Manufacturers’ thoughts on top labeling challenges

Susan Gosnell Cloud computing

Aging systems, mislabeling, and production shutdowns are common challenges that many manufacturers face when it comes to labeling. Perhaps you’ve had some labeling process hiccups that slowed your time to market or resulted in costly remediation. Have you ever wondered about your peers’ experiences with these issues and what they do to address them?

Earlier this year, Loftware surveyed 300 IT directors in manufacturing across the US, UK, France, and Germany. It yielded some interesting results that reveal how companies are shifting to cloud labeling to prevent the issues that arise with legacy systems and processes. Here’s what they said.

Legacy system modernization
Over half of our respondents (51%) were well underway with their digital transformation journey. These companies see the benefits that cloud systems provide. There’s a small group, just 8%, who haven’t started their digital transformation journey yet.

The migration to the cloud is, to a large extent, running in parallel to this digital transformation. There is great potential here for companies to improve their processes by adopting a cloud-based approach. When it comes to labeling, the cloud delivers the full capabilities of a label management solution without the complex deployment and infrastructure cost. With the cloud, companies of all sizes can streamline and scale labeling regardless of where they are. In the past, it was only larger organizations with the resources and in-house IT skills who could deploy such systems. But now there are far fewer barriers to entry for those smaller businesses who don’t have the in-house IT skills and budgets needed for hardware and software maintenance and management. If you are in that half of companies hesitating to take on a modernization effort, it may be easier and more accessible than you think. You could be up and running with a full-blown label management system in minutes.

You may ask, why is the cloud so popular? When it comes to labeling, the answer lies in the added benefits of standardization, centralization, integration, and the ability to scale labeling across the business. On top of that, 33% of respondents experienced easier global collaboration, 32% enhanced brand reputation and 30% saw efficient tracking across the supply chain.

Mislabeling has hidden costs 
Mislabeling is more common than we think. Our survey found that a whopping 76% admit that more than 10% of their goods are mislabeled every year. Another statistic from the survey revealed that over a quarter of respondents said that more than 25% of their goods are mislabeled on an annual basis.

There’s a big cost tied to mislabeling. We found that the average annual cost of mislabeling is $89,000. And these are just the direct costs. Businesses should also be factoring in all the ‘hidden’ costs they may incur, such as loss of brand reputation, lost business, or lost time and money because of shipping delays. Label errors can contribute to much bigger and more costly issues down the line. A shipping delay due to remediating a labeling error could result in a competitor beating you to market. Mislabeling is not just costly, it is also time-consuming. It can often lead to issues with products and that can result in an unsustainable need to relabel product or packaging.

When it comes to the benefits of the cloud in this area, 26% of our respondents see reducing costs as a main benefit of the cloud. When companies move to the cloud, they no longer have the cost associated with infrastructure and support, but the real cost savings comes from addressing the indirect costs.

18% of respondents see productivity gains as their main benefit. Accurate labeling also means that extended supply chains can become more efficient and sustainable. In the past, incorrect labels from partners and suppliers have often resulted in relabeling upon receipt which results in delays. The solution is to extend labeling to those suppliers to ensure they are using the correct templates and content to eliminate the need for costly and time-consuming relabeling. There are also efficiencies in the label design and approval process. With legacy systems, IT is usually involved in label design and changes. With a cloud-based system, business users are empowered to do this, cutting weeks out of the process.

Production shutdowns impact revenue
Production shutdowns are common, especially in the COVID-19 era. Our survey said that 67% of manufacturers had to shut down their production line for more than an hour due to problems with label printing. Another 21% said the same thing but for 30 minutes. If you put those groups together, 88% of our survey group said they have to shut down because of labeling issues. We also asked how many times a year these shutdowns happen. On average, they had to shut down just under six times each year and each time a production line is not working it is losing money.

Any business disruption or shutdown can significantly impact any manufacturer, causing loss of revenue and ultimately putting the business itself in jeopardy. It’s becoming a growing concern as labeling becomes a key part of business and supply chain strategy. COVID-19 has made this challenge even worse for some manufacturers. Entire sites have had to shut down, forcing production and labeling to shift to different sites.

Manufacturers on average incur huge losses of around $1,174,000 per year due to production line shutdowns caused by label printing problems. Ultimately, the risks to production operations extend well beyond full shutdowns. Decentralized labeling, for example, also adds risk to production operations. An ERP system is supposed to provide “a single source of truth” to business users. However, at many organizations, there are as many versions of the truth as there are labeling locations. That is because, in decentralized labeling operations, each facility may not be integrated with ERP and will be creating its own label formats and duplicated product and customer data. Redundancies of data make enterprise-wide updates unmanageable and increase the likelihood of having to halt production.

So how does cloud labeling help in this area? Browser-based deployments offer flexibility. You can easily shift production between sites if one goes down. Users and suppliers have immediate and remote access to accurate labeling, minimizing error-related production shutdowns.

Want to hear more of what was revealed? Listen to the on-demand version of our Manufacturers’ Thoughts on Top Labeling Challenges” webinar.

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