14 replies to this topic

[Baohan88]

Our auditor raised this finding:
"No physical blocking or product status labelling is implemented in the warehouse. Product is correctly controlled in WMS; however, lack of physical controls results in unclear on-site identification of product status."

 

In our process, all products are initially set to HOLD after production. QA then updates the status to RELEASE or REJECT in the WMS. Warehouse staff pick goods based on the picking list (product name + location), with a second check and labeling step before shipment.

 

Currently, product status can only be verified in the system. We did try physical labeling (e.g., for rejected goods), but it wasn’t sustainable due to real-time update challenges.

 

Could you please help me understand whether this is considered a real risk or control gap if product status is not physically identifiable in the warehouse but is fully controlled in the WMS? Also, what are the best practices in this case?

 

[Syzygy]

I think it depends on your system, if someone would release a product (accidentally or on purpose) that actually on hold for an issue, the operators wouldn't even question just use it. In my past I had similar warehouse system, all statuses were updated in the online system, but as soon as we changed something, we put a hold, reject, quarantine tape on it instantly, so it is clear for everyone. It happened that something accidentally been released and the production system automatically instructed the forklift driver to bring that ingredient to production. As it was taped up (hold tape), the FLT driver came and questioned. We normally updated the statuses with a laptop and scanner, put the tape on right away at place, to avoid any confusion. We also had a separated zones for products on hold, products rejected and products in quarantine to make it easier to identify which products should not be used.

[MDaleDDF]

It indeed sounds like you need to do something.   Anything on hold at my place gets a hold tag, but we release product before packaging, so when it comes off the line it gets a license plate immediately.    

If your stuff is on hold while sitting in the warehouse that's fine, but yeah, it needs a physical tag imho.   A hold tag, or LP that shows when scanned it's on hold.

[Baohan88]

Actually, we have a control step in place to prevent both unintentional and intentional removal of unauthorized goods from the warehouse. Before shipment, we perform a verification process by checking the serial number of each carton against the barcode label attached to it. This allows us to confirm whether the carton is approved for dispatch. Only after this verification do we proceed with labeling and loading the goods into the container.

 

Additionally, if there is no official shipping order—which normally includes details such as pallet number, pallet location, and quantity—the status of the goods cannot be identified. In such cases, handling or moving the goods is strictly prohibited. Therefore, I don't really know if I need the physical tag or not.

[MDaleDDF]

 

Actually, we have a control step in place to prevent both unintentional and intentional removal of unauthorized goods from the warehouse. Before shipment, we perform a verification process by checking the serial number of each carton against the barcode label attached to it. This allows us to confirm whether the carton is approved for dispatch. Only after this verification do we proceed with labeling and loading the goods into the container.

 

Additionally, if there is no official shipping order—which normally includes details such as pallet number, pallet location, and quantity—the status of the goods cannot be identified. In such cases, handling or moving the goods is strictly prohibited. Therefore, I don't really know if I need the physical tag or not.

 

So basically everything is on hold until approved for dispatch?    Is it all in one warehouse room?    

[GMO]

It would be interesting to know which standard you were being audited against for this as that might impact the response.

 

Physical labelling risk

 

Firstly, is physical labelling a good second step? Yes but it depends on your processes on whether this is necessary. In some warehouses, pallets are not practically accessible and a hold may occur over many pallets so if you put in a requirement to label every one physically, that might be impractical and slow.

 

Also, depending on how your WMS works, bringing your pallets out to label them may introduce risk. Some block processes in a WMS actually stop pallets from being moved at all. So to get them to an accessible location, you have to unblock them.

 

Lastly, after all of that, if the pallet is later accepted and taken off hold, you need to be sure you remove all labelling from the pallet or risk rejection at customer.

 

So that's all the problems with labelling.

 

BUT there are also potential problems with your system as is and it depends a lot on how it's designed and how you operate your warehouse.

 

Possible problems with your process "as is"

 

Does the automated hold system still work if you have any picking processes? Or is it a risk that once a pallet has gone to picking that it will just be used unless physically labelled?

