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Managing complexity: How to cope with SKU proliferation

10-Aug-2018
Managing complexity: How to cope with SKU proliferation
Stock-keeping unit, or SKU, proliferation has been a topic of discussion in just about every industry for the better part of a decade. Food and beverage, apparel and garment, consumer goods – all of these industries have had to cope with the logistical challenges of managing hundreds, or thousands of SKUs.

The life sciences industry is no exception. The Healthcare Distributor Alliance’s annual Factbook revealed that the total number of SKUs held in inventory on a distributor level was almost 55,000 on average. While one might expect that distributors have to handle large volumes of products and devices, this trend isn’t limited to that area of the supply chain. According to McKinsey’s Pharma Operations Benchmarking (POBOS) study, for example, the number of SKUs handled by a typical plant doubled between 2004 and 2009. And we see it in our own client base. One of our life science customers, a medical device manufacturer, maintains 3,000 templates – one per SKU.

Dealing with this level of complexity is challenging. This challenge is compounded by the fact that many life science companies still take a manual approach to quality control. When you then consider the costs of error in this highly regulated industry, the importance of being able to manage SKU proliferation effectively becomes business-critical.

Managing complexity is key to avoiding labeling errors
You don’t need a management consultant to tell you that increased complexity combined with manual approval processes is a recipe for a product recall. Errors in labeling or packaging artwork still account for over 50% of pharmaceutical recalls. In addition, some industry analysts estimate that up to 90% of these errors are due to human error, brought on by manual quality control and approval processes.

The message is clear. You need to have systems in place that can manage a complex SKU universe. Systems that give you control over each label’s lifecycle, down to the SKU level, and ensure that no unauthorized changes impact the label prior to printing.

Introducing label variant technology
We have built our label management system based on the idea of having flexible, universal label templates that contain dynamic content. By creating flexible templates, you can keep the overall library of templates to a minimum, and minimize the most resource-intensive part of the labeling process, label design.

We offer you the best of both worlds: the security and flexibility of these universal templates, combined with the ability to approve each and every label that is created, down to the SKU level. We call this label variant technology. This ground-breaking capability means you can approve every single production label prior to printing and make sure data cannot be changed after the label has been approved.

The result of this is a focused label review process. The format, design and artwork are all automatically created based on the template selected, so reviewers can concentrate on approving what has changed – the data. Label variants have their own individual label lifecycle, which is completely transparent. You know that every label, and the data printed on it, has gone through the same rigorous approval process. Using this technology, you can avoid labeling errors and successfully manage hundreds, even thousands, of SKUs.