Compliance Labeling: Not Just for Automakers

As with many things, vendor compliance labeling got everyone's attention in the automotive sector. But years of use in retailing have made a big contribution to state of the art.

Compliance Labeling: Not Just for Automakers

As with many things, vendor compliance labeling got everyone’s attention when it hit the automotive sector. But it’s been around for many years; you just called it by a different name.

by Clyde E. Witt, executive editor

In the automotive industry, vendor compliance labeling (VCL) grew out of Just-In-Time (JIT) manufacturing practices at about the same time as electronic data interchange (EDI) and vendor-managed inventory programs. VCL has proven itself to be an excellent way to communicate and coordinate production schedules, purchase orders, shipment tracking and other key parts of the supply web.

The uniform price code (UPC) is probably the oldest or best-known form of compliance labeling, although there are other programs in the chemical industry (CIDX), the federal government (LOGMARS) and elsewhere. Most programs have arisen in the last six or eight years and are gaining momentum as velocity within the supply chain increases. Most recently, VCL migrated into retailing — primarily electronics — as well as into the home-supplies business and food industries. As with the early days of JIT, people are unsure of what label to put on VCL. Is it a method, philosophy, strategy, concept or what? The easy answer is all of the above. VCL should, however, make your business run smoother and facilitate material handling, particularly in the tracking of shipments. Whether it will make you richer has yet to be determined.

And, like JIT, it’s much easier to talk about VCL than it is to implement the program. Manufacturers of label printers have been quick to respond to the increasing demand for VCL and have kept pace — even led the way. They provided the right kind of equipment before users and distributors knew they needed it. Major manufacturers like General Motors and associations such as the Automotive Industry Action Group (AIAG) have seen the advantages of VCL and led the way to establish standards to help eliminate confusion.

Why comply?

A label might appear to be a flimsy piece of paper. Actually, it’s a device to bridge the gap between you and your suppliers. The reasons for compliance labeling are manyfold and basic to material handling. It’s another way to get the right product, in the right quantity, to the right place, at the right time. This is true not only for the end user, says Gene Korzeniewski, manager of product development, Avery Dennison, but for everyone within the supply chain.

“Compliance labeling increases supply chain velocity, reduces handling costs and lowers inventory levels while increasing accuracy,” says Korzeniewski.

There tends to be some initial resistance to compliance programs on the part of suppliers. Companies that must print and apply the labels feel the programs will require some modification to established manufacturing or distributing processes. Modifications can range from a simple change in procedure to moderate capital investments in printing equipment and software.

To extract the greatest benefit from adopting a compliance labeling program, experts recommend you make it more than a one-way proposition. If you produce a label to satisfy your external customers, you’re gaining only half the benefits. You have to use the technology internally to leverage benefits within your own company, then back to your suppliers. By working the program within your organization and back to your suppliers, you can show your customers added value, and thus gain a competitive advantage, says Korzeniewski.

The concept of compliance labeling, although hardly a new idea, is still evolving and is expected to grow. This growth is anticipated because of the fundamental advantages it offers. Compliance labeling is as much a communications tool as anything. Manufacturers who deal with many suppliers have found themselves restricted (or at least slowed) by the different methods of electronic data interchange required for each supplier.

In large part, the Internet, along with compliance labeling, is overcoming the communication barriers thrown up by EDI. Common software programs to print labels can be accessed via the suppliers’ application service providers. The parts supplier, most often expected to supply the labels, does not have to design and print special bar code label templates. This up-front work is done by software provided by the label printer manufacturer.

Following the general

The General Motors’ GM1724A label standard defines the information and layout of all labels to be used on shipments of parts by its suppliers to its facilities.

The GM1724A Shipping Label Template conforms to ISO, ANSI and AIAG standards, and is designed to increase efficiency and accuracy by reducing product-handling costs and by identifying specific parts information on all shipping containers. Complying with the standard can be a challenge for suppliers since the label has many fields that uniquely identify every shipping container. The purpose of the fields is to facilitate a complete audit trail for each shipment. GM estimates it will generate a savings of $100 million annually from this initiative.

The label format specifies two types of bar codes — a 2D PDF417 code and a traditional 1D bar code — and additional tracking data. More than 30,000 GM suppliers are affected by this new standard.

The new label provides more information about parts as they move into and through GM’s assembly operations. Bar code printers currently in use in the industry to print the labels may need to be upgraded to handle the new format.

To make compliance easier, companies like Teklynx have placed ready-to-print label templates for users of its Codesoft 6.01 and Labelview 6.05 software programs on its Web site. The templates can be downloaded free.

A subscription service provided by ClearOrbit offers suppliers and their customers a collaborative solution to the errors caused by traditional shipping and receiving methods.

Most major printer manufacturers have been named by General Motors to assist suppliers to meet the new shipping label requirements. Intermec Technologies is one such company. “Intermec and GM are dedicated to making this transition [to the new labeling requirements] as smooth as possible,” says Bill Hoffman, solution manager — industrial, Intermec Technologies. Hoffman leads Intermec’s GM1724A compliance label strike force. “Many of GM’s suppliers are Intermec customers. By acting on GM’s behalf to officially certify compliance, our customers are assured we have the knowledge and commitment to accompany them through the compliance process.”

Another industry leader,

Zebra Technologies, provides GM’s suppliers with the GM1724A label template. Its printers have the required PDF417 symbology loaded as an algorithm, not as a bitmap graphic, so the GM compliance labels output faster.

