Harald Desjarlais is the automotive industry specialist at Loftware. He spoke to Aftermarket Business World about the complexity of labeling and how the right labeling solution can improve supply chain operations.
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How does labeling make a difference in the highly complex automotive supply chain?
Since the data carried on the label inevitably finds its way back into an inventory, WIP, or warehousing system, it is the crucial component in providing an accurate snapshot of present state inventory across the enterprise. The cost of label inaccuracy is significant, yet most companies do not measure it effectively.
At the same time, companies are dealing with customer-specific requirements that are increasing at a rapid rate. You’re seeing more and more customers (whether they’re OEMs, next-in-line suppliers, or resellers) demand that graphics, translated text, branding, and more be added to their labels. As a result, the burden of creating and maintaining compliant labels has become increasingly demanding and costly – with some companies managing a staggering amount of label templates to capture all these requirements.
Adding to this complexity is an ever-increasing amount of redundancy as companies rely on a variety of disparate labeling solutions across global locations, each providing identical label design and maintenance in a completely siloed, disconnected fashion.
Which brings us to the inherent business benefits of a standardized enterprise labeling solution. By taking a holistic, integrated approach to labeling, automotive companies can respond quickly to new and evolving requirements, while maintaining labeling consistency across the supply chain. Dynamic, data-driven capabilities allow OEMs, suppliers, and even warehouse distributors to take control of labeling – with fewer templates – and achieve dramatic reductions in overall maintenance and the costs associated with it.
What can labeling do to help reduce costs?
A basic business principle applies here: If you can move product faster and more efficiently, you will save money – not to mention increase productivity and improve customer satisfaction.
In a recent survey we conducted with about 200 manufacturing professionals, nearly half – 47 percent – indicated they were experiencing costly downtime due to labeling disruptions. The reasons cited for these delays included dealing with customer-specific labels, product-specific labels, and slow label printing speeds, in that order. When you add up all of these isolated labeling issues occurring across different segments of your supply chain, you’re looking at hundreds of thousands of dollars of lost productivity, impacting your bottom line.
An enterprise-wide labeling solution, tightly integrated with existing systems, unifies your entire labeling process. Errors are reduced because you’re pulling data from sources of truth, be it SAP, Oracle, or your WMS system. And, if configured properly, you can also automate the process and drive label production from a back-end transaction. This further reduces the errors that occur as a result of manual data entry. Any customer-specific label changes that come in are handled systematically with secure access to a library of templates that can be updated as needed – while greatly reducing the number of templates you need to manage.
How does enterprise labeling improve efficiencies at the partner level?
If you’re like many automotive manufacturers, you rely on suppliers to deliver parts or components in a timely manner, but you experience costly hold ups in receiving as containers often need to be re-labeled before moving on to a specific production line. You could send suppliers your own pre-printed labels, but that has its own drawbacks as you’re beholden to their process of storing and applying labels.
But now through secure, Web-based access to your enterprise labeling solution – and templates you create – the supplier can simply run off your labels to their local printers.
Case in point: we recently visited the plant of a global maker of car sub-assemblies and noticed they had pallets and pallets of supplier parts in their receiving area. This was additional inventory that was waiting to be relabeled before it could move to the production line. They told us they stored two weeks’ worth of safety stock to account for the relabeling process, which took about 80 man hours every month. They have 12 plants following a similar process. Quickly do the math and you’re looking at about $600,000 annually wasted on relabeling. That’s not even considering inventory management costs.
The right labeling solution lets you share label templates with suppliers and other trading partners so incoming materials and components are labeled and formatted the way you want them with your data. We’ve seen some companies save upwards of millions of dollars in labor, materials and inventory costs when switching over to an enterprise labeling solution.
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