Supply chain organization as a survival method

Good companies cruise through recessions, great ones learn from them. If there’s one area that seems to be analyzed and optimized whenever markets slow, it’s the supply chain management and logistics, and it’s easy to see why.

On a rainy Monday morning, a purchasing manager entered his large office and took a seat at his desk. Coffee in hand, it was time to go through the weekend e-mails, and among the usual notifications and documents, two emails stood out. Emails from goods suppliers, notifying him that their prices have gone down again this quarter, and that he’ll be glad to see a lower sum than usual on the invoice at the end of the week.

Without a blink, he forwarded the messages to account managers, checked how the lower costs impact the quarterly budget, and leaned back with a smug grin. Rainy days do look better when your job pretty much does itself.

The purchasing manager, of course, had nothing to do with the price reduction. The suppliers simply saw one of their competitors somewhere in India lower his price, so they jumped to let their favorite account know that they’ll be offering that price themselves.

Supply chain as an asset, not a barrier

It’s hard to believe that the salesman would be eager to drop his price, but this happens far more often than we would expect. Many producers and retailers around the world get this five-star treatment from their suppliers, and they have one of two things in common.

First, most of them are powerful. Yes, when you’re as big as Wal-Mart or Siemens, your suppliers stop bleeding you, and start thinking about how to make you happy. They employ legions of people to come up with discounts, special offers, better services, anything to keep you satisfied.

The second thing they have in common is supply chain management. Wal-Mart is known for getting the best deals from their suppliers, not because of size, but because of flexibility. If Wal-Mart’s purchasing department gets a better price than the one you’re offering, they’ll have you replaced in 1 hour.

They not only can do it, they will do it because it costs them next to nothing to pull it off.

Which supply chains are at an advantage?

The sharpest players in the market are using supply chain optimization as a bargaining tool, and labeling is one of the cornerstones of this system. Quite famously, it was Wal-Mart that caused the global expansion of the modern bar code, when it demanded that every package entering their warehouse should be equipped with a standardized bar code label.

When a shipment enters a cutting-edge distribution center, it doesn’t matter if it’s a pallet of apples, a truck of televisions, or a ton of raw meat. Every single shipment is equipped with the same standard labels, and the path of the shipment and business data that accompanies it is mostly automatic from there on.

Are there obvious solutions we’re missing?

This dominance over one’s supply chain isn’t exclusive to the biggest companies out there. They simply invested millions into these operations in the past, and they’ve developed highly efficient logistic systems.

Luckily, the evolution of techology and the Internet now allows every company to access the benefits of efficient supply chain management. Shipment labeling systems, for example, can be placed online, and you have the opportunity of requesting unified labeling from all your suppliers. They can print labels straight from their browsers, and the usual barriers of cost and time are a thing of the past. While they may have resisted labeling your shipments in the past, they should have no problem with simply clicking a button on the Internet.

Why are you still reading this?

Reach out to your suppliers and offer them the most efficient shipment labeling method available. Your logistics will be more reliable, they’ll cost much less,  and most importantly… On those rainy Monday mornings, you’ll open your email expecting good news.

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10 Things You Need To Know When Selecting Bar Code Labeling Software.

When selecting  bar code labeling software, you should consider the following:

  1. How many users will you have designing and printing labels at one given time?
  2. What type of operating system or network are you using?
  3. Do you have existing labels that need to be converted from another software or from a hard copy? Any compliance labels with specifications/requirements?
  4. Will you be connecting to a database and if so what type? Or will you prompt the print operator at print time to type in data?
  5. Do you need to block users from label design or printing? Would a custom printing screen help reduce user input and printing errors?
  6. Do you need to combine multiple fields together within a bar code or text field?
  7. Are you looking for automated printing integration with another application? (ERP, SAP, Oracle, etc)
  8. What is you printing volume per day and how many printers do you have?
  9. What hardware will you be using with your printing environment? Weight scales, scanners, touch screens, etc?
  10. Are any mobile printers or mobile devices involved for printing?

