Questions & Answers: Moving from Labels to Direct Carton Marking Pays Off

Direct carton marking delivers cost savings, improves line speed and reduces errors

In this interview, Packaging Technology Today explores the benefits of direct carton marking with Matthews Marking Systems.

Direct case coding can reduce errors and improve the efficiency of the shipping exception lane.

1. What are the benefits of switching from carton labeling to direct printing?

Carton labels can be replaced with a print-on-demand system, which has line speed and error reduction benefits, but the big win is usually around cost savings. However, regulations or customer requirements may prevent you from moving to direct carton marking.  For those who can make the switch, the move is worth consideration due to the savings involved for most businesses. For those who can’t make the switch, we have an innovative labeling system worth exploring.

2. What kind of savings can be achieved with direct carton marking?

Specific savings depend on your situation, but let’s take a hypothetical that’s typical for what we see with our systems involving a 4-inch mark in a distribution center. It’s a rough hypothetical, but it will give you a good idea of the numbers involved.

Let’s say your production is labeling 5 million cartons per year across 21 production lines. Your average cost per label is 2.8 cents with total annual operating costs for labels of $140,000.

When you print directly onto cartons, your average cost per mark is .56 cents. Your total annual operating costs for direct marks are $28,000. That gives you a direct printing savings of $112,000 per year over using labels.

Carton labels can be replaced with a print-on-demand system, which has line speed and error reduction benefits, but the big win is usually around cost savings.

3. How does direct case coding reduce errors and costs?

With labeling, you have errors such as delamination (labels falling off), jams and breakdowns where cartons hit the shipping exception lane for repack. In our example, 50,000 cartons per year will go into the shipping exception lane with a 1% repack rate. The cost to repack in the shipping exception lane is very expensive with the additional labor overhead involved. Let’s estimate this late-stage rework at $15 per box, which adds up to $750,000 per year.

With direct case coding, you’ll likely reduce errors by 80%, which brings the total units that go into the shipping exception lane down to 10,000 cartons per year. That means repack costs per year are $150,000 instead of $750,000, which is a $600,000 annual savings from the shipping exception lane alone.

The return on investment (ROI) for new equipment is significant. The new equipment cost for direct case coding is $40,000 per line in this example, or $840,000 total. The total annual savings in this case is $712,000 based on operating cost savings of $112,000 and $600,000 in repack savings.  Based on new equipment costs of $840,000 and an annual savings of $712,000, the ROI in our example is 85% in the first year, with a 1.2 year payback.

For additional information about direct carton marking from Matthews Marking Systems, visit their website: www.matthewsmarking.com/solutions/replacing-carton-labels/