Similar to each child in a family, each customer your business ships to has different needs. Specific labeling requirements help move your product efficiently through your customers’ supply chains and into consumers’ hands. Failure to follow requirements often results in a fine, chargeback, or deduction. Of course, you want to fulfill each customer’s requirements perfectly, but those requirements have an unfortunate tendency to be different. This article explores four different systems of fulfilling customer labeling and packaging requirements.
Level 1 – Rely on People and Memory
This is the weakest system, but often where most small businesses start with a new customer. A manager or supervisor will read the customer’s routing guide or vendor manual. He or she will make note of items to remember, such as pallet height requirements, labeling requirements, preferred carriers, etc. Then, that person will help ship the first few orders, remind the team that Walgreen’s pallet height limit is 60 inches, or that CVS needs the customer specific item number added to the package. With a good team and little turnover, this usually works for a while. However, eventually an exception arises, or things get busy, and the team makes a mistake or forgets a detail. The team then often gets blamed for the mistake, even though they have simply been victims of a poor system. Relying on people instead of processes is often unfair – and problems can be avoided by simply creating a better process.
Level 2 –Create a Requirements Checklist
For most customers, creating a checklist of requirements is enough to avoid problems. It gives a quick, consistent reminder of what the shipper needs to do for the customer. It also creates a level of accountability if you have the shipper sign off on the order. Signing a name to an order certainly makes one realize the importance of accountability, and the employee is more likely to ask how to fulfill each line of the checklist if he or she doesn’t already know how.
The checklist may look something similar to the section below:
- Customer PO# Appears on Master Carton Label and Packing Slip
- Carton Count on Packing Slip
- Lead Carton Marked with Bright Color Sticker
- Stacked on Grade A Pallet without Any Defects or Spills
- Shipped via Preferred Carrier (YRC, UPS Freight, Old Dominion)
Shipped by (sign) ______________________
If you can get these checklists to print on the pick sheets, then you’ll never need to worry about whether the order included one or not. If that is not possible, then manually stapling a checklist to each pick sheet may be an effective, although cumbersome, solution. However, the money saved in chargebacks and deductions will quickly make up for the increased order preparation time.
Level 3 – Two-Person Password Authentication
Some customer requirements are especially difficult to follow and especially expensive to mess up on. For example, forgetting a label can easily create a chargeback of $300 for some customers, a fine several times higher than the order value. For these types of customers, you want at least two people to carefully scrutinize each order. A two-person checklist is effective, but in the rush of emergencies, sometimes those checklists are ignored. For example, how many bathroom cleaning signoffs have you seen at restaurants or stores that haven’t been filled out for several days, or longer? When analyzing the problem with the 5 Why’s technique, the result may be something similar to the chain below:
Problem: We were fined by customer X
Why? Five Cartons were missing a specific label
Why? We shipped them without the labels
Why? We did not follow our checklist
Why? Because nothing stopped us if we didn’t follow the checklist (and we haven’t had a problem in months)
Why? We have no checkpoint in place in our system to ensure the checklist is followed
Solution: Create a checkpoint, or tollgate, in which we ensure the checklist is complete
Just like action movies in which two people must turn their key simultaneously to launch a missile, you can have two people enter a username and password verifying that they completed the checklist. When shipping an order in your system, a screen could pop up asking two people to log in and acknowledge in the system that the order meets all customer requirements. While this may feel a bit stringent, it creates shared responsibility and can help ensure that procedures are followed even in the most hectic of times.
Level 4 – Complete System Automation
The ideal is to have all customer labeling and packaging requirements automatically done by your system. Complete automation is the dream of any shipping manager, and is close to what most large distribution centers do. However, the high cost and frequent need for customization often keeps this option out of the reach of small businesses. Obviously, the more you can automate, the less human errors you’ll see – which means a decrease in fines and deductions. Creating customer specific labeling is usually the first step in automation, especially as requirements for Advance Ship Notices (ASNs) become more common. Work with your team to identify the most repeated or expensive mistakes and focus your automation efforts on reducing those first.
As you grow, you’ll eventually reach a point in which you can confidently watch truck after truck leave your docks knowing with 99.9% certainty that you won’t see any chargebacks of fines because your system helps your team perform flawlessly.