The very straightforward list found on the Team Barcode Blog, make sure to visit them for the full article and other beneficial information.

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Chasing the information shortening trends

Try as I might, I can’t avoid starting this off with the obvious. These days, it seems there isn’t a newscaster or a newspaper that hasn’t been pushing Twitter like it’s the cure for cancer, and as impartial as we might be regarding the service, hearing constant echos of twits, tweets, and other made up words can be somewhat nauseating.

Still, like it or hate it, Twitter is frequented by millions of people. Few of them know why they like it, but they simply do. And so a new communuication standard is born, that of the famous 140-character message. A length that doesn’t allow for a formed argument, but merely an individual opinion or statement. The 140-character length is so restrictive that Twitter caused an explosive launch of a separate service, which has been around, but dormant for a long time.

The “Tiny url” service, originally provided by www.tinyurl.com allows Twitter users to compress log URLs that they’re linking in their statements to a mere 25 characters, freeing up the remaining space for a bit more text. The Tinyurl service was copied and recently matched by services with even shorter URLs, such as bit.ly, whose only advantage is a 3-4 character shorter URL size.

QR code, which we have written about in the past, is a similar mechanic compressing data into an image. Instead of writing about a topic, one posts the information online, then instead of an impossible-to-remember URL, creates an image which a cellphone can scan to access the data. Tons of communication compressed in a single image.

The above progression brings me to an illustration which made me think this morning. http://twitter.com/kaywa/status/1871472774 is a Twitter post of a user that combines all of the above. The short post lists a tiny url, which links to a QR code, which finally forwards the user to the final content destination. It seems we’re so much in love with shorter information that we’re willing to jump through hoops, use a handful of different methods, and even subject ourselves to a bronze-age hunt for the elusive information, all the while convinced that someone is doing us a convenient service.

AIDC and logistics operations in the modern enterprise seem to be struggling with a similar issue, applying layer over layer of solutions, advanced programming, poorly integrated and/or error-prone systems, all in order to scan a bar code or RFID chip instead of typing information. The simple goal of traceability and control is often compromised because of how it’s applied in practice, and we’ve come to appreciate this deviation from reason as if it was the optimal way to handle labeling.

I don’t have a one-stop-shop solution, or rather I would not assume that I have a solution that is applicable to every infrastructure, but it’s a worthy matter for contemplation. How much of a favor are we doing ourselves by using layered and complex AIDC systems instead of seeking out straight-forward and manageable solutions that provide us what we really need, a reliable shortcut to handling item data.

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So where’s our stimulus package?

Free money? Yes please?

There are few topics as hotly disputed as the recessions stimulus spending, and the camps will likely never agree on whether spending to invest in growth is better than cutting spending to weather the downturn. One thing is for sure, if you haven’t gotten any money by now, you won’t be getting any “free” stimulus money from the ole budget czars.

This leaves the average company with a grim outlook for the coming years, and more questions than they can find solid answers for. To get a quick grip on the future, it helps to divide companies into the basic stimulus/performance categories, and take it from there. The fortunate companies that have received or will receive government-sponsored stimulus can be divided into the few that will successfully weather the storm, and the many that will fail to provide long-term benefits from the financial bandaid, and will either demand more or collapse in disgrace. The other two groups are companies who will crash or take dramatic beatings during the recession, and the few companies that will seem to ignore the downward trends and will continue to grow.

Having established that we don’t fit in either of the first two categories, we’re left with the final two as our choices, and quite obviously, looking for ways to define ourselves in the final group.

The Alternatives

The recession can’t really be avoided, so the main ways to reduce the impact of economic contractions on the bottom line lies in expanding business or reducing costs. Of course, there is a 3rd path of profiting from the recession directly (“recession proofing” books and classes sell like cookies these days), but if you’re not knee-deep in that market already, you probably won’t be breaking new ground anyway.

