Some of the reasons for this practice (which is most prevalent in the baking industry) are the following:
(a) Frozen dough that is baked-off in retail stores (such as supermarkets) is packed at the retail location. Labels are sent to the customer to be affixed after the product is packaged.
(b) At times, a retailer prefers to affix his own store brand label in order to create the impression that the product is baked fresh in the supermarket (though in fact, it's baked in a factory). To provide the customer with maximum flexibility, the manufacturer sends loose labels, which can be used or discarded.
(c) There is a labor saving benefit to the manufacturer to not label the product, and have that task performed by the customer.
How can an RFR determine if loose labels are shipped from the plant? The simplest way is to ask the question. "Do you send labels to your customers?" In addition, there is a clue to look for during inspections. Retail stores generally use self-adhesive labels. Self-adhesive labels are printed on flat sheets, usually 4 - 8 labels per page. On the other hand, labels that are affixed by machine in the manufacturing facility are either stacked or on rolls. Thus, if the RFR spots flat pages of OU labels, it's a red flag that things may not be in order.
In general, it is always best to address problems proactively, and RFR's and RC's should review with companies the importance of keeping labels in the plant where they can be properly controlled.