This special report details how enterprise labeling significantly improves your supplier transactions, and by using a simple formula, you can calculate potential savings when you eliminate the relabeling process and reduce costly inventory.
June 19, 2017
Why Are Your Supplier Inventory Costs So High?
If you’re like most large manufacturers, the management of supplier goods is a complex process with multiple stakeholders.
You have Planning that drives forecast and production scheduling, and Procurement that purchases materials from vendors based on those demand forecasts.
Operations oversees the flow of incoming goods in the production line, and then Warehouse Management receives inbound shipments and moves them into inventory until ready for use.
While the titles and roles may vary among organizations, the basic supplier workflow is generally the same.
Where it gets messy - and where you are likely to experience significant costs in time and money - is the physical handoff from your supplier.
Essentially, when the box hits the dock.
All too often we see a reliance on the Advanced Shipping Notice (ASN) in which the supplier alerts you of pending deliveries at the header level.
You may see a product name, a PO#, and select dates, but the ASN does not contain many of the details that receiving or warehouse management needs, such as pallet breakdown.
Then there are the labels themselves on the pallets and boxes, which were created by the supplier with no certainty that they are correct or aligned with your downstream process and data.
That’s why it’s not unusual to see pallets and pallets of supplier goods stacked up in receiving waiting to be sorted out and relabeled.
If things go right, you or a 3PL partner will spend several days creating and printing new labels, which drives the need for additional buffer inventory.
If things go wrong, a chain reaction of inefficiency can occur:
- Any mislabeled parts will cause confusion and cost precious time before they can move to the production line.
- A wrong receipt will cause an overstatement of one item leading to expedited shipment upon discovery.
- Conversely, the same receipt will result in an understatement of another item leading to hidden and costly excess inventory.
You can end up spending hundreds of thousands, even millions of dollars reconciling supplier goods and driving up inventory costs.
Ask yourself this: If it takes weeks for supplies to travel thousands of miles from Asia to your dock, why does it take another several days for the same supplies to move a few hundred feet to be properly processed for your operation?
Download this paper and discover how enterprise labeling significantly improves your supplier transactions.