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Short Run Labels



The capability to effectively deliver short run labels opens converters to new markets and more profits, and the right equipment and process know-how are key tools for success in this segment of the industry.



By Steve Katz



Published November 13, 2009
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Professional Botanicals features over 100 products, and by using basic sizes, capitalizes on the benefits of digitally printing short run labels.
Flexibility in label printing is an important asset, and printers that can offer affordable labels to meet customers' varying quantity needs are attractive to do business with. Particularly in today's uncertain economic times, customers are apt to keep lower inventory, and label printers are asked not only to print on demand, but to print shorter runs. And other drivers fuel the demand for short runs: branding and marketing trends. For example, the personal care, household products, and nutraceuticals markets have seen great proliferation in the number of SKUs offered for a given product. Specialty foods feature a plethora of flavors, and the need for specialty constructions often require shorter runs.

Regardless of the market and application, converters have a number of things to consider when addressing the needs of their short run customers. Which printing process to use, the workflow, labor, waste, time, and price are all issues converters consider when printing short runs, and the technology one has at hand goes a long way in determining how converters meet the issues and challenges presented by these jobs.

Defining 'short run'


A short run label job is relative, and what may be short for one customer might be considered rather long for another, says Mark Trumper, CEO for Maverick Label, Edmunds, WA, USA. He talks about what he feels is somewhat vague terminology. "Consider a label for a shampoo bottle for Procter & Gamble or any national consumer products company. Certainly in that kind of job, a run of 1,000 would be considered a very short run. Then consider a specialized high-end electronics manufacturer needing unique control panel overlays – now the concept of short run shifts into the dozens or less, rather than the thousands. And yet, with technology, we can produce those runs using equipment appropriate for the quantities needed by the customer, at a cost that is usually within the customer's budget. We try to make the run match the needs of the customer, and technology has made it possible for us to do that in almost all cases," he says.

Trumper says that based on his loose interpretation of what qualifies as short run, it's difficult to calculate what percentage of Maverick's business falls in the category. "However, there is no question that the number of orders for smaller quantities has risen, as our ability to meet the needs of short run customers has grown. New printing technologies, improvements in existing technologies, and development of our own automated and online support systems for product presentation, quoting, order processing, and order fulfillment have made all that possible.

"Coupled with the growing ability to deliver smaller quantities at reasonable prices, the economic downturn has pushed many of our customers to order smaller quantities than they would have considered when times were booming. They know that we can meet their needs with faster turnaround times, and consequently they feel safe ordering, and holding smaller inventories," he says.

While Trumper finds it hard to pin down how much short run work his company does, others follow a more concrete formula, often based on square footage or the number of labels printed. The consensus among converters is that any order of 5,000 labels or less is considered short run.

Michael Martin, VP sales and marketing, Primeflex, Denver, CO, USA, says, "Any run that is under 1,000 feet of material we consider a short run. So if the label is big enough, it may be a few hundred, but if it's a small label it very well may be a few thousand labels."

Primeflex is solely a flexo converter. Martin estimates that 20 percent of the business is short run, and the number of the company's short run customers continues to grow. "We've seen the amount of short run customers grow each year and most of our new customers start off as a short run client," he says.

The digital advantage


Stacy Santos, marketing manager for Dion Label Printing, Westfield, MA, USA, says the company takes into account the length of the run when deciding which printing process it's going to use. In Dion's case, short run jobs, among others, get moved to one of the company's HP Indigo presses. "We decide whether a job will go digital or flexo based on the amount of footage we are going to run, the complexity of a customer's label graphics and the number of SKUs in a particular run. About a third of our business is digital. We made the investment in digital in April 2005, and because our digital business grew so quickly, we invested in another HP Indigo digital press. And our digital operations have steadily grown over the years.