 

Is there any occasion where a pallet could be removed from the warehouse without being scanned? While you have processes in place, how do you know they're always followed etc. 

 

Lastly and this is the only one which really started to ring alarm bells for me from your description. Are you using appropriate hold states not using a "pending release" state for products which might have a food safety or quality issue? The reason why is that pending release state (or what you describe as "initially set to hold after production") is not, in many WMS actually a "true" hold. What do I mean? What I mean is that the pallet can often still be moved when on this status but not issued. While on paper if everything is always done to plan, that works, it's also in a status where the majority of pallets are normally released and there is no differentiation between "hold for good reason" and "pending release" status. The reason I worry is because you've said in your description that the pallets then progress to one of two states; release or reject. This must therefore mean that when you do have a QFS issue, you are leaving some pallets in the same status as those pending release. I can tell you from bitter experience, that's where mistakes can happen. If possible, for example, if you have a SAP system and your pallets are produced in QI (quality inspection) status but an issue is detected before they're released, that they are transferred to B6 or some other blocked stock status before the decision is made, while you're investigating. That way your planners aren't seeing it as good stock, your operators aren't assuming it will be released, the pallets can't physically move past automated systems and your quality team are less likely to make a mistake.

 

Of course none of that is actually about physical labelling but what I'd do once you've assessed all your processes and the risks of labelling or not is record it all in a risk assessment as to why you've made the decisions you have. For example, you may choose only to physically label pallets which have gone to picking if you have that process because labelling other pallets has risk as detailed above.

[Baohan88]

It would be interesting to know which standard you were being audited against for this as that might impact the response.

 

Physical labelling risk

 

Firstly, is physical labelling a good second step? Yes but it depends on your processes on whether this is necessary. In some warehouses, pallets are not practically accessible and a hold may occur over many pallets so if you put in a requirement to label every one physically, that might be impractical and slow.

 

Also, depending on how your WMS works, bringing your pallets out to label them may introduce risk. Some block processes in a WMS actually stop pallets from being moved at all. So to get them to an accessible location, you have to unblock them.

 

Lastly, after all of that, if the pallet is later accepted and taken off hold, you need to be sure you remove all labelling from the pallet or risk rejection at customer.

 

So that's all the problems with labelling.

 

BUT there are also potential problems with your system as is and it depends a lot on how it's designed and how you operate your warehouse.

 

Possible problems with your process "as is"

 

Does the automated hold system still work if you have any picking processes? Or is it a risk that once a pallet has gone to picking that it will just be used unless physically labelled?

 

Is there any occasion where a pallet could be removed from the warehouse without being scanned? While you have processes in place, how do you know they're always followed etc. 

 

Lastly and this is the only one which really started to ring alarm bells for me from your description. Are you using appropriate hold states not using a "pending release" state for products which might have a food safety or quality issue? The reason why is that pending release state (or what you describe as "initially set to hold after production") is not, in many WMS actually a "true" hold. What do I mean? What I mean is that the pallet can often still be moved when on this status but not issued. While on paper if everything is always done to plan, that works, it's also in a status where the majority of pallets are normally released and there is no differentiation between "hold for good reason" and "pending release" status. The reason I worry is because you've said in your description that the pallets then progress to one of two states; release or reject. This must therefore mean that when you do have a QFS issue, you are leaving some pallets in the same status as those pending release. I can tell you from bitter experience, that's where mistakes can happen. If possible, for example, if you have a SAP system and your pallets are produced in QI (quality inspection) status but an issue is detected before they're released, that they are transferred to B6 or some other blocked stock status before the decision is made, while you're investigating. That way your planners aren't seeing it as good stock, your operators aren't assuming it will be released, the pallets can't physically move past automated systems and your quality team are less likely to make a mistake.

 

Of course none of that is actually about physical labelling but what I'd do once you've assessed all your processes and the risks of labelling or not is record it all in a risk assessment as to why you've made the decisions you have. For example, you may choose only to physically label pallets which have gone to picking if you have that process because labelling other pallets has risk as detailed above.

This is a customer requirement, based on their company's own standards.

 

In practice, all finished goods are initially placed under HOLD status after production, pending QA confirmation.

