Expert Insights: Label Shortages & Supply Chain | Varcode

September 14, 2022

Ask the Expert

Labor markets are tight. Gas prices are through the roof. And yes, believe it or not, ice cream has hit $5.32 per a half gallon. Supply chains across many industries are struggling if not broken. As I talk to experts in the supply chain industry, there's one area that's often overlooked - labels. It's another area of the business that is causing massive disruption in the supply chain. With shortages of paper, composite materials, liners, adhesives, and inks, the supply of label products is not just strained, it's broken.

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Recent world events have only made things worse by driving commodity prices even higher. We've all heard the line "paper’s going away." But is it? Not really.

There has been an explosion in the demand for paper products, particularly in the US, thanks to the growth of home delivery across all industries. Think marketing inserts, recipe cards in meal kit boxes, oh and yes…labels: product labels, warning labels, shipping labels. Can you think of anything that doesn't have a label?

Covid was a double whammy - not only did it impact the supply chain but also accelerated the demand. Is anyone not using Amazon or a meal kit company for home delivery? Even groceries for curbside pickup have labels on the bags. But here's the underlying problem, besides the supply chain being constrained and demand increasing, the market's ability to manufacture products is constrained. Did you know that the last paper mill built in the US was in Eastover, SC in 1985? Hard to keep up with demand when you can't manufacture the finished product to meet it. The impact is felt in every area of our professional and personal lives.

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With the market for print labels expected to grow at a CAGR of 4.2% over 2022-2027, it’s important to get our ducks in a row and make sure that we’re prepared. So, what can we do to minimize the cost of labels and avoid delays? Plan. Plan ahead and escape having to rely on next-day shipments to replace empty stock. Expect longer than usual lead times and plan accordingly. Purchasing larger quantities would also help with reducing costs as well as having backup inventory on hand.

Our supply chain has been struggling and while we may see a glimpse of that when purchasing our favorite ice cream at twice the price as 2 years ago, we often overlook the simplicities such as labels. Without labels, our supply chain is unable to function and without the raw materials, everything can surely come to a complete halt. It won’t last forever. But for now, we must have an effective plan. Plan for the worst and hope for the best.

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