Mislabeled products destroy profits

Manufacturers plagued by mislabeled products

A recent survey conducted by Packaging World magazine in conjunction with Datalogic and Digimarc® revealed that more than 80% of manufacturers each year experience increased costs and waste because of mislabeled products. CLICK HERE to download the survey infographic.

Additional costs resulted from more than just returned products, the error impacts production. The survey revealed that mislabeled products caused 52% of respondents to shut down lines, as often as once or more per week (26%). Astoundingly, 30% said as many as 1 in 10 of their final products are mislabeled when they head out the door to the customer. The impact of the mislabeled product is staggering, causing problems within the enterprise and damaging customer relationships

Manufacturers and consumers rely on package labeling for traceability to ensure efficient production, timely delivery and product safety. Mislabeled products cost industries hundreds of millions of dollars per year in losses. Caught within the enterprise, mislabeled products stop production, are often scrapped and generate waste. If the items reach retailers and consumers, the expense is compounded by blemishing business relationships and customer loyalty. In some cases, a costly recall can be triggered adding press coverage, regulatory fines, and potential litigation. All these challenges can be almost eliminated with by implementing track-and-trace solutions that leverage vision system and watermark technology.

Global supply chain challenges

Global supply chains are the norm, whether the products are automotive parts, consumer packaged goods (CPGs), groceries, or others. Raw materials are produced in one country, manufactured or processed in another country, and packaged for distribution in a third. Throughout the supply chain, regardless of geography, manufacturers, distributors, and retailers must accurately track and trace products.

Manufacturers that can accurately track and verify each product throughout the supply chain have the most to gain from robust traceability within their supply chain. In today’s data driven world, accurate and transparent traceability is a competitive and strategic advantage. Yet, according to the recent survey, inspection and traceability is not robust:

67% of producers manually check only batches of products, not full production
12% of producers surprisingly do not monitor label accuracy at all

Only a small percentage of manufacturers surveyed (17%) use in-line machine readable codes to verify 100% of labeled product. The impact to a manufacturing enterprise is significant as the majority of manufacturing companies are small businesses. According to the U.S. Census Bureau, Statistics of U.S. Businesses, data from 2016 shows that 98.5% of manufacturing companies are small businesses; 75% of these firms have less than 20 employees. The effects of mislabeled product in terms of lost revenue, waste, damaged reputation with retailers, and lost consumer confidence can result in the end of the enterprise.

Manufacturers are committing to traceability

Manufacturers who understand the risks mislabeled products pose for their enterprise have committed to traceability as part of their strategic plans. Pressures from retailers looking to limit their liability and reduce inventory costs are significant. Retailers are quickly moving to deploy omnichannel fulfilment and to do so, their supply chains must have end-to-end visibility. Manufacturers that cannot deliver this will be left out.

Consumers are also raising the stakes as they are more data savvy than ever. Consumers have the expectation of wanting to know as much about their purchases as possible: where it was sourced, when it was manufactured, how products are best used, and more. Manufacturers realize they can build demand by leveraging consumer’s data interests. Providing more data about their products helps to build their brand directly with consumers creating pull at retail.

The survey also found that 31% of manufacturers are looking to invest in automated inspection technology. Moreover, these same manufacturers are planning on spending in excess of $100,000 on these solutions. This value illustrates the cost effectiveness of automated inspection technology illustrating how implementing solutions is not a multi-million-dollar expense.

Vision technology is readily available that can be implemented quickly and easily using intuitive controls. Inspection technology coupled with bar code print and apply devices is a time-tested method of increasing traceability.

Vision systems can also be used with watermark labeling that embeds traceability codes within labels or package graphics. The Digimarc® Barcode is being used by retailers and manufacturers worldwide to embed traceability directly on to products as part of the manufacturing process. Datalogic is the first to offer imagers that support the Digimarc Barcode, the Matrix 220 and Matrix 120. These devices make it easy for manufacturers to implement traceability anywhere within their production lines: high speed conveyors, tight work cells, automatic equipment, and more.

The survey illustrated that manufacturers see traceability as a key component of their quality control procedures. 62% of respondents cited initiatives in quality control as the leading reason for committing to investing in automated inspection technology. These manufacturers are looking to maximize their strategic positions while leveraging traceability to eliminate mislabeled products; those who aren’t will eventually be out of business.

Traceability is a key component of manufacturers quality control procedures. Initiatives in quality control were cited by 62% of respondents in the survey as the leading reason for committing to investing in automated inspection technology. Today manufacturers are looking to maximize their strategic positions while leveraging traceability to eliminate mislabeled products; those who don’t will eventually be out of business. Watermark technology such as the Digimarc Barcode and its reading capability will increasingly become a must have. Manufacturers need to start planning for such capability.

DOWNLOAD PDF

28 votes