Labeling Is Key in Keeping Up with Today’s Supply Chain
COVID-19 has created unprecedented challenges for supply chain and logistics management. Products like canned food, toilet paper, and cleaning supplies have seen a significant rise in demand, while the demand for oil and refined products has slowed down. At the same time, e-commerce is booming, and some companies are struggling to meet the demand.
Multiple factors affect the supply chain and determine the success of delivering a product on time to the correct destination—labeling is one of the key factors to a successful delivery.
Labeling Impacts the Entire Supply Chain
Misprinted labels come with a high cost. Chargebacks from big-box retailers can range from $5 to $165 per label. This figure increases significantly in the food and medical industry, and can reach hundreds of millions of dollars. From demand planning to warehousing to shipping, labeling affects the supply chain from beginning to end, and is essential to maintain a growing, multichannel, smooth-running supply chain in these difficult times. Labeling affects the supply chain in the following five ways:
- Stocking: labeling errors can lead to supply-chain interruptions and should be considered when calculating put-away time. Companies need to plan accordingly so that in case of a disruption caused by a misprinted label, demand can still be met. To minimize the risk of these stoppages, it is becoming more common to implement labeling software and work collaboratively with suppliers to ensure data is accurate. A centralized and integrated management system where users can oversee label data helps minimize label errors.
- Recalls: labeling errors can lead to product recalls. Misprinted labels are more common than people think and can happen anywhere within the supply chain ecosystem. In 2018, companies paid up to 24 billion US dollars in recalls for reasons including misprinted labels. In fact, misprinted labels are the first reason for food recalls.
- Warehouse: labeling also affects warehouse efficiency. Inbound (put-away), inventory management including cycle counting, and outbound (shipping) are affected by improper labeling. Correctly labeled items help to control inventory and provide immediate, accurate information. Moreover, establishing a good warehouse labeling practice can reduce the processing time for all warehouse areas.
- Shipping: Correct data on shipping labels is vital to get goods delivered to the right place at the right time, especially for international shipping. A misspelling, incorrect description, or empty field can be costly and hold a cargo shipment for weeks. Shipping labels can also help to prevent damage and loss.
- Product details: labels can help to ensure companies are adhering to complex legal regulations. Labels carry essential information related to product materials, ingredients, usage recommendations, and more. Some countries, industries, and products have more strict regulations than others, but a violation in any of them can result in high fees.
Avoid Fragmented Labeling
It is imperative to understand that the “labeling supply chain” is very fragmented. It affects the entire supply chain and, therefore, a company’s growth. After a label is designed, suppliers create their own versions based on published label design guidelines. As a result, multiple versions of a label are propagated and used by different players. This process not only raises costs for all concerned, but also drastically increases the chances of label error, especially when in the absence of sufficient controls to ensure all parties are printing the same label.
Develop a Labeling Strategy
Analyzing different labeling functions and identifying key areas for improvement will help companies develop a comprehensive labeling strategy, thereby becoming more competitive in today’s global market. For instance, labeling software that facilitates collaboration can help companies increase internal efficiency and external efficiency with multiple suppliers. This collaboration streamlines labeling, minimizes the risk of incorrect data, reduces costs, and helps speed up warehousing and outbound processing.