• If the products are found to be non-conforming or suspected to be non-conforming and require further investigation, QA will move them to REJECT status.
• Products that meet the requirements will be released (RELEASE status).

When preparing for shipment, the Sales team reviews the list of released products and prepares a dispatch list. This list includes:

• Carton/pallet identification numbers
• Storage locations (rack positions)
• Quantities

This list is then provided to the warehouse team.

The warehouse team will:

• Pick products based on this list
• Verify the items by comparing the identification numbers on the cartons with those on the list

Currently, we do not use barcode scanning during picking. Instead, verification is done manually by matching the carton codes with the dispatch list before moving the goods to the staging area for shipment.

[Baohan88]

So basically everything is on hold until approved for dispatch?    Is it all in one warehouse room?    

Basically, goods are released and still stored in the warehouse, when a shipping decision is made (as requested by the sales team), staff will take goods that already release to export. All types of goods are stored in the same warehouse, without separate areas.

[GMO]

So you put to reject even if the status is still pending? That's a risk and I'd check adherence on that. Ideally in most WMS systems if you're using a pending release, what you call "hold" status it would be better to have:

 

"Hold" (or pending release, QI, whatever you want to call it)

"Issue" etc (this is why I wouldn't call the above "hold" but whatever you want to call it, some kind of status that would indicate a decision needs to be made.)

"Reject" (when a decision has been made and that decision is to scrap)

"Release" (self explanatory)

 

Your current situation could blur current status whether you think that is happening or not. I bet if you really delve you will find some with a "hold" status that is known to have an issue. I also very much doubt your planning team are only looking at released stock not that held, pending release as otherwise their stock control will be terrible.

 

But that's your decision etc. The reason I raised it though is because all of the risks around behaviour that could occur. You don't think that's a risk? Fine, not my process.

 

But to move on from that, if you're not scanning pallets and units out against your electronic stock status then you 100% have a risk of dispatching items which are meant to be held. Relying on them comparing codes against released stock is hugely risky. So in your set up I would absolutely physically label stock. 

 

All of your processes are very manual, very prone to behavioural lapses. That's why I would have raised it too if I were your auditor. The argument that electronic systems are as good, if not better than the manual labelling only holds up if they're used end to end. Yours aren't.

Edited by GMO, 20 June 2026 - 07:10 AM.

[TimG]

Couple points from this. Firstly, it's a customer requirement. My most ridiculous auditor requests/NC's were from customer audits. It might not even matter if you come back to them with info on why you don't need it. Try to determine what the result of 'we disagree with your finding and will not be acting on this suggestion' will be. It might just be an 'ok, see ya next year' type of deal.

Secondly, it has been industry standard to label (or use supplier labels) all product as soon as it comes in the door by receiving, at least in the 5 food facilities I've run compliance in over my food career. But it sounds like you are handling this by placing it in HOLD in the system and utilizing a positive release program then picking. I didn't see you say that you do label released goods, which might be all you need to add to your program in this case to make the customer happy. We use a similar system here for certain bulk products where the incoming does not get any type of label, but when I clear it after review, I then create a green quality release label with the pn/lot# signature and date on it to go along with the product. That way there should be very minimal chance for a picking mistake (only pull green tagged rows).

[jfrey123]

I think the issue here is terminology.  Using "HOLD" in your WMS as the pre-release designation and also your "HOLD" status for product with issues makes it unclear which product is actually under investigation for issues.  Two of our sites have pretty awesome WMS and we ran into a similar issue, so our IT guy created a new category for finished goods that aren't yet cleared for release, can't remember what we named it but we can pretend it's something like "Finished - Pending" to show it's not yet released for the warehouse staff to start loading.  The WMS is sufficient to block users from loading unreleased product, and since it's not on hold, no physical labeling is required.

 

Now for goods on HOLD, every GFSI scheme I've seen indeed requires physical hold tags affixed to the pallets/cases/containers.  Your WMS and training might be sufficient to ensure no one uses HOLD material incorrectly, but the written rules still mandate the physical tags regardless.  In my mind, the finding is valid and my corrective action would be to stop calling finished goods pending positive release as HOLD items.

