U.S. Manufacturing Contracts for First Time in 3 Years
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The following should be cut and pasted, or cut and posted, at the end of every electronics manufacturing line, every warehouse, every distribution center, and even every executive suite. It is a list of the eight most common bad outcomes that can occur from labeling errors, and is derived from more than two decades of experience in manufacturing labeling mishaps:
1. Mislabeling and related data errors
The wrong label or a label with incorrect or incomplete data typically sidetracks the product, often in distribution centers, until the problem can be identified and corrected. Delivery deadlines can be missed, inventory carrying costs can soar, or worse, products that linger too long can become obsolete.
2. Customer and regulatory fines
Label production delays due to non-compliance labels mean product shipment delays. With customers having agreements for timely delivery, delays often equate to monetary penalties. Labels in non-compliance with regulatory authorities can trigger recalls and fines as well. With the advent of emerging initiatives for global harmonization of product labeling, this is more important than ever.
3. Loss of business
Chronic label issues resulting in delayed shipments, customer fines, or the delivery of the wrong product can turn customers away to seek alternate sources of supply. “This negatively affects market share and margins, leads to loss of brand credibility, and increases customer dissatisfaction.”
4. Label-related safety compliance
Beyond the regulatory implications of labeling-related safety compliance, failures in this area can dramatically impact a company’s overall brand and reputation. In severe cases, many companies do not survive the reputational effects of a major product recall.
5. Inability to scale labeling operations in manufacturing, shipping and distribution centers
In today’s electronics industry supply chain, speed and efficiency are two areas most manufacturers examine for value-added opportunities and improved economies of scale. When labeling inefficiencies such as improper load dividing or redundant relabeling slow everything down, or even bring operations to a halt, the bottom line suffers.
6. Label-related recall execution; track and traceability solutions
One of the reasons for the dreadful effect of a major product recall relates to how long it can take to identify and find the product and complete a recall cycle. Contemporary track and trace labeling solutions speed the process, thereby minimizing costs as well as the potential downside to a company’s reputation in the marketplace.
7. Global readiness for evolving industry standards
Emerging product labeling standards, some mandated by governments, can mean the difference between market entry and exclusion. For companies working with supply chain, manufacturing, and distribution partners in these countries, compliance with regional standards can streamline the supply chain. The need to support language requirements and compliance variability based on each country’s regulations is becoming more and more complex.
8. Inability to meet customer-specific labeling requirements
More than ever, customers are driving requirements for both label layout and data content for labeling. Both a baseline requirement and a point of differentiation against the competition, labeling is a critical factor when considering businesses’ ability to quickly and seamlessly distribute their products from supplier to customer. If manufacturers lack responsiveness to these customer requirements, a loss in market share is a real possibility.
The Unintended Consequences of Organic Growth: IT Management Stress
On top of all this, many IT professionals in the electronics industry sector are apt to recognize the following profile characterizing the most common labeling technology challenges. For example, organizations often struggle with disparate labeling systems, accumulated over time to meet the needs of various divisions or functional areas. Some are stand-alone, purpose-driven or silo systems with no relevance or connection to enterprise data and business applications. For electronics manufacturing companies that have grown through mergers and acquisitions, multiple units may have varied labeling methodologies and technologies.
Labels may be printed by these disparate systems for case, pallet, customer requirements, regulatory compliance, or other purposes, and may also have unique applications for each type of label. These companies lack an overarching process or global product identification solution that can consistently efficiently generate labels by product, customer, or country.
The situation is likely to become worse, because the industry continues to consolidate. Plus, acquired operations in emerging countries may bring with them their own labeling infrastructure, systems, and processes.
The absence of an enterprise-wide and centrally managed solution for products manufactured in disparate locations generates routine rework. Home-grown work-arounds, numerous extract modes, and broadly fragmented labeling knowledge are often the result. This can lead to conflicting organizational behaviors, brand inconsistencies, mislabeling, and process failures with very costly implications.
There exists, however, a straightforward approach to solving these problems to meet the next generations of opportunity.
Stay tuned for Part V of Enterprise Labeling: An Imperative for the Electronics Industry, where you can read all about the solution to these labeling mishaps. To find out more about how Enterprise Labeling solutions can improve business performance, view the recently released report on Key Business Drivers for labeling in your global supply chain.
About the author:
Joe Longo is Electronics Industry Specialist with Loftware and has been working with Loftware enterprise customers in the electronics industry for over seven years. His customers include some of the largest electronics manufacturers in the world: Jabil Circuits, Flextronics, Celestica, Kemet, Plexus, GE and more. Email: jlongo@loftware.com.
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