Supply Chain Commentary: How to Reduce Supplier Inventory Costs

Managing supplier goods can be a complex process with multiple stakeholders. You have planning that drives forecast and production scheduling, and procurement that purchases materials based on forecasts. Operations oversees the flow of incoming goods and warehouse management receives inbound shipments. While the titles and roles may vary among organizations, the basic supplier workflow is generally the same.

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. You may see a product name, a PO#, and select dates, but the ASN does not contain the details that receiving or warehouse management needs. Also, there is no certainty that the labels on the pallets and boxes, created by the supplier, are correct or aligned with your downstream process and data. That’s why it’s not unusual to see pallets of supplier goods stacked up in receiving waiting to be sorted out and relabeled.

You or a 3PL partner could spend several days creating and printing new labels, which drives the need for additional buffer inventory. You can end up spending millions of dollars reconciling supplier goods and driving up inventory costs.

There is a better way…and it points to the label.

The label connects the supplier’s intent to your ERP and, to the part itself. Thanks to new advancements in browser-based enterprise labeling, by using data directly from your ERP and merging it with supplier actions you can control the labeling so that shipments from suppliers and other trading partners are labeled with your data, your barcodes, your instructions, and your process.

Extend Enterprise Labeling to Suppliers

Thousands of manufacturers across multiple industries are relying on enterprise labeling to drive measurable gains. The tight integration with existing enterprise applications like ERP, PLM, WMS, and other systems ensures that the data on the label is the most current and enables companies to automate the labeling process within these applications.

By standardizing and centralizing on a single labeling platform, companies can share templates among internal teams to simplify the approval workflow, reduce the number of templates to manage, and keep up with changing requirements without duplicating efforts.

Now imagine extending your labeling process to include your trading partners such as suppliers and 3PLs. You can allow suppliers to securely access, update, and print your labels locally with the exact information and data your downstream process requires. And because the data is coming directly from your ERP and other sources of reliable data, you can be confident that the label will capture the latest information in real time.

From an implementation and execution phase, there’s minimal effort required of your suppliers. They have to create and print pallet and carton labels anyway; now they simply print your labels in your format. You can do the following:

  • Eliminate relabeling, once and for all
  • Increase velocity of inbound receiving
  • Reduce inventory, achieve JIT goals
  • Know when supplies are coming earlier, plan accordingly
  • Respond faster to course corrections in manufacturing
  • Prioritize orders, keep suppliers in check
  • Gain visibility of suppliers, big and small
  • Gain insight into supplier carrier costs

Ultimately, because you design and own all the supplier labels, you have granular detail where your materials are every step of the way. New innovations in enterprise labeling make it faster and easier to produce labels at your suppliers and other partners to ensure accuracy, eliminate relabeling, and reduce dock-to-stock time.

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