Enterprise labeling: an industry imperative - Part I

The electronics industry today is characterized by an ever-sprawling set of global supply chains, causing an increase in disparate labeling systems spread across the enterprise with an ever increasing volume of duplicated label and redundant master data.  This begs the question:  how effective is labeling in the electronics industry today?  Can labeling be more optimized for large corporations with thousands of printers around the world?

The challenges facing organizations dealing with global supply chains include the need to accomplish the following:

•          Increase supply chain transparency for speedy product development

•          Centralize and consolidate label printing from one location to thousands of remote printers worldwide

•          Integrate labeling with business applications

•          Reduce the number of label templates with automation

•          Rapidly change labels as customer, geographical and regulatory requirements evolve

•          Build “configure to order” solutions in high volumes

•          Attain higher yields through fewer defects in labels

•          Defend against higher costs by safeguarding against counterfeiting

•          Reduce manufacturing costs and sustain or improve margins

That’s more easily said than done.  Why?  Because among other things, and most obviously, the success of a collaborative and coordinated global supply chain depends upon operating reliably across borders, over distances, in many languages—and all must be in sync with different time zones in compliance with a variety of different local, regional, and national regulatory requirements.

This discussion is targeted toward electronics industry supply chain and logistics professionals tasked with optimizing their company’s partnerships to get more done, in more places, in less time, for the achievement of greater profitability and market share.  It speaks to the many components that contribute to partnership optimization and solutions at hand through product labeling and data standards that can lead to supply chain transparency (see Figure 1). 

Click image to enlarge

Figure 1: Proper product labeling and data standards can lead to supply chain transparency.

The basic concept is simple: if all stakeholders in the supply chain can speak the same language, figuratively speaking, then raw materials and finished products can come and go faster, more reliably, with less waste, and with fewer errors.  All this can occur at lower costs for higher margin outcomes, increased customer responsiveness, and strong competitive advantage.

There’s no such thing as “Business as Usual” in the electronics industry

Because the electronics industry continues to innovate, the task of meeting the new objective of supply chain transparency and integration is not merely a matter of engaging in the same, business-as-usual approach to raw materials sourcing, manufacturing, assembly, and shipment processes for a simplistic adaptation to a new supply chain model. 

For example, the adaptation has to happen in parallel with new trends in unit-level traceability by involving increasingly smaller components that defy conventional labeling processes.  Adaptation has to occur while demands increase for faster line changeovers, faster component and assembly verification, and inspection.  It all has to happen at a time when many electronics manufacturers are looking to emerging countries with fertile opportunities for low cost manufacturing potential through new or acquired facilities.

Against this backdrop, data and product marketing standards initiatives in the electronic industry cannot expect to gain traction until ongoing trends and developments can be supported.  Better-known issues with a long-standing history of adding complexity to the industry need to be solved. In other words, the electronics industry doesn’t just need something different, or something new, unless the solution takes away the burden of current processes and simultaneously delivers the opportunity to leverage the industry to the next level.

Common practices with uncommonly burdensome, costly, risky, and wasteful limitations

If the common systems for product labeling were working flawlessly, there would be no demand for change.  But even just a cursory review of all that electronics manufacturers must accomplish in labeling generates a profile of an approach that is unsustainable.  Consider, for example, what manufacturers need to do simply to comply with their customers’ labeling requirements as the industry continues to grow and expand product lines.

Customer labeling requirements often dictate the exact type and placement to be used on the product, box, carton, and pallet.  It is not unusual for a major customer to demand exact specifications for label size, data titles, data field identifiers, as well as a dozen or more exacting guidelines for barcode symbologies.  For example, one leading electronics buyer provides this guidance:  “Barcodes should be within a character density range of 3.7 to 6.9 characters per inch, with a minimum element ration of 2.5:1 to 3.0:1…preferred.”  And every major customer’s labeling directives can be different.

Customers today also want the manufacturers to exhibit faster, more reliable, more secure turnaround for the use of new label designs that evolve as products change.  This comes at a time when products are changing faster than ever.   The industry is already coping with possibly the largest number of serial numbers and labeling configurations of any industry in the world.

Failure to meet customer labeling requirements, especially across multiple customers with differing standards, leads to shipping errors, higher freight costs, returns, repackaging expenses, late penalties, compliance issues—and worse—customer dissatisfaction.  For an industry already undergoing increased pressure on prices and margins, these outcomes negatively exacerbate corporate growth and profitability objectives.

Satisfying customers while taking unsatisfactory delivery of unidentifiable materials

The above example is about outgoing finished product.  But electronics manufacturers have a labeling challenge with incoming raw materials—and an opportunity.  At the same time, the electronics manufacturer’s business sustainability depends on meeting customer labeling guidelines.  

In many cases, the manufacturer is taking delivery of raw materials or components with labels that bear no compatibility or consistency with their labeling system.  This means it takes time to determine what exactly has been delivered and from which provider.  It means these materials or components have to be re-labeled or over-labeled with product label substitutes aligned with the manufacturer’s system.  This takes time, and contributes to added expense. 

The contemporary objective is to have raw materials providers label their products in ways that are consistent and compatible with the manufacturer’s operations and labeling methodology.  Unfortunately, “homegrown” patchwork systems and solutions that are not enterprise-driven, and do not provide integration capabilities with secure access to a provider of raw materials or components, cannot easily meet this objective, if at all.

Why efficient enterprise labeling is the solution

Once considered a mere tactical necessity, contemporary electronics industry product labeling solutions can have major strategic implications.  There are at least eight major negative corporate outcomes that can result from product labeling errors and inefficiencies.  Averting these issues is no longer a matter of fixing one label at a time or refitting one product facility at a time with silo or purpose-driven systems.  Labeling has become a core component of a manufacturer's strategic mission to create a smoothly operating global supply chain.  The solution cannot be found in a patchwork of more systems, but in less and fewer disparities and incompatibilities.  For a truly successful outcome, labeling must be integrated with core enterprise applications and data.  To find out more about these major challenges and regulations impacting the Electronics Industry, stay tuned for Part II of this article,  “Reliance on Compliance:  Evolving Electronics Industry Standards.”

Loftware