Navigating Barcode Requirements of Vendor Compliance Programs

Any company that works with high-volume retailers must maneuver through each retailer’s vendor compliance guidelines. While there are many similarities between different retailer’s requirements, there are few universal industry standards that vendors have to adhere to for each of their retail clients. Because of this, vendors could have to adhere to a different set of compliance rules for each of their retail clients.

Vendor Compliance Guidelines Benefit Both Retailer and Vendor

Retailers institute these policies because they deal with countless vendors on a daily basis. Vendor compliance guidelines help them standardize and streamline the process, with consistent internal systems and policies. For vendors, however, these often disparate standards can turn into a significant expense, in terms of updating computer systems, improving quality control methodology, and managing multiple systems for different retailers. However, vendor compliance programs are also beneficial to vendors:

• Making procedures compliance-compatible allows a vendor to work with higher-volume retailers, which are the most likely to have specific, stringent guidelines—and to sell more of the vendor’s products.
• Violation of compliance standards usually results in steep fines known as chargebacks. Thus, updating systems represents an up-front investment that will reduce costs in the long run, both in terms of reduced fees, and in time wasted identifying the cause of each chargeback.
• Vendor compliance guidelines actually force the vendor to improve in-house communication and data systems. Communication among departments, particularly accounting and operations, necessarily improves as vendors rise to meet the demands of rigorous vendor compliance standards.
• Retailers are more likely to choose a vendor with an excellent compliance track record over their less compliant competitors. Ultimately, adhering to these standards improves relations between vendors and their existing retailers. Additionally, it makes the vendor a more attractive customer to new retailers, supporting sales growth.

Ensuring Compliance: Barcode Strategies

By far, the most common reason that vendors incur chargebacks is barcode quality. The labels on individual products, master cartons and pallets are especially important, because each barcode that is inaccurate or cannot be scanned may result in a separate chargeback. Thus, it is critical to select the best kind of barcode printing method and materials for each retailer and each level of product packaging.

• Laser printing barcodes offers a wide range of fonts and design layouts, and laser printers are very common. But laser printed barcodes can have weak edge contrast rations because laser printers use round print dots. Also, laser labels may not work properly in difficult labeling environments; such as cold temperatures, high humidity, etc.
• Thermal-transfer labels that are printed with cheap or low end printer ribbons can smudge easily, rendering them inaccurate, or sometimes even impossible to scan. Ribbons must be properly matched to the label material they’re printing on, to achieve durable good quality barcodes. This is the most common way to print barcode labels, and when done properly it’s also the best way.
• Direct-thermal labels use no ribbon for printing, so the print is extremely smudge-resistant. However direct-thermal print will fade over time and with exposure to light or heat, and the image will become inaccurate and unreadable. So the user must consider the life span required from the label.
• The label stock on which the barcode is printed must match the printing method used and the demands of the product’s environment. There are many different materials available for each print option, ranging from economical to premium.

Because barcode errors are the number one cause of vendor compliance violations and chargeback penalties, it is often preferable to enlist an expert to design and print barcodes on the vendor’s behalf, or to have an expert design the vendor’s internal printing system. This is especially true if the vendor’s different retailers have widely variant requirements.

The best way to avoid vendor compliance violations is to understand each retailer’s compliance standards thoroughly, and use them as guidelines for streamlining business. Ultimately, the choice to adhere to vendor compliance guidelines is the choice to promote growth and build profit for a business.