Indeed, the solution is one that a 5th-grader could come up with. Increasing revenues and reducing costs. Still, some companies do it better than others, so we’ll provide an example which focuses on the AIDC/logistical end of doing business.

Wal-Mart (who else?) is a perfect example of a company that seems to be growing in spite of  the downturn while competing retailers are crashing and burning all around it. Circuit City, Steve & Barry’s, and Linens ‘n Things are some of the many top-end names that filed for bankrupcy in 2008, and Goody’s Family Clothing Inc. was purchased out of bankruptcy, restructured, remodelled, and praised for the wonderful work they did. Less than four months later it filed for Chapter 11 again, and was liquidated.

Wal-Mart 12-months

Wal-Mart's stock compared to NASDAQ over 12 months

So how is Wal-Mart doing it? How do they stay in such a strong position as if they simply didn’t notice that there’s a full blown crisis on the market? The answer is logistics. Wal-Mart is the undisputed retail champion of logistical process support, and it’s the main weapon they use to drive down purchase and handling costs, which in turn allows them to prop up their revenues by beating competitors on pricing.

Pierre Georget, CEO of GS1 France says on his blog:

 From the logistics drawing board to each individual store, operational excellence is at work on all levels of this buying conglomerate. Rigorous procedures, different methods of globalization and an adoption of all technologies capable of contributing to its quality and operational efficiency are the trademarks of the company.

<snip>

It is Wal-Mart’s unwavering commitment to new technologies that has payed off time and time again in giving it an edge over the competition. Each gain in supply chain productivity is reflected as a reduction in product costs, allowing them to continue to offer an “every day low price”.

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QR Codes Explode into the Western Markets

Microsoft announced its Microsoft Tag alternative to QR codes, and life goes on as it did before. By this I mean that there was no massive shakedown of the industry just yet, and while products pushed by giants such as MS should never be ignored, let’s take a brief look at the future of QR barcodes.

It seems that our recent reservations about the QR codes spreading from Japan into the West were unnecessary, as there’s more and more daily reports from both Europe and the US about the familiar consumer codes being used on marketing materials. Looking back at the title, the metaphor could be expanded somewhat. The arrival of QR codes is not so much akin to the fast burst of expanding flame, as it is to the beginnings of an earthquake. The earth shakes slowly, rumbling and testing the structures upon it, announcing a change that is going to make a violent appearance from the foundations at any second. The weak will fall, and new life will grow from the cracks of post-QR marketing.

Dutch QR campaign

Dutch QR campaign

The Dutch government, embracing its technological trendsetter role in the Old Continent, has launched an advertisement campaign with Sprxmobile, putting up some 1500 billboards around the country. These billboards not only include QR code, they use the code as the focal point of the advertisement, putting it at the forefront of the marketing buzz.

Likewise, Fox Searchlight put up over 100 posters in 2 New York subway stations to promote their recently released film Notorious. All of the posters feature a QR-encoded link to the company’s Youtube page, where the trailer for the movie is available, a clear indication of the studio’s aggressive venture into new media advertising.

These are but two examples of how gigantic marketing players are not relying simply on loud noises and erotic innuendo to promote their products. Technology is the play of the day, and it seems that QR code is one of the indicators of a shift in not only the technology, but the approach to consumers. The good old brand bombardement isn’t working anymore, and the famed recession demands creativity and new angles.

The ground is indeed shaking, and QR is taking decisive strides into our daily lives in the West, proving once again that while the Japanese market may often be a bit too wild for our tastes, they do occasionally produce a pearl which can have global reprecussions.

 

Pepsi QR campaign

Pepsi QR campaign

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Microsoft Tag promisses a bar coding revolution

The bar code industry has been observing the evolution of QR (Quick Read) tags and what it means for the business with mixed feelings. While the standard has existed for years, it hasn’t really had much potential before the advent of mobile phones with respectable cameras. The revolution has actually already started, quietly, in the Land of the Rising Sun. Japan, in its trendsetting fashion, started embracing the QR tag as a mass marketing tool around 2005, and its use has exceeded all expectations, reaching a baffling 42% penetration in the consumer market in 2008 (source). Now Microsoft is not only jumping on the wagon, it’s reinventing the platform with a clear business goal in mind, promissing a visible shakeup in how we all see consumer marketing in the West.

