Labeling is complex; today’s chemical manufacturers are faced with a range of evolving requirements that complicate the process, and many companies accept this process as the cost of doing business. But it doesn’t have to be.
Labeling can make a huge difference, enabling IT and supply chain decision makers to not just overcome challenges, but also provide their company with a distinct competitive advantage. There are just six questions you have to ask yourself to find out.
How Can Labeling Improve Supply Chain Processes?
The chemical industry supply chain is as complex as any industrial supply chain. Companies need to manage raw materials, feed stock, commodity pricing and regulatory issues – both locally and internationally – as well as deal with third parties like tollers, all while tracking products right to the customer. Manufacturers increasingly are asked to meet customer’s requirements, manage constantly changing regulations and find ways to overcome mounting security and fraud issues. Chemicals also touch many of the industrial and consumer markets, so they are affected by the up-and-down swings of different market segments.
Managing all of this is an exceedingly hard endeavor. One area that sometimes is overlooked, but present throughout the supply chain, is labeling. The only way to effectively track a product from the time it is sent by the supplier, arrives at the dock, is processed and finally packaged and shipped to the customer is through the labels.
The information that goes on the labels is getting more and more complex. It has to meet customer requirements, comply with industry regulations and adhere to branding guidelines, all without slowing or shutting down operations.
And if there’s any incorrect information on labels during operations, it can lead to relabeling, customer issues, incorrect shipments, returns, hold-ups in customs, inventory problems and many other significant, hidden costs to a company.
That’s why it’s important that a company’s labeling operations be tightly connected to business processes. This helps avoid costly interruptions and manual mistakes, and product moves faster and more efficiently through the supply chain.
How Can Labeling Help Me Stay Ahead of Constant Change?
Labeling won’t change the only constant in chemical manufacturing, which is change, but a labeling system using best practices can help a company better manage that change. All the factors mentioned earlier regarding complexity are compounded by constant change, including customer requirements, products, regulations and even IT systems.
How can a company make sure that it is managing the change without disrupting its supply chain? The only way is to have systems that can react in real time to the data that is dynamically changing. Companies need labeling systems that easily can be changed and adapt to change, reducing errors and not relying on personnel to have to relay changes manually.
One company in the pharmaceutical chemical space relied heavily on orders obtained through its internet web page. The issue was that the formulations frequently could change but its labeling system wouldn’t always reflect the changes in time for shipment, causing a major issue with its customers. The company had struggled with this issue for years. With an enterprise labeling solution in place, they were able to change the data for their product, which automatically changed the label in real time. Standard labels, templates and systems allow for global compliance and a single source of the truth for change management.
How Will Accurate Labeling Deliver Measurable Savings and Overall Cost Reduction?
A company should standardize on a single labeling solution throughout their supply chain. As I said, the label is the only thing that is constant throughout the supply chain, from raw materials through to the customer. Depending on the system or process used, labeling either can add costs and complexity, or it can help to greatly reduce those costs.
Choose a labeling solution that can eliminate returns, reduce delays in international shipping, remove operational steps, lower inventory, avoid mistakes and improve many other areas, including customer service. Automation, error proofing and data management will speed the movement of product through the supply chain, making a positive impact on working capital and margin.
One company we recently worked with was stocking a particular SKU of the same product in the same size container and was using five different labels, each to meet the specific language and compliance requirements of different regions. Because of how its systems were being used, it had to print labels in advance of shipping, which led to escalating costs in added inventory, warehousing and employee productivity. Just by labeling containers with the correct information later in the process, the company was able to reduce inventory of that SKU and many other SKUs by up to 60 percent, which translates into hundreds of thousands of dollars in cost savings.
How Can the Right Labeling Solution Help You Meet Compliance With Regulations Like GHS?
All chemical companies have to use multiple systems to store data, which is why one of the first questions we ask customers is, “Where’s the data?” Usually a chemical company will rely on a system as a source of record like SAP or Oracle as well as at least one system for regulatory information. There are many other systems that also can come into play, like warehouse management (WMS), manufacturing execution (MES), lab systems and product lifecycle management (PLM), to name a few.
A labeling system that meets good manufacturing practices has the ability to retrieve data from multiple systems for the same label. In the case of regulatory labels, you need to have six elements on a label; signal word, product name, hazard statement, pictograms, manufacture information and a precautionary statement. If you have a labeling solution that can obtain data from multiple systems, you can know the following at the time of print: what product is it, where the product is being shipped and to whom and what elements are needed for that printed label with the proper information.
Too many times during facility reviews I see multiple labels for a single product, thousands upon thousands of preprinted labels and the need to re-label items; all of which can be addressed with the proper labeling system. The ability to manage change and have a work process engine that ensures compliance across all regions is imperative.
How Can Labeling Create Efficiencies At the 3PL, Toller and Supplier Levels?
For years, companies in the chemical industry have struggled with how they integrate partners like distributors and tollers into their processes. Today, many companies use third parties as extensions of their own business. They can be used for many value-added services like direct shipment to customers.
When it comes to labeling, companies handle third parties in multiple ways, but it commonly is a difficult manual process. Many manufacturers still package and ship the labels right to the partner or they pay to have the labels printed for the third party by an outside vendor. These options can be extremely costly and can cause significant delays and mistakes. The best way to handle this challenge is to integrate the third parties into the labeling systems.
Using either their own partner portal or a secure system from another company, chemical companies can allow suppliers or tollers to access and print labels locally – with the correct information expected by the receiving company. Globally consistent labeling reduces the need to manually ship labels around the globe or have to re-label inbound shipments, saving time and money while reducing the likelihood of errors.
Companies can set up this solution in a secured environment so third parties only see information, labels and printers they are supposed to see. Many companies leverage this ability to print their labels at the third-party sites around the world and have improved their processes immensely while saving millions of dollars in relabeling and inventory reduction.
How Can Labeling Help Grow and Expand Our Business?
As companies look long term, the label often is the first item of marketing that customers see. This opportunity to authenticate product and to “start a conversation” with the customer will become more and more important. As such, you need a labeling system that doesn’t limit growth or changes and can be used on a global basis.
One of the most disruptive and challenging areas for companies in the chemical industry is mergers and acquisitions (M&A). You look up any of the major companies in the chemical space and you can see that they constantly are acquiring new companies, spinning off separate businesses or selling divisions. Recently, Dow and DuPont announced a merger that, when complete, will break the chemical giants into three different companies. Sherwin Williams is now merging with Valspar. Air Products is spinning off a new division called Versum. With each addition of a new division comes the integration of the acquired company’s systems.
One of the first things a company will want to tackle is the integration of the labels to reflect proper marketing or branding information and ensure one face to the customer. With the right solution in place, you could easily design new labels or, better yet, update existing templates for the new labels. You can pull information from trusted data sources as well as connect to new sources of data using the same labeling system.
As companies grow and expand, they need a system that will meet their needs on a global and local level. They need a system with proper certified integration with systems of record like SAP and Oracle. They need an enterprise labeling solution that can meet their requirements to handle languages, regulatory standards, color printing, third party and customer demands, etc., and have the support and service organization behind it to ensure long-term success.
Greg Wimble has more than 25 years of experience in manufacturing and supply chain software applications. As the chemical industry specialist at Loftware Inc., he provides guidance to chemical manufacturers on the implementation of enterprise labeling solutions to accomplish their goals and meet complex global and regulatory challenges in the global supply chain. He can be reached via email at email@example.com.