The cost of poor labelling in logistics and the supply chain

Labelling is a primary component of any supply chain, from product to pallet. However, when not done effectively poor labelling can come at a great cost.

Regardless of industry, labelling is a key component of any supply chain. It ensures the traceability and accountability of every product throughout the entire process from the manufacturer to the consumer. All it takes is one incorrect label on a product or pallet to cause a logistical nightmare, and without the right processes in place, the cost that poor labelling can incur will skyrocket.

What are the costs of poor labelling in logistics and the supply chain?

  1. Increased labour costs to correct errors from mislabelled products

When products or pallets are mislabelled it creates gaps in the inventory data, which in turn off-puts ordering schedules and increasing labour costs to resolve the issue. It can also side-track the product or pallet until the issue is corrected, causing delivery deadlines to be missed and subsequently impacting the customer.

  1. Issues in recall execution – tracking and traceability

One of the reasons the impact of a recall can be so significant and at times critical is the time it can take to identify the issue, find the product and fully complete the recall process. By this time, it not only has the potential to damage the brand’s credibility, but also have serious consequences for their customer, costing them their time and potentially also compromising the safety of the end user.

  1. Regulatory fines

From a supplier perspective, labelling issues can result in delayed shipments meaning supply deadlines can be missed which can equate to monetary and supplier penalties (if stated in agreements). Additionally, larger retailers are tightening the leash on what they can accept from suppliers. This means that shipments that don’t meet their standards can be rejected, this in turn means a loss of potential sales for the supplier if customers in-store are forced to search for alternative products.

  1. Loss of business

Following on from the last point and probably one of the most impactful costs of poor labelling is the loss of business. Without the right processes in place and a potential lack of traceability, a business can face a cost greater than the expense of resolving poor labelling issues, and that is the loss of customers and the impact on the brand’s credibility.

insignia offers a range of labelling, printing and mobility solutions that provide transparency and traceability throughout the supply chain process. With a long history in label manufacturing, our customers can be assured that they’ll always receive a product that is both great value and high quality.

Click here to see how we’ve helped other Australian businesses in the Transport & Logistics industry.