 

The origins

Before jumping into news, let’s take a moment to see how any why the QR code has been successful in Japan. A few years ago, tourists returning form Japan have started reporting on a curious phenomenon they observed, where every other advertisement in papers, on billboards, and even restaurant menus and business cards featured a curious 2D bar code. Not only that, some advertisements used the bar code as their focal point, and the locals loved taking pictures of said codes on their mobile phones.

 

QR code, all the rage in Japan

QR code, all the rage in Japan

As it turns out, the technology is a unique bridge between printed media, mobile technology, and Internet technology, allowing the user to take a mobile picture of a printed bar code, and instantly accessing the website to which the encoded URL points. No more notepads, URLs, texting, no more futile attempts to memorize a website when riding the bus or grabbing a lunchtime snack.

 

The technology was embraced by users with little hesitation, blowing up into a virtually unheard of 42% of active marketing penetration with both genders and all age groups. Japanese consumers of all shapes and sizes are actively accessing QR tag encoded information on their cellphones every day. Such a platform allows the advertisers to track their campaigns in clearly identified metrics, and the industry has been quietly bracing for the arrival of the QR code in the west.

 

A different market

As with many other Japanese fads, the West shows reserved optimism when it comes to global application. The culturally fragmented nature of the “prime” markets in the EU and US are cautious in their responses, until one of the industry giants throws his full weight behind the issue.

Microsoft took notice in April of 2007, and introduced its own standard of compact 2D codes. They announced gradual practical application of the so-called Microsoft Tag by the end of 2007, and predicted that the platform would gradually evolve as mobile phone camera technology improved enough to capture smaller and smaller MS Tag images.

2008 came and passed, and instead of having to remember to check on the progress on the Microsoft Tag front, the makers of the new technology have hit us with an avalanche of announcements. Press pieces are popping up left and right, and MS has launched a website dedicated to the technology. Currently in beta, but the last time I looked, so was Gmail, so that’s not exactly saying much in terms of maturity and accessibility these days.

Is Microsoft Tag better than QR?

The million dollar question, quite literally. Microsoft would have you believe that it is, mostly due to two factors. Primarily, they developed MS Tag and are throwing their significant weight behind it. Secondly, Microsoft Tags don’t actually store any information, except for a unique ID which can fetch more data stored on Microsoft servers. This paves the way for a proprietary standard, something that shouldn’t come as a surprise to many. Unlike the QR codes, which can be encoded and printed by anyone, the Microsoft Tag will be backed up by a Microsoft solution, which is free in the Beta phase, but could turn into a paid service at any moment.

Technically, MS does mention that the tags will be smaller than QR codes (which makes sense, considering that it doesn’t need to carry the actual information forwarded to the user). It also claims to have no issues with a common QR issue, which is the need for high focus imaging and/or macro lenses. Aparently the MS Tag will easily be read when out of focus, and initial video and reports from the published applications also note that the scanning is done instantly, as opposed to the somewhat arduous process demanded by some QR tag mobile applications.

 

Tag size comparison

Tag size comparison

 

The bottom line

The western marketing and bar coding industry could not decide what to do about the emerging Japanese QR code phenomenon, and Microsoft seems poised to make the decision for us with their alternative. Like it or not, when Microsoft makes something it’s a force to be reconed with, and the Microsoft Tag is here to stay, and while it’s not likely to reach the popularity of Japanese proportions, it’s also not going to be ignored.

As with most marketing methods, its popularity will be judged long after the major players in the industry have decided that they can’t afford the risk of being the last to adopt it. The recently released video advertisement is generating interest, so they’ve already missed out on being the first.

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