Labeling Improves Automotive Supply Chain

As automotive technology is transformed, and vehicle designs focus increasingly on the digital rather than the mechanical or electrical, supply chain efficiency is going to become paramount. One way to quickly introduce efficiency is by improving labeling.

Too many organizations today rely on cobbled together solutions composed of disparate applications and manual processes. Sticking with this approach will not yield any efficiencies. An effective enterprise-wide labeling approach will. Such an approach empowers companies to deal with the nuances of today's complex labeling requirements and regulations, and gives them the ability to support high levels of variability in labeling, while providing the speed and scalability to support global supply chains. This smarter and more efficient way of doing business provides standardization, allowing companies to achieve consistency and flexibility to support changing labeling requirements. It also provides a platform that is scalable and easily supported and maintained.

Why labeling matters

Accurate and timely labeling is essential to a smoothly flowing automotive supply chain. Throughout the supply chain, the label is the identifier that provides critical barcodes and other information that speed the flow of goods from suppliers to their customers, as well as within a supplier's internal manufacturing process.  When labeling is optimized, suppliers are able to better control costs, monitor inventory, trace shipments, manage product recalls, and improve distribution operations.

Labeling has an impact at every stop along the way of the supply chain, and at each of these stops, there are requirements that must be met. Some of them are industry standards that have been adopted. Others are particular requirements that an individual customer has established. There are also country- and region-specific regulations that must be adhered to.

Having to relabel or over-label shipments in order to ensure that they contain all the data needed at each stop is inefficient. Worse yet, if the labels aren't correct, shipments may be refused. They may be returned to a supplier. They may be confiscated at customs. Suppliers may find themselves fined – or fired. As the number of suppliers that automotive manufacturers choose to work with gets winnowed down, the quality of a supplier's labeling may make the critical difference.

While labeling is central to the overall operation of the supply chain, it is also an important element of branding, with many suppliers using the label to convey their brand. Branding may seem to be a trivial consideration, but consistency and accuracy in labeling can be a strong deterrent to counterfeiting. A label that's distinctive and correct is a visual way to demonstrate authenticity, even between suppliers within a supply chain.

Why labeling is so complex

Labeling matters, which makes getting it right an imperative. Labeling is also exceedingly complex, which makes getting it right a challenge. What makes for such complexity?

Labeling would be fairly simple if a supplier were providing one component to one customer, without having to cross a border to do so. But today's supply chains are massive and global, and shipments navigate through multiple countries, regions, and languages. Requirements vary from country to country, and from manufacturer to manufacturer. From one place to the next, scanning may be set up to work with different types of symbology. A label needs to concisely tell a long and intricate story – a story that's subject to frequent rewrite as regulations and requirements change.

The level of complexity in labeling in the automotive supply chain introduces the potential for major inefficiencies and costly errors. Consider the simple hypothetical situation of the supplier with a lone product sold to one customer, which now takes on an additional customer. Customer B has labeling requirements that differ from Customer A, so the supplier now has to create, manage, and worry about two different labels for the same product. Then Customer B decides to use the supplier for its overseas operations. Customer B wants labeling to be consistent throughout its operations, whether they're located in the US, in South America, or in Asia Pacific. But South America and APAC countries have different regulations (and different languages). And now the supplier also has to comply with US export regulations. As more variability is introduced – Customer A is now tweaking its product requirements, so the supplier is now contending with two products  – the label permutations begin to multiply.  This hypothetical situation is complex (and confusing) enough on its own, yet it understates the case for the true intricacies of the labeling process. There are just so many different pieces to think about, and – in order to get to the end product – all of those pieces must be seamlessly knit together.

The adoption of industry standards – the Global Transport Label (GTL) standards, which are modeled on existing regulatory ISO 15394, ANSI MH10.8.1, the Odette Transport Label (OTL) and AIAG's B-10 Standard  – help suppliers move in the right direction. But each supplier remains accountable for designing their labels, and ensuring that they're accurate, GTL compliant, include the right languages, and are in accordance with customer-specific requirements. As the number of permutations grow, it's easy to see how costly errors can be introduced. It's also easy to see that, as suppliers try to manage their complex labeling process, inefficiencies are compounded. For a supplier with multiple plants, each serving different customers or geographic constituencies, each plant may have come up with its own labeling solution – manual, home-grown, piecemeal. This makes the overall labeling process too varied and too disconnected – and too difficult to manage.

To further add to the complexity story, the global nature of the automotive industry brings close governmental scrutiny to suppliers. Labeling plays a critical role in complying with various import and export regulations and trade agreements, and in managing the risk inherent in dealing with countries where there is a high degree of corruption and fraud.

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