Supply chain disruption remains a major concern in the label industry

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According to a study by FINAT, the European association of manufacturers of self-adhesive labels and related products and services, the supply chain crisis remains a major concern for brand owners, with impacts felt in all applications. and all sectors.

FINAT’s latest market trend RADAR was conducted in the fall of 2021, which the group identifies as “the period that exposed the growing tensions in global supply chains” due to a so-called “storm perfect” of factors. With the ongoing effects of the COVID-19 pandemic on supply, demand and labor, a particularly cold year in the Northern Hemisphere and a series of force majeure events, many industries are feeling the pressure due to longer lead times and higher prices.

FINAT President Philippe Voet explains: “What happened in 2020 was just a small beer compared to the global supply chain disruptions we experienced in the second half of 2021.

“Currently there are shortages of almost everything: energy, chemicals, pulp, (waste) paper, plastics, inks, transport, laminates, chips, components, people.”

In the food, beverage, personal care, pharmaceutical and automotive industries, reports found that supply chain concerns were “a priority when examining label sourcing trends” for more than 60 brand owners involved in the study.

For example, 72% and 63% of respondents said they encounter supply chain issues in the folding carton and corrugated segments respectively, while 56% of respondents in the flexible packaging and labels sectors also reported disturbances.

Looking ahead, Voet adds that only “time will tell if these tensions are a temporary adjustment issue and there will be a ‘soft landing’ in the spring of 2022, or that we are dealing with lingering tensions with longer lasting impact that could hurt recovery.

“It is clear from these numbers that there is not a single section of the value chain that is unaffected or to blame by these external factors.”

Additionally, the report notes that supply chain issues have been felt throughout the supply chain, including the “low end”. Label and packaging specifiers, engineers and those involved in procurement, supply, research and development have all admitted to feeling the strain of the disrupted global supply chain.

Jennifer Dochstader of LPC, who led the research, comments: “There is huge concern at the bottom of the value chain about the stability and availability of raw materials and the ability of label suppliers to meet delivery demands. and time requirements.

“The current disruption in the supply of raw materials has made us all aware of the complexity and interconnectedness of the global supply chain.”

However, label supply is expected to increase in 2020, despite – and perhaps even compounding – supply chain issues, with more than three-quarters of respondents indicating plans for expansion. In 2022, FINAT estimates that tag purchase will increase by 5.4%, with a slightly higher expectation of 6.4% expected for digital tag purchase.

Furthermore, Voet warns that “irrespective of these short to medium-term trends, we must not lose sight of the other mega-challenge we face in the longer term: climate change and the need to shift to climate change models. more circular economy.

“Current supply chain tensions could accelerate the shift from linear to circular consumption, turning used products into new raw materials.”

Indeed, FINAT respondents also noted a desire to move towards more sustainable labeling and packaging solutions. The number of respondents already involved in liner recycling programs would have been 41% – more than double the previous year’s figure – while 63% of respondents said they would be willing to make recycling centers available. collection for used liners, as long as these are within a radius of 200 km around the factory.

Dochstader concludes, “Every company we spoke with also indicated that they want to work more closely with their label suppliers to co-create innovative ways to make the printed packaging industry more resilient and sustainable. “

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