June 10, 2013
technology review | Auto ID

Five steps to ensure bar-code compliance

As more DCs automate their receiving operations, suppliers risk steep fines if they don't comply with customers' labeling requirements. Here are some tips for staying out of trouble.

By James A. Cooke

Slap a smudged bar-code label on a carton and the chances are pretty good that your customer will slap a fine on you. That's the reality for many suppliers these days, particularly if they ship to large and medium-sized companies.

And it's not just smudges suppliers have to worry about. Today's buyers have become downright picky about the way their shipments are coded and labeled. Not only do they want their suppliers to use a certain type of bar-code symbol, which generally varies by industry, but they're also likely to mandate a specific label format, type, and placement on a carton or pallet.

The penalties for failure to comply with the buyer's specifications can be steep. Jack Householder, a partner in the firm Quad II Inc., says he knows of companies that have been hit with fines as high as $10,000.

As for why customers have become so fussy about their bar codes, you can blame automation. More and more companies are turning to automated receiving systems, which typically operate within very strict tolerances when it comes to reading codes. For instance, in order for a fixed-position scanner to read a bar code on a carton traveling down a conveyor, the label has to be in a certain spot and the image crisp and clear. Anything less is bound to slow operations and cost the receiver money.

"If the receiving side has an automated system in place, [it will] just kick out the boxes [it] can't read," says Householder. "They then have to put the information in manually. That's how charges can add up so quickly."

How do you avoid paying those fines? We asked several experts for advice. What follows are their recommendations on ways to ensure bar-code compliance:

1. Know exactly what the customer requires. Industries such as automotive, health care, and retail have adopted standardized symbologies for bar codes as well as standards regarding label size and placement. But that doesn't mean suppliers can assume that meeting those standards equates to compliance. Many customers in those industries still have their own individual requirements for label format and placement, says Andy Verb, president of Bar Code Graphics Inc., a firm that specializes in bar-code products and compliance solutions.

"In the retail and automobile industries, there is no one-size-fits-all [set of rules]," he reports.

Verb points out that most large retailers have created guides or online portals that spell out the details of their bar-code compliance programs. But it's not enough for logistics managers to familiarize themselves with the requirements, he cautions. They also have to ensure the information is passed on to the appropriate people in their companies. While this might seem obvious, that's actually where a lot of companies stumble, Verb says. "In most cases, the right individuals within the organization are not provided with the necessary information to facilitate compliance."

2. Clean and check printers regularly. Companies that use thermal transfer or direct thermal printers should make sure the print heads are cleaned regularly to ensure high-quality bar-code printing. Verb says he often sees printing problems crop up in the fourth quarter of the year, when suppliers are rushing to fill end-of-the-year orders and let maintenance slide. "As volume goes up, maintenance drops off," he says. "We see issues because print heads aren't replaced or maintained."

Operations that use thermal transfer printers, which use heat to transfer carbon from a ribbon to a label, should also be sure their ribbons are inspected on a periodic basis. Householder recommends cleaning the print head each time the ribbon is changed. After any ribbon change, he adds, users should run a print test to ensure a quality reproduction of the symbol.

3. Resist the temptation of low-cost materials. Experts say they often see suppliers try to save money by buying cheaper printing materials only to encounter problems down the road. For example, Householder recalls a company that bought cheap label stock but soon discovered the adhesive on the label backs didn't stick very well.

Companies using direct thermal printers in hot and humid environments must be especially careful to use good label stock, Householder says. These types of printers use heat to activate the chemical in the label stock (hence no ribbon). But in areas with high temperatures, chemical stability can become a concern, particularly if the printed labels are meant to have a long shelf life, according to Householder.

"The printing disappears because the thermal-sensitive coating turns dark," he says.

4. Double-check label placement before shipping. Because fixed bar-code scanners on sortation systems are set up to read labels in specific box locations, an improper placement can cause a "mis-read."

"Placement of labels is critical nowadays," says Verb. "Each company is different. Macy's might have different requirements from Saks. It's important to train warehouse associates to check to see that the labels are in the proper location."

5. Use a verifier to test your bar-code labels. To avoid the risk of an out-of-compliance code, companies can test their labels themselves with a bar-code verifier, a device that analyzes codes for readability and accuracy. For example, a verifier can be used to determine whether the spacing between bar-code lines complies with established standards.

Verifiers can also "grade" the quality of the bar code reproduced on the label. "Just because the bar code looks good to the human eye doesn't mean it will scan," warns Denise Neumann, a senior account consultant with Bar Code Integrators Inc., a firm that offers bar-code compliance services.

Since bar-code standards are updated regularly, industry experts also urge companies to check periodically with their respective industry associations and with GS1 (Global Standards One), the international organization that sets bar-code standards.

"These standards are complex and continue to evolve," says John M. Hill, a director with warehouse consultancy St. Onge Co. "Given increasing regulatory and market pressures for compliance, it's imperative that suppliers, wholesalers, and distributors take the steps necessary to assure that they are on the right page."

Editor's note: For a more in-depth look at bar-code compliance, see the book Bar Code Compliance Labeling for the Supply Chain: How to Do It by Jim Dooley and Rick Bushnell.

About the Author

James A. Cooke
James Cooke is a principal analyst with Nucleus Research in Boston, covering supply chain planning software. He was previously the editor of CSCMP’s Supply Chain Quarterly and a staff writer for DC Velocity.

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