How to save money when sourcing millions of thermal labels
Large food processors that consume millions of thermal labels each month are turning to specialty converters thatcan deliver unique consignment and inventory management.
Although most food processors view labels as a commodity item, for large operations that consume millions of thermal labels per month, it is a prime operating expense.
With so much at stake, processors find themselves in a constant quest to find reliable label providers capable of delivering a quality product, consistently, and at the lowest possible price. For many, this means partnering with specialty converters thatcan pass on savings due to bulk purchasing power of thermal media direct from its source, in addition to unique consignment and inventory management options.
Although this can be a tall order, sourcing a thermal label supplier that can deliver all of the above is said to be able to reduce annual labeling budgets by as much as 40%.
“You can run through a couple million thermal labels faster than you think,” says Russell Gayer, manager of printing services for a major U.S. meat processor.
According to Gayer, Fortune 500 food processors can utilize hundreds of millions of labels per month. Even comparably smaller operations of $200 million or more in annual revenue can have label budgets that exceed $250,000 a year.
For meat and poultry, specifically, the information that appears on the label varies depending on whether or not it is a processed or prepared meat or poultry product, an unprocessed meat cut or a poultry product, and upon the type of package or container in which the product is packed and shipped.
However, most packages require multiple labels, including scale labels that list the price per pound, net weight, total price, when the item was packed, the sell-by date, safe handling instructions and often a bar code. Labels are also used to provide nutritional information or to promote a product as “great for the grill” or “keep frozen.”
Labels are also widely used on shipping or institutional containers to impart information mandated by regulators such as product type, handling statement, legend, establishment number, net weight, ingredients statement, signature line, nutrition facts and safe handling instructions.
Far from “blanks,” these labels often come pre-printed from the converter with store name, logos or other branding, as well as fixed information and defined spaces or boxes where variable data will be printed later by the processor.
According to Gayer, the process of identifying a thermal label converter begins with an RFP to multiple suppliers, followed by careful vetting of each to determine the company’s stability and long-term viability.
“Obviously price is the ticket to the dance,” says Gayer. “However, we follow up with a lot of questions, so we can learn about the company we are partnering with to determine if itcan deliver the goods consistently.”
For example, in 2000, Gayer contacted OMNI Systems Inc., Richmond Heights, Ohio, for a quote on scale labels in quantities that were in excess of 30 million per month. OMNI Systems, a privately owned label convertor, specializes in pre-printed and blank direct thermal and thermal transfer labels.
To start, he found the initial quote hard to believe.
“When I got the pricing, I thought surely there was a mistake,” Gayer says.
When he contacted the company to confirm the price, OMNI Systems explained that it had the purchasing power to procure quality raw materials at extremely low rates. In addition, it operates in a lean, modern, 24/7 operating environment, which results in the savings being passed on to the customer.
Price, though, is only one piece of the equation. Selecting an unreliable label company can lead to range of problems, including inconsistent or late deliveries, as well as raw material, adhesion or other print-related issues.
“Any company can offer product at a good price, but in my opinion you measure a company by how they respond when something goes wrong,” says Gayer. “My experience with OMNI Systems is that in the past 15 years things, do not go wrong very often.”
However, there was a time when the printing on the scale labels was not properly centered. OMNI Systems “stepped up to the plate and corrected it” immediately by shipping replacements even though it meant taking a $30,000 loss.
When dealing with millions of thermal labels in rolls of varying diameters, another major concern for processors is inventory management.
Once the supplier is approved at the corporate level, individual or regional processing plants can access the information and order using the company’s enterprise resource planning (ERP) system.
However, leaving the task of inventory management to in-house staff can result in human error that can leave the processor high and dry.
For this reason, large thermal label converters often offer several vendor-managed inventory options to ensure that label stock is maintained to inventory minimums and replenished quickly from regional distribution centers. This type of program requires the label converter to maintain its own sizable inventory at specific minimums agreed upon with the customer.
“From a corporate point of view, we realize that with the volume of tens of millions of scale labels there has to be significant inventory at the supplier as well,” says Gayer. “So, we worked with them to identify an appropriate minimum/maximum inventory for them to keep based on past order history and projections.”
For higher volumes, OMNI Systems offers a consignment option that allows the processor to store thermal transfer or direct thermal labels at their facility at established minimums, so stock is available at all times. The processor is not asked to pay for inventory until it has been pulled and reported.
If required, OMNI Systems can also take control of the inventory process for the end user by tasking personnel to go to the processor’s site to complete inventory counts and ensure label supplies are maintained.
There are many advantages to this type of arrangement, including guaranteed product availability, less cash invested in labels sitting on a shelf and a cost savings by eliminating the need for overnight or expedited fees.
“There are companies that find [the consignment approach] to be very useful,” says Gayer. “Obviously, the advantage is you don’t have to pay for the labels until the point of usage, so I can see the financial advantages to doing business that way.”