"Digital printing is perfect for multiple SKUs, low volume orders, promotional labels and prototyping," Santos says. "It's a great way to offer high quality printing, complex graphics, and vibrant colors to customers that do not have large volume quantities. Our customers do not have to sacrifice label quality while keeping their inventories low."

For Lightning Labels, an all-digital printer based in Denver, CO, USA, 99 percent of the business is short run, says Peter Renton, director, business development. What he finds most appealing about digitally printing short run labels is prepress cost reduction. "The biggest advantage of digital is the cost savings gained from not having to produce plates. Also, most of our repeat customers have dozens of different variations of the same label. Digital printing means that they can gang all these label orders together and enjoy significant cost savings."

Less prepress translates to a faster workflow and quick turnaround – another advantage digital offers. "Of course, everyone loves the time savings too – all our orders are out the door within three days," Renton adds.

Lori Smith, marketing manager, Target Labels and Packaging, Salt Lake City, UT, USA, discusses the cost savings benefits digital printing provides, as well as how it allows for quick and easy changes to a customer's product line. "Professional Botanicals Incorporated is a very successful local nutraceuticals company, and a perfect fit for the advantages of digital label printing," she says. "They feature over 100 products, and frequently introduce new products to the market. By utilizing three basic size bottles, and three size labels, they capitalize on the benefits of short runs on the digital press. By combining orders of multiple labels on the same size die, they maintain the flexibility they need to meet their product goals, while saving money on the total run. When it's time to introduce a new product to their product line, changes are quick and easy. Since there are no plates to make, changing a couple of details on the labels is fast and very economical. For customers that need lots of flexibility to meet their product requirements, digital label printing is definitely the way to go," says Smith.

"We use virtually every printing technology that you might consider to be part of the label business, as well as some digital techniques of our own design," says Maverick's Mark Trumper. "Remember, that for some customers, 1,000 shampoo labels may be a very short run. In most cases, we would produce those using an HP Indigo, or one of our other digital technologies. However, in some cases, they might be produced using traditional flexographic presses, but using modern production techniques.
"With every job, we carefully match the technology to the specifications of the label that the customer needs, or, more accurately, our automated systems do that for us. Again, that is the key to keeping fixed costs down," Trumper says.

A place for flexo


Converters who have the capability, by and large, print their short run jobs digitally, because the digital printing process, with its quick changeover times, low waste and the absence of platemaking, make it an ideal, cost-effective fit. However, strictly flexo converters are more than capable of taking on short run jobs, and there are reasons that flexo makes a lot of short run sense.

Mike O'Connell, business development manager for ATL (formerly Ad Tape and Label), Menomonee Falls, WI, USA, says, "There certainly is a place for flexo in short runs. It's less expensive. And as a product takes off, you want to be in flexo where there's a declining cost and as you get into larger runs, the cost gets lower."

Michael Martin of Primeflex discusses the advantages flexo has over digital when run running the company's short run jobs. "There are some great value-add products that are difficult or impossible to run digitally. We can add varnishes to squeeze films for soft sided products. Digital has to laminate, which destroys the characteristics of the material. Booklets, piggy backs, IRCs, pouch films, extended text labels, spot color matches and foiling are all areas that we excel at compared with other print methods," he says.

Don Earl, president, Overnight Labels, Deer Park, NY, USA, feels flexo has its short run benefits. "We use flexo for all of our runs. The advantage is color consistency from run to run and consistency throughout the product line."

Like O'Connell alludes to, Earl points out that there's something to be said for starting a job in flexo – the hope that the product will take off – and a job that began short becomes a long and profitable run. "We manage the workflow as if we were doing all long runs. We give the same care to a short run as we do a long run. You never know when that one product is going to hit big and becomes a long run. Our prepress department does not know the length of the runs, so they always have to run efficiently," Earl says.

Markets


While some converters report that their short run label jobs run the gamut in terms of markets and industries served, others pinpoint certain areas that generate short run business. And some of these markets are quite specific.

