The Unrealized Benefits of Supply Chain Serialization

Through the use of sophisticated enterprise resource planning (ERP) systems, companies can view the aggregate shipping locations of each distributor, wholesaler, and in some cases large resellers. Most of the time, though, the tracking of products ends there.

By serializing products at the primary package, case and pallet levels, companies can capitalize on enormous opportunities to boost supply and demand management, reduce product loss, prevent counterfeiting, and enhance brand protection. 

Enabling the tracking of items down to the unit level, serialization results in simplified returns processing and recall management, more accurate demand management, and the opportunity for more advanced loyalty programs.

Serialization allows each partner in the supply chain to track product at every step, from point of manufacture to the moment it’s in the consumer’s hands. In addition, when the product is returned, the serial number can be used on all shipping documents to provide information on status and the reason for the return. The information can be of great value in determining whether the product has any quality problems.

With certain recalls, such as children’s products and food and beverage items, the consumer is highly motivated to enter specific serialized information on a website about the purchased product.

Imagine the benefits this would have provided during the romaine lettuce recalls that surfaced last year. Consumers could have determined whether the item was at risk simply by entering a serial number into a website. Stores could have understood which products were safe to keep on shelves, and which needed to be pulled. Manufacturers would have better understood where the contaminated products were shipped, and communicated directly with those specific locations.

With serialization, as each product is returned by consumers and members of the supply chain, easily read serial numbers on each level of packaging are communicated to the brand owner as the products are passed back up the supply chain. Today, products that aren’t serialized bog down the return process, lacking proper and timely information for consumers, supply-chain employees and company executives.

Serialization allows demand management to be optimized. As each product is shipped through the supply chain, the brand owner has access to a timely and accurate tracking history. Shortages can be detected, and replacements shipped, more quickly.

Imagine how useful this would be in the retail industry. Using the power of serialization, one can ensure that the right products are being ordered and available for customers, rather than having a moment of bare shelves and lost sales.

Likewise, disappointing sales in wholesale channels and retail outlets can be detected and handled very quickly. This increase in brand owners’ knowledge can provide for much faster availability of key information regarding the performance of products or their retail outlets, and serve as a guide for making distribution decisions much faster and accurately.

From a brand integrity and anti-counterfeiting perspective, by tracking to the unit level, consumers can validate that the product they are purchasing is authentic. This is a major opportunity for the luxury goods industry.

Aside from the clear supply-chain benefits, opportunities for improvements in marketing are enormous. Marketing teams will be better equipped with timely information regarding sales of their products, allowing them to adjust marketing tactics as needed.

If supply of a specific product is high and sales are low, the company can run a special to promote the product. Demand-side information will be obtained faster and more completely than ever before, allowing for subtle changes to the way products are marketed. For example, communications from purchasers can provide invaluable feedback about product characteristics, which can be used in future advertising campaigns. Any changes in product design or advertising can be detected and altered much faster if a serialized track and trace system is implemented.

On the consumer side, entering validation of product purchase on the company’s website provides the opportunity for a targeted loyalty/rewards program that more closely aligns with that consumer’s needs. In the process, the consumer gets more relevant information and rewards, and the company gets the opportunity to create brand loyalty and increase targeted sales opportunities.

Supply chains have become much more efficient, and products are shipped through these channels much faster than before. Yet even with this increased efficiency, there are still many unrealized benefits of serialization in the supply chain. As more advanced labeling and serialization systems become available at lower price points, companies have the opportunity to embrace the next step in supply-chain management to create a game-changing differentiator through serialization.

Steve Wood is president and CEO of Covectra, Inc.

By: Steve Wood, SCB Contributor

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Clarkston Consulting

This short video was created with the intent of explaining serialization to anyone – your coworkers, your boss, your next-door neighbor, your spouse – after watching this video, anyone should have a basic understanding of what serialization is, why it was created, and which challenges it’s intended to solve. For more information, visit Clarkstonconsulting.com/serialization

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