The current supply chain and procurement industry has been dubbed the “era of the shortage” following extensive disturbance to supply chains, ingredients and raw material supplies. Switching ingredients is a practical strategy to dodge product shortages or terminating production, but it uncovers a host of operational difficulties—in particular updating essential and regulatory controlled labels and artwork.
Throughout 2022 there have been a number of high-profile materials shortages that have a ripple effect on products that require a recipe or mix of ingredients to manufacture. Not only have manufacturers had to quickly find replacement ingredients to mitigate the shortage, they have also had to consider other impacts further down the manufacturing process. Each time an ingredient is substituted, labeling and artwork featuring on product packaging must require an update. In these often short-notice instances, business leaders must adopt new technologies to guarantee ingredient substitutions run smoothly.
This isn’t limited to the food and beverage market—impacted industries include healthcare products such as pharmaceuticals, and cosmetic lines, which have far more ingredients in each product than many consumers anticipate.
Although many ingredients have become scarce or expensive, manufacturers have had no issues sourcing alternatives. For example, a likely shortfall in sunflower oil caused by the conflict in Ukraine—the world’s largest supplier of the oil—has caused disruption for many food manufacturers, yet is already being actively mitigated by switching to rapeseed oil as a close alternative.
The problem lies not with this product reformulation, but the ripple effect on operations such as labeling and packaging—all of which must be updated in line with any ingredient switches, and all of which come with the worry of breaking regulatory compliance.
The ingredients issue is forcing change at a far greater pace than usual. US consumer foods giant General Mills cited some products as being reformulated over 20 times between January and April. For comparison, many ingredient tweaks are typically a very rare occurrence, with adjustments to tried and tested formulations taking place perhaps every 2–3 years.
As manufacturers across multiple industries jostle to secure limited stocks of existing ingredients in what is a very fast-moving situation, some products may end up being repeatedly reformulated with alternatives on a regular basis during this ongoing “perfect storm” of disruption.
But product formulation is far more than a simple “drag and drop” activity during the manufacturing process—especially in highly-regulated industries such as pharmaceuticals.
Packaging and labeling can often be an oversight in this current laser focus on ingredients supply and reformulation to ensure production continuity—but it plays an equally vital role in the overall process, and manually adjusting these assets can be a long, laborious process. If labeling and artwork cannot be adjusted at the same pace as product ingredients, production could be severely delayed or even halted. It is clear advanced technology is needed to cope with the impact of short-notice changes and bring agility to the artwork and label management process.
Any business with multinational operations or large product ranges will likely see a major impact to operations if they cannot identify and address ingredient changes on packaging in an agile, accurate manner—ideally from a “single source of truth.”
With many firms still outsourcing their product artwork and label management to local third-party agencies, dealing with ingredient shifts is a slow, costly process with no complete visibility of operations and an ever-present threat of inconsistencies introduced by human error.
This outdated process can today be phased out with the arrival of advanced, end-to-end label and artwork management (LAM) systems, such as the Veraciti™ platform from Kallik. Advanced LAM systems will offer features such as a “Where Used” tool, to identify every instance of a specific ingredient used on every product label—in every language—and update accordingly.
Global disruption has reached unprecedented levels over the last few years—but further uncertainty for businesses and their supply chains could be on the horizon. We’re also currently seeing businesses across multiple industries adopt a “shrinkflation” tactic, where products reduce in size while remaining the same price. Again, this will likely demand a change in product composition, with a knock-on labeling effect.
Ultimately, any change—whether imposed by supply chain disruption or even seasonal crop availability—will require ingredients to be updated or listed in a differing order on product packaging.
It’s clear that a reliable digital framework is needed to support manufacturers worldwide with the operational dexterity necessary to solve continual supply chain issues as they arise and present challenges.
LAM solutions will be used to accelerate reactions to changing factors such as ingredient availability. These will also ensure strict industry regulations are tightly followed to diminish concerns over including unnamed allergens into products.
Implementing dependable and regulated procedures, overlayed with digital oversight that support and assist a multitude of other crucial processes impacted by supply chain shocks is essential in the process manufacturing industry—labeling and artwork included.
Bob Tilling is VP of sales at Kallik.