case or pallet label depending upon the carrier. At this time you’re also producing any hazmat labels and even labels in the language of country they are being shipped to. Having proper labelling instructions available on-line or better yet a video will assist the shipping department to produce and apply the right label.

While producing Outbound labels often contain a myriad of rules and guidelines, the payoff is avoiding penalties, having the shipment quickly processed at border crossings, and better customer satisfaction. 

How you design the systems and workflow to produce and apply these labels is critical to the efficiency of the warehouse – so where you can fold the labelling process into the workflow such that the labels are available for production upon the completion of that specific operation.

Talking Social: Should You Take the Leap?

When it comes to social media, you either want to do it or you don’t see its merits. Isn’t Facebook, Twitter etc. just for those who take an unnecessary amount of selfies (now an official word in the Oxford dictionary)? We won't deny it, however it can also be a very powerful business asset. Not only are your customers on most social media sites, but they’re also looking for you!

If you haven’t already put your company out there via social media, it could be a very daunting task ahead. Channels like Facebook, Twitter, LinkedIn and Google+ are very popular, but what about the others like Tumblr, Instagram, Pinterest, etc. etc. etc.? The list is almost infinite! But let’s not get ahead of ourselves. It’s okay to stick with the more commonplace sites until you are more comfortable with your social presence.

Decide on the tone you want to use when you engage with your customers. You can be formal or casual, but always keep slangs to a minimum and a courteous voice is absolutely necessary!

Steel yourself against criticism. Even if your customers are giving some very negative reviews, it’s always best to apologize directly and then rectify the situation, so your current followers can see how diplomatic and helpful you are while under fire. Never lose your cool!

Good content is not always frequent content! Though the combination of both is the most effective! The key here is not to post just because you need something up for the day, but because you have relevant, fun or trending news about your industry or your company to share with like-minded clients. 

Punctuate announcements, links and news with great pics or videos. After all, aren’t they worth a thousand words? Your customers will more inclined to share an article if it is accompanied by a beautiful or intriguing image. And you definitely want them to spread the word for you!

Good customer service. Your customers may want to book a table through Twitter or ask you product questions on Facebook rather than the handy, dandy form you already have on your site. Don’t brush them off for not following the rules; see how you can have your CSRs accommodate them instead

Finally, be creative. Giveaways, contests, interactive content and exclusive discounts are a great way to lure people to share your page with others. After all, your competitors are vying for the same audience, so you have to constantly step up your game. 

Don’t forget that social media isn’t a “build it and they will come” entity. That is to say they will want to check you out, but may not want to commit. These little promotions will make you more attractive to the chronic “liker”.