Enterprise labeling: an industry imperative (Part II)*

These labeling challenges include:

•          CEA-556: Outer Shipping Container Bar Code Label Standard

•          CEA-556C: Shipping and Receiving Transaction Bar Code Label Standard

•          CEA-621A: Consumer Electronics Group Product and Packaging Bar Code Standard for Consumer Electronics

•          CEA-706: Requirements for Using 2D Machine Readable Symbols for Marking and Identifying Electronic Components

Beyond these standards in electronics, global supply chain labeling demands to meet guidelines, standards, and regulations are increasing at a rapid pace in almost all industries.  In the field of electronics, which crosses over with peripheral industries such as chemicals and consumer goods, evolving labeling standards and regulations, sooner than later, will require enterprise-wide labeling solutions in response to corporate concerns about risk mitigation and consumer safety.

Hewlett-Packard recently acknowledged it “maintains information on about 240 chemicals that could be in electronics parts but are not regulated, so it knows where the chemicals are being used in case they end up restricted by laws.” “With so many chemicals used in the manufacturing of electronics, and the increasing regulations in the chemical industry such as the Globally Harmonized System for Hazard Communication (GHS), electronics companies may have to address the associated challenges of labeling chemicals accurately. 

All point to an unmistakable pattern:  globalization, environmental concerns, chemical substance monitoring and control, counterfeit prevention, industry regulations, customer responsiveness, best practices, supply chain transparency, data standards, and the need for commonly understood product labeling are all critical factors in the smooth operation of a reliable global supply chain.”

This trend can be temporarily avoided or delayed, but inevitably the industry is facing a future where partners and consumers will demand to know more about a product's origins, contents, and whereabouts.

Focus on the environment

The following regulatory initiatives are admittedly environmentally focused.  As such, what are the implications for quality enterprise barcodes tied to core applications?  The point is this:  the information required by these rules, directives, guidelines and regulations is not going to be managed at a desk using a notepad and a three-drawer manual filing cabinet system.  Not, at least, for electronics manufacturers who hope to survive and thrive in this second decade of the 21st century. 

Electronic data systems tied to product labeling solutions are going to capture, follow, measure, evaluate, track, and monitor the required information.  For a long time to come, standards-based traditional and 2D barcodes will indisputably remain at the center of establishing and managing a product’s identity and all of its various characteristics. 

These directives, rules and regulations include:

The RoHS Regulation (Directive 2002/95/EC) and RoHS II: EU Member States shall ensure that new electrical and electronic equipment put on the market does not contain any of the six banned substances: lead, mercury, cadmium, hexavalent chromium, poly-brominated biphenyls (PBB) or polybrominated diphenyl ethers (PBDE), in quantities exceeding maximum concentration values.

The WEEE Directive: Together with the RoHS Directive, WEEE sets collection, recycling and recovery targets for all types of electrical goods.

The ErP Directive2009/125/EC (Formerly EuP): This European directive establishes a framework under which manufacturers of energy-using products (EuP) will, at the design stage, be obliged to reduce the energy consumption and other negative environmental impacts that occur during the product’s life cycle.

The Packaging Directive: This directive aims to harmonize national measures in order to prevent or reduce the impact of packaging and packaging waste on the environment.  It contains provisions on the prevention of packaging waste, on the re-use of packaging and on the recovery and recycling of packaging waste.

The CE Mark: This is a mandatory conformance mark on many products placed on the market in Europe to ensure the product conforms to EC directives.

IPC-1752: This is an Institute for Printed Circuits materials declaration management standard for material declaration forms and electronic data exchange formats to facilitate electronic reporting for suppliers and customers along the electronics supply chain.

The Electronic Industry Code of Conduct: This is a set of best practices adopted and implemented by some of the world’s major electronics and telecommunications brands and their suppliers to implement a single supply chain social responsibility code of conduct in the sector.

Green Supply Chain Management (GSCM): GSCM has been adopted as a proactive strategy by leading electronics industry companies, including Dell, HP, IBM, Motorola, Sony, Panasonic, NEC, Fujitsu, and Toshiba. It represents a proactive approach for improving the environmental performance of processes and products in accordance with the requirements of environmental regulations.

How bad can bad get?

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 standalone, 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.

The cure:  an enterprise-centric approach to labeling

1. Consolidation and Centralization

Electronics manufacturers with dispersed, departmental, standalone and multi-regional labeling systems face a daunting task of meeting enterprise-wide consistency and control if the decision is made to sustain these systems.  Fixing redundancy of all these separate solutions over many departments and across all labeling geographies is a time-intensive initiative that, in the end, does nothing to resolve the underlying problems of a decentralized labeling approach. 

Consolidation around a centralized system, tied to enterprise applications and data, insures corporate-wide labeling consistencies, compliance, and security.  Electronics manufacturing companies need the ability to easily and quickly manage label data, make label changes, comply with evolving standards, and flexibly support new labeling requirements.  Allowing multiple locations and/or suppliers access to centralized data to seamlessly produce labels remotely is crucial to business continuity.  Utilizing this centralized approach to label data allows businesses to scale globally and remotely, and drives label production from any of its sites.

2. Integration

Electronics products manufacturers today know they need—and they already have—systems for version control. This means many electronics manufacturers have systems in place for compliance and regulatory standards with approvals, workflow, revisions, and documented copies; and, they have the right people already in place who are familiar with these systems.  With this in mind, it isn’t practical to replicate data.  Instead, it makes significantly greater sense to simply use the label data in these existing applications for the data to generate the labels, so the ability to connect and integrate to all key sources of label data is essential. 

Business partners, too, need to leverage their own sources of label data, and extend labels and data to their partners. Through integration, an unprecedented level of flexibility to enable the use of corporate or partner data to create, manage, and print mission-critical barcode labels across the global supply chain becomes possible.  In some enterprise solutions scenarios that include WYSIWYG design and browser-based capabilities, business users can even take ownership of the design process. This eliminates the need for IT at each print location to get involved or write code to handle new label creation and label changes, resulting in significant cost and time savings. 

3. Automation based on business rules

In addition to application integration, the forward-looking solution in electronics products manufacturing labeling looks to all major enterprise applications to drive label printing.  To ensure an effective global supply chain strategy, customers must consider how labeling intersects with evolving contributors such as globalization of manufacturing, safety and quality of products, shorter lead-times, lean business environments, and changing international market demands. 

Widely installed enterprise applications from providers such as Oracle, SAP, and others, are considered “a single source of truth,” and if these systems are leveraged to drive label printing and label data, then the error-prone practice of manual or redundant label data entry is eliminated. Enterprise labeling solutions include business rules logic that allows customers to automatically meet the rigors of global requirements such as regulations, languages, images, formats, and printers, and to manage variability across multiple industries and regions in one place. Automating these complex workflow processes frees up the organization to use precious labor hours more creatively and efficiently.

Electronics manufacturers of all sizes and scope can gain tremendous value from the intelligent three-step methodology of consolidation, integration, and automation of their labeling environment.  Implementing enterprise-wide solutions that centralize global labeling and integrate with core applications and data bring into alliance the parallel goals of corporate growth and supply chain efficiency with labeling agility and accuracy.  At a time when regulatory scrutiny and standards initiatives worldwide are on the rise; when customer demands are more specific and varied than every before; and when a single source of truth is the most reliable repository of data, an enterprise labeling solution is an efficient, cost-saving, accurate, and flexible way to quickly meet the critical needs of today’s global supply chain.

Loftware

*Enterprise labeling: an industry imperative - Part I (Published, April 2015)