Mike O'Connell says ATL's short run business largely consists of extended content labels, specifically for the pharmaceutical and drug study industries. He explains: "These jobs tend to be short runs, but yet they'll have up to 35 panels. You might have a booklet 8" x 2" for drug studies, and it could be printed in 35 different languages. The different setups for these types of constructions are very complicated, as is the inspection process. Setup for a job like this could potentially be eight hours, while the press runs for only two hours. It's a different type of job, and often these jobs require fast turnaround – in some cases the same day."

"For our booklet business, we consider short runs from anywhere between one and 10,000 labels. For our more traditional, non-booklet jobs, a short run is 5,000 labels or less. The company's more traditional short run business is in food and electronics, and we're finding there's been somewhat of an influx of short run work due to the state of the economy. These days, no one wants to maintain an inventory," O'Connell says.

Michael Martin says that health and beauty and specialty food and beverage labels stand out as Primeflex's prominent short run markets, but indicates that the nature of those markets lends itself to shorter runs. "Any company that has a large quantity of SKUs will have a need for short runs. So health and beauty and specialty food and beverage stand out. Short run flexible packaging is our biggest growth area right now," he says.


Salt Lake City Candles requires lots of changes and has multiple SKUs – typical of many short run customers.
Mark Trumper says it's hard to think of a market or an industry for which Maverick has not produced short run labels. "We have a very wide and diverse customer base. We produce short run orders for electronics and other manufacturing, for wine, pharmaceuticals and nutraceuticals. We also print labels for the defense industry, and for the military directly. Small personal care products manufacturers certainly make use of short runs, and we also specialize in asset tags, parking permits, and control panels," he says.

Lori Smith of Target Labels says that the company's short run customers are also from a variety of markets, particularly nutraceuticals and certain household goods. Salt Lake City Candles, a company local to Target, is a great example of a customer that requires lots of changes and has multiple SKUs. She says, "Salt City Candles offers hundreds of scents with a new scent being introduced to the market almost every month. They run their labels on three die sizes, so they can run all their versions of one size at the same time. This means they save a substantial amount of money by running multiple labels at once. Their typical order may consist of 30 different labels of the same size, each with varying quantities from a few hundred to a few thousand. They capitalize on the total quantity discount, while we capitalize by increasing our efficiency. It's a win-win situation."

Challenges


Like its longer run counterparts, consumables, waste, time, and labor are certainly important considerations when printing short runs. However, despite the finished product being of lesser quantity, the stakes are a bit higher as converters need to maximize resources. And it seems as if converters have differing points of view when discussing what constitutes the toughest short run challenges.

Mike O'Connell feels that inventory maintenance is particularly challenging in relation to ATL's short run customers. And flexo converters like ATL have a lot more prepress expense to consider. "What you have to carry, like how many basestocks you're going to offer your short run customers, is something to think about. Once that's solved, your prepress accuracy is very important, as are the sign-offs by customers. Also, there are plates. Are you validating that your plates are matching the initial start-ups? Color matching is also an important consideration. We use a LAB unit to monitor colors. You also have to make sure it's the right material and die shape and then it goes through QC, off-press inspection and shipping," he says, adding, "Generally, short run people want fast turnaround. If it's a startup, then often times the last thing they're thinking of is the label. They don't understand the concept of making plates, or having the right rotary tooling. Communicating this can be a challenge when working with some short run customers."

Many short run label customers are startups, and they often lack the understanding of turnaround time, O'Connell says. "In the short run business, people tend to have the 'instant print' mentality."
To Mark Trumper, the most challenging aspect of short runs is handling lots and lots of very small orders, and having automated systems in place is an effective tool in overcoming this. "If we did not make investments in workflow automation we would be in big trouble. In fact, we would not be in business at all. It's like the old story about the merchant who loses a little bit with each sale, but makes it up in volume. That does not happen.

