Today's distribution centers face huge challenges in ensuring compliance with complex packaging and labeling requirements, especially in the age of big data and SKU proliferation, says John Dwinell, CEO and founder of Siena Analytics.

SCB: What's going on inside the warehouse today, with regard to attempts to ensure compliance for all the characteristics of product flowing into the facility?

Dwinell: It’s gotten really complex in recent years, coming from all different sources. Ensuring the quality and accuracy of the product as it comes in requires a lot of manual handling. And that slows down that the process. Technology now is just coming about to help automate that, make moves more efficiently and accurately, and provide better information about product as it gets put into the warehouse.

SCB: What are the elements of a product today in which compliance becomes an issue?

Dwinell: The size, the packaging, and the labeling on the product. Does it have all the information it should have, and is it in the form that it's supposed to be?

SCB: Why is that more of an issue today than before?

Dwinell: Supply chains have become so much more complex. The growth of e-commerce and the omnichannel affects control over product and where it's coming from. A lot more information needs to be gathered as it comes into the distribution center.

SCB: Is it also a question of a lack of standardization, with the customization of product creating more SKUs and variations?

Dwinell: Sure. There's a lot of variation in product. A supplier might be running a 20%-more bonus, so now the package is bigger than it normally is, and that affects where it fits in the warehouse. It's coming from a different place than it normally came from, and maybe the packaging is also different.

SCB: Not to mention an increase in value-added services within D.C.s, where they’re performing more complex tasks than simply receiving, putting away, picking and shipping product out the door.

Dwinell: Right. It has all gotten much more complex, so there’s a lot more need for better information about the product.

SCB: So what’s the solution? How can D.C.s enable their operations to ensure compliance? Is it about automation or people?

Dwinell: It’s a combination of both. People are really important. They have knowledge about the product, but automation helps to handle more volume. And if you can have less manual handling and more automated flow for a large majority of product, then your experts can handle the most difficult situations.

SCB: Doesn’t automation to some degree depend on the standardization of the product? Is it flexible enough to deal with all of the variables in today's product mix?

Dwinell: That's true. Standards help a lot, but at the same time the technology needs to be able to handle all that variation. Artificial intelligence brings a lot more adaptability than traditional technology has had.

SCB: How important is AI enabling these operations today? To what degree is it actually being deployed?

Dwinell: It's beginning to show up in distribution centers. It’s still new technology, but has been rapidly evolving. There’s a lot of opportunity for AI to fit into a distribution center, and handle all the variations. That’s a strength of AI technology.

SCB: Say that a particular package comes into a warehouse, with all of the issues we’ve been talking about. What needs to be done in order to make sure that the product is complying with all of the processes and standards that are attached to it?

Dwinell: First off, you want to know what type of packaging it’s in. Is it just a cardboard box? Is it wrapped in plastic? Traditional technology won't tell you that. It will give you overall dimensions, but you need to know more specifics about that package. What are all the labels, where are they, and how are they meeting the requirements?

SCB: So it's about external packaging and labeling, and the information that attends it, more than what's actually in the box?

Dwinell: Right. We don't know what's inside the box other than what the manifest says.

SCB: What’s going to happen in the future to address these problems? Is it just a matter of more automation, more AI, more machine learning? What are some future solutions that might be brought to bear on this problem?

Dwinell: It will be all of that, but there will also be a more connected supply chain. Over time, information needs to flow back to the sources where it came from. You hear a lot about blockchain and other types of technology that are making the entire supply chain smarter, and allowing for the sharing of information throughout it.