Last week we talked about applying bar code labels and focused on the effects for distributors. In this issue we'll talk about barcodes and the effect on processors and hybrids (distributors who also do processing.) This is a second of our 3 part series on bar codes and the dramatic effect they can have on your costs both in billing errors and customer satisfaction. 
First let's look at an industry standard UCC 128 barcode. You'll notice the UCC 128 has room for a UPC code, Net Weight and room built in for a serial number. This particular label was generated through the FoodConnex Precision Scale interface.
For the moment let's ignore the selling benefit of having a industry standard barcode on your product (yes, we understand that offering your customers the ability to control their inventory by barcode is a benefit but we're going to focus on direct savings for your company.)
- Processors and Hybrids get an immediate reduction in shipping errors and mispicked orders. We talked about this last week but if you missed it click here to remind yourself. Processors get all the same benefits to accuracy that distributors do.
- Catch weight recording errors are eliminated. This is the big one for most processors. Catch weight errors can cripple a company's profits. Research indicates that one half of one percent of catch weights a company records are recorded in error not in your favor(really its 1% but only half are against you) and would be prevented by a bar code scanning solution. Now that's 'only' 0.5% but let's think about that for a moment and imagine:
- You sell 45,000 lbs per week (about 180,000 lbs per month)
- Your average cost per pound is $2.79
- That's $502,200 in catch weight products monthly.
- Multiply by 0.5% is $2,511 per month lost to catch weight recording errors.
- $30,132 per year in immediate error reduction.
- Customer complaints and invoice adjustments reduced. In number 2 we only talked about the times when you lost money directly on a product, and most customers won't call you up to ask you to increase their invoice because the product you shipped was a few pounds too much, BUT THEY WILL CALL YOU TO HAVE AN INVOICE REDUCED WHEN PRODUCT IS A FEW POUNDS TOO LIGHT. This is going to cost you time and money. The fatal assumption some companies will make when thinking about catch weight errors is to shrug and say it all washes out in an unmonitored system.
- Real World Reality Check - Not all your customers are 100 percent honest or accurate in their measurements. One of my customers was implementing a catch weight capture system like we're talking about said that he was going to save several hours in the back office every day just by eliminating the invoice adjustments his customers constantly requested and up till he got his new system up and running he had no way to "check" what had been shipped other than the hand written tickets. Now he has a weight printed on each box, and a scanned confirmation for each shipment. The result, hundreds fewer "corrections" requested saving labor and profit.
- Real World Reality Check - Not all your customers are 100 percent honest or accurate in their measurements. One of my customers was implementing a catch weight capture system like we're talking about said that he was going to save several hours in the back office every day just by eliminating the invoice adjustments his customers constantly requested and up till he got his new system up and running he had no way to "check" what had been shipped other than the hand written tickets. Now he has a weight printed on each box, and a scanned confirmation for each shipment. The result, hundreds fewer "corrections" requested saving labor and profit.
- Product Recall and Traceability System. Limit your liability during a product recall by clearly labeling your product and having a fast and effective recall reporting system (talked about this back in Issue 095). Our hope is that your company never sees a recall and the 'only' savings you see here is the difference in labor between an automated system and a log book, but if a recall does happen make sure you are prepared. One of my customers who just went live on our scanning solution did a mock recall in 2 hours, that recall time compares against a full day of labor when the recall system was not in place. Of course the system recalll is more accurate then the paper/manual recall.
How to get it done: I got some immediate feedback on my last newsletter from companies who were looking to implement a bar code system. I am of course happy to work with anyone who is interested in contacting me, but for those of you who haven't had the time to call or right in I wanted to share this outline with you.
- Organize your company: Hardest thing to tell a potential client but a large part of the burden of implementing a good bar code solution is putting the proper policies and software solution in place even before the first label is printed.
- Prepare Infrastructure (systems): You're going to need a system to feed information into your barcodes about your product (Item IDs, descriptions, serial numbers) and read it back again for order confirmation. This step can take considerable real-world time and money, if you have the option to do so you may want to look at spreading out the investment by working in phases.
- Bring in integrated equipment (scales printers and scanners): When you've taken care of the first two steps the actual equipment installation becomes a no-brainer, but watch out for the "rush" solution that puts this step first. Seeing labels being slapped on your product immediately can lead to a false sense of accomplishment, if you're not scanning those labels you're not seeing your savings.
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