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Technology & Logistics

Data Transfer in the Supply Chain

by Gordon Travers

The flood of paper work required to support transportation logistics presents an opportunity for all trading partners involved in the supply chain process. Typically a company processes hundreds of orders per week entailing a vast quantity of paperwork. In most cases the order fulfilment process is still manual in nature.

As a result of this process two things happen. First, thousands of bills of lading, manifests and similar documents converge on a large carrier daily. Most of today’s bills - up to 90 percent - are keyed into the carrier’s billing system. This process occurs regardless of whether the bill is hand-carried by the driver, faxed in by the shipper or manually sorted or imaged (i.e., page scanned). Carriers must process the documentation quickly and accurately to get the right goods delivered on time to the right consignee. This system is slow and costly and results in a high error factor. These errors quickly become operational inefficiencies.

Studies show that the initial data entry costs carriers between 57 and 66 cents per bill and that re-entry of some shipping data at each step of the process ranges from 7 to 11 times per bill.

Exceptions occur because one in 100 keystrokes by professional data entry clerks results in errors. Exceptions add labor on both the shipper and carrier side to resolve, effectively increasing the average shipment cost for both parties. For example, “...about three percent of the more than 500,000 shipments we made each year contained errors resulting in rejected bills,” says Terry Reuland, supply chain manager for Thomson Consumer Electronics. “ It used to cost us (U.S.)$25 a document to fix the problem: we put 2D codes on our bills of lading, and our error rate is now zero.” These figures are supported by a Texas A&M University study which states that two percent of all received shipments are in error, costing an average of (U.S.)$50 to correct.

Secondly, the arrival of shipments at a customer’s dock initiates an inventory receiving process. In most cases the process is manual. It involves taking the packing slip, matching it to the goods that have been received, which are then matched to a purchase order and finally entered into the host system. For example, at the Subaru-Isuzu plant, receiving was done from paper packing slips. Information had to be manually entered into the system, which caused a number of problems. Errors had to be tracked and corrected. Accounting and purchasing had to reconcile invoices to receiving records prior to vendor payment. Excess inventory was ordered because inventory was inaccurate. Expediters spent excessive time tracking required inventory. To make matters worse, it took 45 minutes to receive an order.

Information about an order or shipment should be entered only once. After that, it should be transferred to people who can make business decisions based on 100 percent accurate information. The key to streamlining the order-entry system is the use of a cost effective, easily accessible standards-based enabling technology that allows for the transfer of data between trading partners in the logistics pipeline.

Electronic Data Interchange (EDI) was initially seen as a way to accomplish this goal. However, the use of EDI to transfer order or shipment data presented some key issues. Data integrity. What goes out the back door often doesn’t match the file created in the front office.

Time. It often takes longer for the transfer of the file from the shipper to the transport company than it does for the order to arrive at the dock. As a result, manual date entry occurs to meet scheduled departures. Because of these issues EDI never lived up to its perceived potential.

Parcel carriers have found a way around these issues by providing customers with shipping systems, or more recently Internet-based order placement. These programs have three goals: to print shipping labels that will help move the freight through their system; the reduction or elimination of data entry at the carriers facility; to act as a marketing tool to help lock the customer into the carrier network.

While these solutions do help resolve data entry issues and facilitate the movement of the order, they only address one small part of the supply chain - the transfer from the shipper to the carrier. They do not address the movement through the carrier network, nor do they address receiving at the consignee or final customer location. As well, these solutions tend to be proprietary in nature, meaning you require a system for each carrier and the data cannot be shared.

The complete solution is Portable Data Files (PDF417), more commonly know as 2D barcoding. 2D barcoding is paper-based, standards-based machine-readable EDI. All the mandatory information for an EDI 204 transaction can be printed in a 2D bar code format on a bill of lading. The American National Standards Institute (ANSI) has established a standard that all members of the Supply Chain can use. The standard describes the use of 2D symbols, specifies the structure, physical parameters, placement and coding to convey data between trading partners. This standard ensures scannability and enables consistency of data transfer across multiple industries and trading partners.