“We recognize that GM’s new label format requirements present a challenge to many GM suppliers, and we are pleased to offer our labeling expertise to assist these companies,” says Ken Pywell, Zebra product manager.

Printronix has been supplying printers to the automotive industry for 25 years. It has been at the forefront in helping establish the GM1724A compliance program. Its printers offer worldwide remote printer management and configuration from a single PC as well as online data validation, providing total bar code quality control and compliance.

Tharo Systems is offering free industry-compliant label examples from its Web site. Besides the GM label sample, it has created compliance shipping labels based on current specifications from companies such as Wal-Mart, Target, Autozone, AIAG, JCPenney and others.

Larry Graham, global manager automatic ID technologies and distributive computing, General Motors, says a common format for labels encourages early implementation by leveraging the enforcement power of a greater number of customers.

“Common processes at the supplier end of the business,” says Graham, “remove the roadblocks to error-proofing labels and shipping parts.” MHM

Collaborate for Customers

Bar code label printer manufacturers and label software creators are getting together to do what neither can do independently. For example, ClearOrbit, a provider of extended enterprise solutions for manufacturing, has selected Zebra Technologies for its compliance labeling service.

The service, known as SupplyChainLabels.com, is a Web-based compliance label printing service. Zebra supplies the printers ClearOrbit gives its customers with their subscription to the service.

Supply Chain Labels service gives users the ability to publish shipping label guidelines to the Web site. This, in turn, allows suppliers to print labels with the exact specifications the customer’s receiving department needs to efficiently dock and distribute the shipment.

Another program for printing compliance labels is a collaboration between Sato America and Unibar Inc.

Sato’s Cle Series bar code printers are located at the supplier’s plant for printing labels and bar codes using Unibar’s e-Barcode 2000 Web Server software.

The supplier accesses its customer’s Web site and prints required labels via the browser. This guarantees adherence to changing corporate requirements.

Bob Karr, vice president, marketing, Sato America, says, “These printers were designed to meet the graphical processing requirements of bar code printing across the Internet.”

AIAG Updates 2D Symbology White Paper

In an effort to further standardize two-dimensional (2D) symbology use within the auto industry, the Automotive Industry Action Group’s (AIAG) symbology work group has published a revised edition of its 2D Symbology White Paper.

“This informational guide helps manufacturers understand and evaluate the choices of 2D symbologies and outlines the expanded choice of 2D recommendations,” says Ron Tillinger, AIAG program manager. “These symbologies can capture more data in a smaller space, detect and correct errors, and can be used to mark directly on parts, which aids automakers and suppliers in the material management process.”

The updated white paper describes 10 potential applications for 2D symbologies, as well as the four symbologies selected for use in the automotive industry and the criteria used in selecting them.

To obtain a copy of the revised white paper, contact AIAG’s customer service department, (248) 358-3003. AIAG members can receive their entitlement from the members-only portion of the organization’s Web site, aiag.org.

New Bar Code Launched

The Uniform Code Council (UCC) has launched Reduced Space Symbology (RSS), an innovative new bar code that brings significantly improved product identification to meat and produce. Currently in use at the Dorothy Lane Markets, Dayton, Ohio, the first in-store implementation is a critical first step toward industry-wide adoption that could provide the same business benefits for fresh foods in grocery stores as the Universal Product Code (UPC) has for non-perishable items.

RSS is an innovative product identification technology that carries greater amounts of data in smaller print areas than the UPC. The new symbol will supply product information such as supplier source, sell-by dates, precise weight and price values — information that previously could be traced for only non-perishable goods with a UPC.

For more information on this new code, visit UCC’s Web site, uc-council.org.

Looking for Solutions?

AIM, the global trade association of providers and users of components, networks, systems and services that manage the collection and integration of data with information management systems, is probably the best single source for information on compliance labeling. At the association’s Web site (aimglobal.com), you can view the solution architecture for not only General Motors’ bar code labels, but also labeling such as the Air Transportation Association specification 2000 standard — the compliance labeling Boeing is using. In addition, the Web site has information on Procter & Gamble’s raw material and packing material bar code compliance.

The solutions offered in the Solution Center location on the site give the pros and cons of programs as well as tips on how to avoid problems, kinds of printing material to use and how to attach labels to pallets and containers.

Registration in the Solutions Center is free. You can create requests for information or quotes. The center was created in partnership with MindMatrix and is a project development platform.

One Company’s Solution

Label and printer suppliers have numerous options for helping clients comply with labeling requirements mandated by end customers or by imposed standards. Avery Dennison offers a couple of programs for its customers. One is an in-plant solution, says Gene Korzeniewski, manager of product development, and the other is what’s termed the ticketing center solution.

“For manufacturers that do not want to establish their own printing systems and software to generate tags and labels,” he says, “we have a worldwide network of ticketing centers they can use.”

Avery Dennison can also link into its clients’ vendors. This facet allows the ticketing center to automatically produce the labels for the supplier when its customer places an order for products.

For companies that chose to establish their own in-plant solution, Avery Dennison offers software, hardware and converted product (label material), and formats if it’s a worldwide compliance program. This is basically a turnkey operation.

Is one approach more popular? It depends on the size of the manufacturer, says Korzeniewski. “It’s really quite balanced. We have large manufacturers who rely on the ticketing centers to feed the labels to vendors who are producing products for them.”

Both programs offer a high level of flexibility in label change and production. Either can produce high volumes or short runs. They offer a range of equipment from la

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