"Another challenge is that lead times are getting shorter, and customer expectations just keep getting higher. The internet has led to a business climate where weeks have turned to days, and days to hours. Handling of short run orders require a very high degree of automation in order to meet those demands, while at the same time sustaining profitability," Trumper says.

Peter Renton has a similar take on the subject. "The biggest challenge is workflow," he says. "Because you are dealing with smaller dollars per order, you need to have an efficient system in place to get the order through the plant quickly and easily. This would be ideally done with minimal time in customer service and prepress. For a $300 order, if you spend an hour in customer service and then another hour in prepress on that job, you have likely eaten up most of the profit before you get to printing it."

Renton also points to waste as another significant obstacle to overcome. "With digital material, waste just comes as part of the equation. But wasted time can be a critical factor in your success in digital printing. You don't want to 'over-manufacture' a small digital order. What I mean here is that not only do you not need to print thousands of overs, you also don't need elaborate inspection and quality control systems for that $300 order," he says.

Don Earl feels Overnight Label's biggest challenge is keeping waste down. He says, "We have to make sure the presses are always in top condition and our anilox rollers are always clean. You don't want to be fooling around with color for a couple of thousand labels. The jobs have to get on and off quickly. In order to be profitable printing short runs, waste must be kept to a minimum. You have to plan your day, and your pressmen need to know what they are doing."

Cost


Short run label printing presents a host of challenges, but pricing is one that stands apart. As in most industries, when volume is high, price per unit tends to be low, and it's an issue label printers have to deal with.

"In most cases, there is no getting around the fact that long runs lend themselves to economies of scale," Renton says. "The only caveat to that would be a large multi-version job. If you have 100 different four color process versions, that is 400 plates at say an average cost of $50 per plate; you are looking at $20,000 in plate costs before you print. Then you have all the plate changes along the way. The breakeven point on this kind of job for flexo versus digital would be tens of thousands of dollars per version," he says.

Michael Martin says short run labels can be more expensive than long runs. "You are taking fixed costs and spreading it our over a smaller number of labels so the unit price is going to be higher. We always offer clients additional quantity breaks because in most cases a few more dollars total may yield thousands more labels. With flexible packaging, the run may actually be less since our minimums are smaller than what a wide web press house can offer," he says.

Martin feels that offering a good value to short run customers, while keeping acceptable margins, is a major challenge. He says, "We address this by working with the client to help them in their purchasing process to order like-sized items at the same time so that they can gain production cost efficiencies. We also may offer pick and pack fulfillment so that we can run higher quantities, yet take smaller shipments. Job grouping is one way to help keep costs down. We group jobs by size and color. For instance, we gain efficiencies by running all four-color process jobs together and all 2" circles together."

Labor almost always will be the major factor in being able to effectively deliver short run orders, adds Trumper. "Short run orders are almost by definition low absolute revenue orders. And since we are basically an industry of papers, plastic films, inks or pigments, foils, and adhesives, the cost of raw materials, in small quantities, is not the major determinate of overall margin. Rather, it is the overhead costs of taking the order, processing it, getting it ready for press, printing it, finishing it, and fulfilling it that will always drive costs, and therefore, profit. As runs become longer, those more fixed costs associated with an order diminish in comparison to the material costs, which by their nature are variable, as well as the variable costs of labor (running the presses) and machine maintenance.

"Here's a simple example. If it costs you just $10 worth of burdened labor time to provide a quote to a customer, and you have to give four quotes for every order you get, then you have to have $40 of pure profit in each run just to make up for quoting costs. Add to that the setup, finishing, billing, etc., and it soon seems impossible to make a profit on an order that the customer pays $100 for – without automation. If, however, you have an online quoting system, those quotes are virtually free, especially on the margin; it costs you no more to do 1,000 quotes than it does to do 10. And that is the economic key to short run success: Automate the overhead fixed costs to keep the price down, while still providing enough margin to make a profit," Trumper says.



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