Distributors stick with labels to lick market woes.
The birth of modern labeling technology can be traced back to the 1700s, when labels began appearing on Guinness bottled ale and stout in Ireland, and on wine and liqueur produced in France. Eventually, canned food processing caused label usage to soar.
In the 1920s, 3M developed masking and cellophane tape, which resulted in various pressure-sensitive applications, and universal product codes introduced in the late '70s spawned a multitude of bar-coded label solutions.
Clearly, labels are one traditional product group that is thriving in our information-crazed, technology-obsessed society. Here, four executives discuss the impact of these products on their distributorships.
Latching on to Labels
Already providing forms to several mid-size manufacturers, Tabco Business Forms, Terre Haute, Ind., began focusing on their bar-coded label needs to replace declining markets. "Diversification is the key for success in shifting markets," said Vice President Khris Bilyeu. "Orders range anywhere from 500 address labels to millions of shipping labels, reflecting a diverse customer base with very different needs."
C. Michael Stewart, president of Jeffersonville, Indiana-based VoluForms, reported a similar scenario. Many of his forms customers are manufacturers of office products, furniture, air filters and heaters, who use labels for warehousing and distribution applications. VoluForms gradually captured this business, which mostly includes orders for rolls of self-adhesive, bar-coded, machine-applied labels.
"One trend we're seeing is increasing orders for rolls of blank labels in varying sizes, since customers print bar codes and other non-static information on them as they go through the assembly lines," said Stewart. He pointed out that this market is in a state of flux as end-users grapple with printer costs.
In addition to manufacturing, Stewart discovered several bar-coded label customers in the financial and health-care industries and is seeing a growing market for laser labels.
Headquartered in Fayetteville, Ark., Data Forms also actively sought out label business as forms profits dissipated. According to President Mike Emis, "We've been building up our label business over the past five years, but it really spiked last year—actually doubling in growth." As with Tabco Business Forms and VoluForms, the manufacturing industry generates most of Data Forms' label sales.
"We have five large poultry processing plants in the area, including Tyson," Emis continued. These companies order more than 100 million labels a year, the majority of which are bar-coded roll labels that satisfy warehousing and shipping needs." Emis explained that most of these labels are variably imaged and must be appropriate for freezer applications.
Unlike the other three distributorships, AFE Industries, Santa Fe Springs, Calif., has always sold labels—including bar coded, variably imaged and ion disposition. However, radio frequency identification technology (RFID) has allowed President Fred Elhami to take labels into the future.
Elhami has been pursuing RFID technology for the past three years. He recently installed equipment that inserts 15,000 RFID chips (or transponders) per hour into bar-coded labels, producing an application that can be read and written to.
"You cannot tell a manufacturer what to do and, for reasons, many do not want to get involved with RFID at this time," said Elhami, explaining his decision to install the equipment.
Unlike smart cards, RFID requires no contact to be read, which avoids wear and tear issues. "It's just sweep and go," said Elhami, who acknowledged that RFID will take some getting used to, just as UPC codes did when first introduced.
However, he believes that bar codes have reached a maturity point and now is the time to start combining them with RFID technology.
According to Elhami, British Airways and Texas Instruments have hosted pilot programs involving RFID and baggage tag applications with impressive results. In addition, RFID is being applied to a variety of tracking functions, inventory control programs, tire-safety monitoring, warehousing and shipping applications and offered the following example. "Any time one has trucks of goods coming into a particular area, antennas can be installed there to read everything in the truck in one pass," said Elhami. He added that built-in anti-collusion features ensure an accurate reading.
"Consider that RFID can be read and written to at any time, there is a drop in cost each time it's used—sometimes costing only fractions of a penny," Elhami said.
Both Bilyeu and Stewart reported that there is not a market for RFID labels among their customer base as yet.
Bilyeu's orders are typically for bar-coded, piggyback and laser labels, with occasional requests for more creative, high-end, machine-applied prime labels.
Some of the more challenging applications at VoluForms have involved adhesives, including one for a high-tech, machine-applied label that had to be freezer-compatible.
At Data Forms, Emis reported seeing a rise in direct thermal and thermal-transfer applications, especially as dense, sharp direct thermal images are a preferred method for printing bar codes.
Although Elhami said that integrated labels are not right for him at this time, he believes they are exciting and profitable label products that manufacturers should promote more aggressively.
"I see samples of them but there is no accompanying information concerning their applications and potential markets," he said. "I would really like to see a greater educational effort from the manufacturers."
By and large, distributors reported no difficulty in finding manufacturers to supply good, quality products. "There are vendors out there for every type of label needed," said Bilyeu. "A good distributor will know how to find the right supplier for their products.
"We're very lucky to have at least 10 very capable manufacturer partners," he continued. "They provide us with the training, knowledge, samples and tools to sell label products."
E-volving E-commerce
In addition to the products themselves, how they are sold is also changing for distributors.
Tabco Business Forms currently has Internet ordering via e-mail, and the company is preparing to offer more extensive e-commerce capabilities.
"It's definitely something customers are looking for," said Bilyeu, "but right now we're limited by our physical location. The phone company cannot provide us with DSL high speed service at this time and, due to the trees, we can't use a wireless system." However, Tabco plans to offer customers a comprehensive e-commerce solution through Quantum Net soon.
While Emis reported that his customers are not currently using e-commerce to place orders, his company is presently working with Four51 to put a program in place.
Since 1984, VoluForms has offered customers forms management programs, particularly to its health-care customers who use a high volume of many different forms. Providing on-demand forms has eliminated the need for maintaining a huge inventory.
Said Stewart, "E-commerce has been a tremendous benefit to us and our customers. When done correctly, everything flows through the system to provide customers with real time information. This helps me save on operating costs, and these are savings I can pass on to my customers."
Stewart added that printing four-color process directly from customer-provided digital files saves time and money and eliminates the need for storing outdated materials.
By Maggie DeWitt