Despite its potential to help organizations operate their supply chains more efficiently and effectively, labeling is often handled in the way it has always been done: with each node on the supply chain, each department, each plant, each geographic location having its own processes, many of which are manual.
Although it may seem to meet the company's existing needs, this approach generally has pitfalls. Each solution may well fit the specific, pinpoint requirement of each location. For example, Toledo, Ohio will have specific needs that differ from those in Singapore. Yet by operating in this mode, organizations are losing out on an opportunity to become more efficient and opening themselves up to significant problems.
An SAP environment works across an enterprise, providing company-wide access to business applications and data that improve effectiveness and efficiencies. However, when labeling isn't handled in the same manner, problems occur. When organizations handle labeling on a local level, with each location being allowed to deploy its own unique solution rather than standardizing and automating across their enterprise as they've done with SAP, issues always ensue. They may include:
Greater potential for errors: Each time data is entered manually and whenever an organization relies on tools (such as spreadsheets) not specifically built for labeling, the likelihood that errors will occur increases dramatically. Sometimes errors are introduced at the local level when someone is unaware that a change that impacts labeling has been enacted at the corporate level. And on rare occasions, under cost or schedule pressures, a local organization may be tempted to make illegal or unethical labeling changes, e.g., relabeling an expired lot of drugs or food with a new, non-expired future date
Regulatory problems: Mislabeling is a frequent cause of regulatory compliance issues even for companies using SAP. With new regulations emerging continually, a local organization may lack the ability and compliance expertise to keep on top of all the changes required to provide accurate labeling. Adhering to these regulations that define how products are developed, marketed, shipped, and disposed of is essential for all corporate facilities, including remote locations, but this can be challenging without access to label data that is maintained centrally.
Higher costs to maintain multiple systems: Lack of labeling standardization means that organizations, even those using SAP, spend more time and money on systems maintenance. Especially with legacy or manual approaches to labeling, there may be just one person with expertise with the system. If this person leaves, institutional knowledge goes with them, putting labeling continuity at risk. Additionally, legacy labeling may involve coding changes, and new labels may take considerable time to come on line, as they may have to be scheduled to coincide with release windows. Further, when a company has plans to scale, extending labeling to new locations and regions may become a major challenge.
Language difficulties: As SAP customers know, global supply chains cross many borders and involve audiences that speak many different languages. Therefore, labeling today must increasingly incorporate multiple languages – especially for international shipments and sometimes within a country like the United States where a significant minority speaks another language. However, at the local level, there may not be the language fluency required for meeting multi-national labeling needs and it may be difficult for those sites to deal with multiple languages on a single label.
Branding confusion: Companies handling labeling at the local level may have their own approach to branding, or may just not be "up" on new corporate standards. This causes confusion in the minds of customers, and may well open the door to counterfeiting.
Overall, a lack of standardization often leads to mislabeling, which can be costly for any organization – even those using an SAP environment. Shipments may be impounded at customs or refused by customers. Fines may be levied by government entities. There may be contractual customer penalties, and ultimately business may be lost.
Enterprise labeling plays an important role in the digital transformation by creating new efficiencies both throughout the enterprise and within global supply chains by empowering companies to deal with the nuances of today’s complex labeling requirements and regulations.
Significant efficiencies and cost savings can be found when adopting a single, unified approach to deal with customer, product, regulatory and regional complexities that impact both labeling and artwork management – whether it is on traditional packaging, online or in the supply chain.
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