Illinois Tool Works, more commonly known as ITW, is one of the largest and most successful companies in the United States. Founded in 1912 by a Chicago financier and a team of tool inventors, ITW gradually grew from a humble manufacturing business into an enormous billion-dollar conglomerate. Along the way, ITW has acquired an incredibly long list of subsidiaries, including several companies familiar to those in the industrial printing field. 

Some of the most prominent companies in ITW’s marking and coding portfolio include:

• Diagraph
• Trident
• Foxjet

With ITW at the helm, these subsidiaries have continued to be cash cows after acquisition. However, according to insider reports, daily operations aren’t as smooth as they appear on the surface despite this monetary success. 

In 2015, inefficiencies caused by an ineffective company structure, siloed communication, and slow responses to product concerns reached a critical point when issues with its Scan True and Scan True II ink formulas led to mass market confusion that took years to resolve. 

Here, we take a look at the controversy, examine its root causes, and see how ITW and its subsidiaries have tried to resolve the problems. 

ITW’s Marking and Coding Corporate Structure and its Core Issues

Before we detail the specific issues with the Scan True and Scan True II formulas, it’s important to understand how ITW’s marking and coding subsidiaries are structured. To do so, we need to take a look at the ITW business model.

For more than 30 years, ITW has followed an established set of values that guide business strategy, daily operations, and corporate culture. These values are broken down into three elements:

• A set of unique proprietary tools and methodologies called the “80/20 Front-to-Back Process” that directs subsidiaries on how to treat large customers vs. smaller customers
  
• An innovation strategy called “Customer-Back Innovation” that eschews research and development to instead focus on the needs of the biggest and most profitable customers
  
• A “Decentralized, Entrepreneurial Culture” that largely leaves subsidiaries to make business decisions and retain an entrepreneurial identity                             

When this business model operates as intended, it enables ITW’s subsidiaries to operate with a sense of independence while still receiving monetary support from their larger parent company. However, maintaining a decentralized corporate structure can have several negative effects as well, including:

• Siloed communication between subsidiaries: Internal sources indicate that ITW’s subsidiaries frequently have difficulty maintaining close communication with one another. This can be very problematic, especially considering that many subsidiary products are designed to be compatible with other subsidiary products. For example, certain ink formulas produced by Diagraph are intended to work with the printheads designed by Trident. To help with communication between Diagraph and FoxJet, locations were combined into one building in St. Louis a few years ago.
  
• Slow responses to problems: As a result of the siloed communication between ITW subsidiaries and the hands-off approach by ITW itself, when problems arise, quick solutions aren’t often found.
  
• Market confusion: ITW’s subsidiaries are explicitly instructed to “operate, think, and act like entrepreneurs” and work to maintain separate identities from ITW. Although subsidiaries may enjoy this sense of independence, the separation from ITW often confuses other companies and customers in the coding/marking industry. For example, Foxjet and Trident aren’t even listed on ITW’s subsidiary Wikipedia page. Each company will also have its own booth at Pack Expo. 

In 2015, these issues directly led to a series of confusing problems that not only affected ITW’s subsidiaries but many customers and aftermarket ink companies as well.

What Went Wrong With Scan True II Ink

Scan True II is a black oil-based ink that was formulated by Diagraph, manufactured by Trident, and distributed through Foxjet—three companies that are all ITW subsidiaries. 

Trident is well-known for its popular case coding printheads, such as the 256Jet-S, 384Jet, and 768Jet. These printheads are widely used across multiple industries and are integral to the daily operations of companies involved in everything from food packaging to chemical manufacturing. When the Scan True II formula was released, it also became popular throughout these industries, inspiring the best aftermarket ink companies in the world to begin producing it as well. 

Scan True II was designed to work with Diagraph’s IJ3000 high-resolution case coder and other similar systems, and it was guaranteed to be compatible with Trident's various printheads. For a while, there didn’t appear to be an issue with any of these claims. Companies were successfully using Scan True II and aftermarket Scan True II alternatives to complete their case coding applications.

However, in 2015, customers began reporting to Diagraph, Trident, Foxjet, and various aftermarket companies that Scan True II was gumming up their printheads, leading to hardware damage and extended downtime. At first, no one knew what was causing the problems—Diagraph assumed it was user error, and aftermarket ink producers assumed it was an issue with their formulas. The true cause was miscommunication on the part of ITW’s companies. 

Foxjet had begun selling Scan True II Plus, an improvement on the original Scan True II, and promoted it as compatible with systems that already used Scan True II. However, unbeknownst to Foxjet, this selling point was false. Scan True II and Scan True II Plus weren’t only chemically different, they were placed in bottles with different-sized necks. 

The small changes in formulation and neck size greatly affected how the ink would react in different systems, and soon enough, companies experienced hardware damages stemming from the mixup. What happened next was a slow, laborious recall process that negatively affected both the customers and all companies involved. 

ITW’s Slow Response to the Controversy

Although customers first began reporting problems in 2015, it took years for ITW’s companies to begin taking corrective action. Marred by inefficient communication channels, the problem couldn’t be exactly pinpointed (let alone fixed) until long after the first reports came out. The first recalls began years after the initial problems were reported. 

In response to the controversy, different groups had to take expensive actions. Most notably:

• Diagraph, Foxjet, and aftermarket ink producers had to recall the formulas.
• Trident had to replace the damaged customer printheads.
• Some customers had to perform complete system swap-outs following the damages.

So how have ITW companies changed since this event? By all appearances, they haven’t changed much. Diagraph lost a bit of market share but didn’t lose any distributors. ITW maintains the same siloed company structure that initially led to the problems, and Trident still mentions Scan True II compatibility on its company website. 

As a result of this inaction, ITW’s customers and coding/marking industry at large are left with a question: Is this an isolated incident, or will ITW’s business practices doom history to repeat itself?

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