Because the information travels in a machine-readable format with the shipment the real long-term benefit of PDF417 is the sharing of information with all parties in the supply chain. PDF417 facilitates the automatic transfer of all necessary data between computer systems throughout the logistics process, including the transfer of detailed delivery information directly into the computer system of the ultimate consignee.

There are a large number of organizations that are using a 2D barcoding application to meet some of their needs for data management in the supply chain. From the carrier side: Consolidated Motor Freight, RPS, Watkins Motor Express, CityLink, TNT Logistics, US Delivery, USPS, ICS, Apps Cartage, Sameday Right OWay and UPS Canada.

Sameday is an example of a carrier who is using Portable Data Files [PDF417] to resolve data capture and transfer issues. Sameday’s shipping systems have incorporated PDF417 into the shipping label and manifest process. Using this technology, shipping labels, waybills, manifests, and other paper-based documents that travel with the goods have been transformed into high value machine-readable media. As a result, all necessary information relating to the parcel or consignment can travel together with the physical goods in machine-readable format. This method in turn facilitates the automatic transfer of all necessary data between computer systems throughout the logistics process. All that is required is a simple low-cost scanner.

Sameday sees this process as a way of resolving a number of issues. By scanning the 2D bar code into their system the company assures complete and totally accurate data capture. This procedure has a number of results. Initially it significantly reduces the cost of data capture, but more importantly it assures data integrity. As a result, un-routable or misrouted shipments are reduced or eliminated.

One of the benefits for Sameday is the reduction of operational inefficiencies and related costs. More importantly, though, it helps ensure that the right goods are in the right place at the right time, resulting in a win-win for both the shipper and the consignee. This efficiency may translate into additional business for Sameday.

Currently, Sameday’s cut time for pick-ups is based on the time required to enter the data in relationship to the time its outbound schedules must depart to meet delivery commitments. It now takes approximately one minute to enter the shipping data. However, scanning in the data will allow it to reduce entry time to a matter of seconds. The result: an extended pick-up window. The benefit: customers will be able to ship later, allowing them to fill more orders and increasing its volumes.

Because the information travels in a machine-readable format with the shipment, PDF417 facilitates the automatic transfer of all necessary data between computer systems throughout the logistics process, including the transfer of detailed delivery information directly into the computer system of the ultimate consignee. Now both the carrier and consignee can focus on the management of the inbound receiving process.

A number of shippers and consignees, such as Thomson Consumer Electronics, U.S. Department of Defence, William Carter Company, Cellar Masters of America, Pella Windows, Raytheon Aircraft, Subaru Isuzu of America and General Motors have also looked to 2D barcoding to resolve data transfer, capture and management issues.

The Subaru-Isuzu plant turned to 2D barcoding to improve inventory accuracy and automate the receiving process. Orders are sent to the vendor via an EDI 862 transaction. The shipping label with a 2D barcode is generated directly from this data. Each label contains the supplier code, delivery order number, part number, quantity, engineering change level, serial number and ASN number. Now, with a single bar code, the inventory records are instantly updated, and what used to take 45 minutes is now completed in less than oneminute!

General Motors is also taking advantage of this technology. GM has published a global shipping label specification for all suppliers shipping production parts to all GM facilities, worldwide. Suppliers must comply by March 31, 2000. Two-label standards have been issued to date - 1724-A, covering Individual Container, and GM-1724B for Master Label for Multiple Containers. The labels use PDF417 providing machine-readable information to facilitate container routing and receipt. Two letters and several label specs from GM regarding their global label compliance initiative are available at the GM Supplier public website: www.gmsupplier.com/apps/gsnhome/supplierquality/procedures-manuals/ww_purch/gm1724/1724indx.htm