[GMO]

I think the issue here is terminology.  Using "HOLD" in your WMS as the pre-release designation and also your "HOLD" status for product with issues makes it unclear which product is actually under investigation for issues.  Two of our sites have pretty awesome WMS and we ran into a similar issue, so our IT guy created a new category for finished goods that aren't yet cleared for release, can't remember what we named it but we can pretend it's something like "Finished - Pending" to show it's not yet released for the warehouse staff to start loading.  The WMS is sufficient to block users from loading unreleased product, and since it's not on hold, no physical labeling is required.

 

100% agree I'd have a separate category but I disagree that's the problem why this is raised. I just think it's a separate risk.

 

 

Now for goods on HOLD, every GFSI scheme I've seen indeed requires physical hold tags affixed to the pallets/cases/containers.  Your WMS and training might be sufficient to ensure no one uses HOLD material incorrectly, but the written rules still mandate the physical tags regardless.  In my mind, the finding is valid and my corrective action would be to stop calling finished goods pending positive release as HOLD items.

 

Disagree, kinda. I agree in this case I'd have hold labelling but only because there isn't full automation. You will have warehouses up and downstream of you (including retailer warehouses) where pallets can be held electronically in a way where they can't be moved. That's more robust than a sticker and every GFSI auditor I've had where we've had systems like that have been fine about it. Where you come into problems is where there are activities which do not require scanning, that aren't fully automated, like this. That's why you need the labelling IMO. I do agree on your point that the conflation of "pending release" and "hold" makes the issue riskier still but IMO, I think the issue was raised because there isn't a fully automated WMS which prevents release of pallets. So whether a pallet is pending release or held, you're reliant on manual processes for release. That makes labelling the pallets more important.

[Jocelyn Legaspi]

Hello, 

 

Just want to share our best practice regarding Hold and Release program in our factory.

 

All finished goods that are not yet cleared in the laboratory are categorize as Category 2 Hold, all pallets with these bags are tagged or labelled accordingly with "STOP" signage and each pallet are identified with the following details e,g, batch code, quantity, date of production and date of clearance release from the laboratory. As soon as QA will release clearance after 7 days of testing, the tagging will be changed to "GO' signage

 

Apart from the above practice, we also have an approval before loading of the goods will be checked by the QA, the warehouse cannot load the goods without the approval from the QA.

 

With this practice, we can ensure to prevent inadvertent movement of the hold products entering in the supply chain.

[liberator]

In systems I'd worked with we'd have finished product not yet released classified as "under inspection", then it progresses to various states, QA released, QA Hold, under retest, Failed, rejected etc, so a quick glance in the ERP system can give people an idea at what stage the product is at. We'd always use hold stickers for Under rested status even if controlled in the ERP system. Trouble was/is if retests all good and product good to go, our warehouse ops would sometimes dispatch the product with the hold stickers still affixed to the pallet, and that always caused no end of headaches.

[GMO]

In systems I'd worked with we'd have finished product not yet released classified as "under inspection", then it progresses to various states, QA released, QA Hold, under retest, Failed, rejected etc, so a quick glance in the ERP system can give people an idea at what stage the product is at. We'd always use hold stickers for Under rested status even if controlled in the ERP system. Trouble was/is if retests all good and product good to go, our warehouse ops would sometimes dispatch the product with the hold stickers still affixed to the pallet, and that always caused no end of headaches.

 

Yep I agree, that's why a well implemented WMS with full scanning of every pallet as it moves within the warehouse and at intake and despatch can often be better than physical labelling as your example proves, physical labels can be ignored.

 

I think to my mind, the OP's non con exposes two problems.

1. The "pending release" and "on hold while a food safety or quality problem is investigated" are the same. This creates a risk of accidental release as routine batches around an issue batched have their status changed. More advanced WMS systems have other hold states for this reason.
2. Not all batches are fully scanned in and out of the warehouse. The warehouse is reliant on matching codes of released stock. This creates a risk of accidental despatch.

The non conformance seems completely valid to me. The pallets aren't fully controlled by the WMS.